New U.S. sanctions could restrict uranium imports from Russia
The proposed U.S. bill to tighten sanctions against Russia could hit Rosatom, as it proposes to extend restrictions on imports of low-enriched uranium (LEU) from Russia until 2031, national daily Kommersant reported on Thursday.
This could affect a key market for the state nuclear corporation. Rosatom subsidiary Tenex earned over 40% of its LEU export revenue from U.S. contracts in 2017. The owners of nuclear power plants (NPP) in the United States are interested in buying Russian uranium, because it is cheaper than alternatives.
The Defending American Security from Kremlin Aggression Act of 2018 (DASKAA) included a proposal to restrict LEU imports from Russia. The bill proposes to extend limits on U.S. imports of Russian LEU until 2031.
While quotas for Russia will increase until 2020, the bill proposes to rapidly reduce them in the subsequent decade, to 463.6 tonnes in 2021 and to 375.8 tonnes in 2030. The bill also proposes to eliminate the current option to purchase uranium above the limit for the U.S. Energy Department's reserves, although Russia has not used this option, the paper said.
Russian LEU is exported to the U.S. by Tenex, which works primarily with the operators of NPP. As of the end of 2017, the company's total limits for uranium product exports to the U.S. in 2011-2020 were 95% filled. Tenex's overall portfolio of long-term contracts totals $17 billion, and a number of these agreements go beyond 2020, so they could be affected by the proposed reduction of the limits.
The U.S. is Tenex's largest market, accounting for about $700 million of the company's $1.7 billion in sales in 2017 and about $1.1 billion of the $3.3 billion in new contracts secured by the company.
Tenex's IFRS net profit dropped by 38.5% to $242.6 million in 2017 on revenue down 10% to $1.9 billion. Tenex noted difficulties on the world market, including high uranium stockpiles (equivalent to two to three years of consumption in Europe and the U.S.) and a drop in prices for uranium enrichment from $52 to $45 per separative work unit under long-term contracts, according to UxC estimates.
The U.S. nuclear energy sector has depended heavily on imports of both uranium and uranium enrichment services in recent decades, particularly since 2011, when prices for uranium, enrichment and nuclear fuel tumbled in the wake of the Fukushima nuclear disaster in Japan. The U.S. now essentially has two suppliers of enrichment services: Russia's Rosatom and Europe's Urenco, which also has facilities in the U.S. Most uranium mining in the U.S. has been shut down due to unprofitability, including assets controlled by Rosatom.
This situation has for a long time essentially kept U.S. sanctions against Russia from affecting Rosatom. So far only scientific cooperation and a number of secondary sectors have been symbolically hit with restrictions.
But the situation has changed this year. Back in January, U.S. uranium miners proposed that the White House introduce quotas for purchases of local uranium for NPP and in July the Commerce Department began an investigation concerning this complaint. At the time, Tenex did not see this as a direct threat to the company.