NYSEAM:UEC - Post by User
Post by
mangoeon Jun 30, 2024 5:23pm
137 Views
Post# 36112815
🎇🎆😲ICYMI.. US Department of @ENERGY has issued a ❓
🎇🎆😲ICYMI.. US Department of @ENERGY has issued a ❓ 
ICYMI.. US Department of has issued a US$3.4 Billion Request for Proposals (RFP) for the purchase of Low-enriched #Uranium (LEU), the fuel used in the 94 operating US #Nuclear reactors.
I've done a deep dive into the RFP
so let me break it down for U:
The RFP stems from 3 legislative actions taken by the US Congress and signed into law by President Biden: 
The Nuclear Fuel Security Act of 2023 (NFSA) - Public Law 118-31 The Consolidated Appropriations Act, 2024 - Public Law 118-42 The Prohibiting Russian Uranium Imports Act, 2024 - Public Law 118-62 The NFSA requires the US Department of Energy (DOE) to establish programs to build up stockpile reserves of Low-enriched Uranium (LEU), High Assay LEU (HALEU) for advanced small modular reactors, and US-mined yellowcake U3O8 in order to "support domestic production of low-enriched uranium" and "ensure that, in the event of a supply disruption in the nuclear fuel market, a reserve of nuclear fuels is available to serve as a backup supply" which, as needs arise, will be sold to US reactor operators at "fair market value". 
The Consolidated Appropriations Act, 2024, provides $2.7 Billion towards funding the provisions of the NFSA. A further $700M is being added by DOE for a total of up to $3.4 Billion. 
The Prohibiting Russian Uranium Imports Act effectively creates a "supply disruption in the nuclear fuel market" that the NFSA is meant to address, banning all US imports of Russian LEU until 2040, with waivers that DOE can issue up to the end of 2027 for individual reactors where there are no other viable sources of supply available. From 2028 to 2040, all Russian uranium imports are banned and no waivers can be issued.
**Note that this $3.4 Billion RFP is only for procurement of LEU. HALEU will be addressed separately by DOE.**
The $3.4B RFP (Solicitation 89243224RNE000039) issued on 27 June by DOE seeks to set up 10-year Indefinite Delivery, Indefinite Quantity (IDIQ) base contracts with one or multiple suppliers able to provide quantities of LEU that MUST be enriched in the US by expanding or building new enrichment facilities inside the US, and MUST utilize mined/milled U3O8 produced in the US or an allied nation or partner (Canada, Australia, EU). Conversion from U3O8 to UF6 MUST also be done in the US or an allied nation or partner. The LEU purchased by DOE must also be stored inside the US as part of the DOE's Assured Fuel Supply Program.
Details here: https://fedconnect.net/FedConnect/default.aspx?ReturnUrl=%2fFedConnect%2f%3fdoc%3d89243224RNE000039%26agency%3dDOE&doc=89243224RNE000039&agency=DOE…
The 140-page RFP does not provide any direct funding for construction/expansion of enrichment, conversion or uranium mining operations in the US. All of the $3.4 Billion is expected to be used for direct purchases of LEU produced in the USA.
In essence, DOE is asking potential suppliers (Urenco, Centrus, and others looking to enter the enrichment market) to provide proposals for supplying US-made LEU to meet the DOE's requirements. Based on the responses, DOE will award one or multiple 10-year IDIQ contracts to the successful bidders. IDIQ contracts are essentially an open contract for the sale of LEU to DOE, who then issue requests from time to time for their specific requirements in terms of quantity, price and delivery dates as needed over the 10 year period, likely to run from 2025 to 2035.
How much LEU can DOE purchase with $3.4B at today's market prices?
I used the most recent Long-term contract prices for enrichment SWU ($159), Conversion ($38) and U3O8 ($80) to do that calculation with UxC's Nuclear Fuel Calculator using a tails assay of 0.25, with the cost of the LEU (aka EUP) coming in at just under $3,400 per kgU.
$3.4 Billion would buy approximately 1 Million kgU of LEU at today's prices, requiring:
Over 24 Million lbs of mined U3O8 Conversion into 9.22 Million kgU of UF6 6.87 Million enrichment SWU
Of course, DOE is not awarding a contract tomorrow for those quantities. Contracts would be issued on an annual or as needed basis over a ten year period up to the maximum spend of $3.4 Billion.
DOE will be running a training course that will provide potential bidders with more details about the RFP expectations, process, conditions, awards and contracts with instruction on how to complete all the required forms in submitting an offer. Deadline for submission is 28 August 2024.
Another way of looking at this is that the US DOE, as a result of the US ban on Russian LEU imports, is investing $3.4 Billion to purchase a large inventory of LEU reactor fuel which it can sell to US utilities "at fair market value" to replace the supply that would have been coming from Russia if no ban were in place.
Between now and 2040, US reactor operators are expected to seek out alternative Western non-Russian suppliers of LEU to meet their needs for reactor fuel so as to end all dependence on cheap Russian sources that have undermined the US Nuclear fuel industry for decades.
DOE, in essence, will replace Russia's Rosatom as a supplier of LEU to fill the gaps in Western LEU production that exist today so that US reactors will continue to run uninterrupted as the Russian Ban kicks in. Instead of spending an estimated $1 Billion per year to buy Russian LEU, US reactor operators will use those funds to purchase LEU from Western suppliers and the DOE, which will ensure the ramp-up of US and allied mining, conversion and enrichment capacity by 2028 when all Russian imports cease.
The result is demand being shifted onto US and allied uranium miners who must provide the yellowcake U3O8 feed required by US and allied Conversion and Enrichment facilities to replace lost Russian supply. Whoever is awarded LEU supply contracts by DOE will be required to sign new long-term U3O8 supply contracts with US and allied Uranium miners to the tune of around 24 Million lbs over the next 10 years. The squeeze is on!
Hope U find this deep dive helpful. Good luck with your own research and investments!
