NYSEAM:UEC - Post by User
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mangoeon Aug 25, 2024 6:09pm
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Post# 36195398
🎇🎆😲ICYMI.. On June 27th the US Department of ❓
🎇🎆😲ICYMI.. On June 27th the US Department of ❓ 
ICYMI.. On June 27th the US Department of issued a US$3.4 Billion Request for Proposals (RFP) for purchasing a stockpile of Low-enriched #Uranium (LEU), the fuel used in the 94 operating US #Nuclear reactors.
The closing date for submission of proposals has been extended to 9 September and a 5th amendment to the solicitation was posted late last week.
Here's an updated deep dive into the amended RFP
to 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 funded 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. The ban went into effect on August 11th, but so far only 1 waiver has been made public, a partial waiver to Centrus Energy allowing them to import "already committed" Russian LEU for just the next 16 months until end of 2025. 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 is being addressed separately by DOE.**
The $3.4B RFP (Solicitation 89243224RNE000039) seeks to set up 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 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 up to 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 up to 10 year period, likely to run from 2025 to 2035.
How much LEU can DOE purchase with $3.4B at today's market prices?
In response to a large number of queries by potential bidders as to the quantities and timing of deliveries, the DOE has revealed that its basic plan "assumes the acquisition of 100 MT/yr for 6 years but this estimate will depend on the availability of new production capacity and available funding. DOE desires new capacity to be available as soon as possible."
Using the July TradeTech Long-term contract prices for enrichment SWU ($164), Conversion ($40) and U3O8 ($82) to do that calculation with UxC's Nuclear Fuel Calculator using a standard tails assay of 0.30, for a desired LEU (aka EUP) quantity of 100MT (100,000kgU) yields an estimated cost of $3,620 per kgU, requiring 2.67 Million lbs of mined U3O8.
The DOE base case would, at today's prices, equate to a yearly $362M in LEU purchases that require 2.67 Million lbs U3O8. Over an initial 6 year plan that comes in at around $2.2B in LEU purchases requiring 16 Million lbs of Uranium feedstock.
Using 10 year contracts as cited in the RFP, at today's prices, the total bill hits over $3.6B requiring nearly 27 Million lbs of Uranium as mined U3O8 from US and allied suppliers.
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 then 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 now that the Russian Ban has kicked 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 help to ensure the ramp-up of US and allied mining, conversion and enrichment capacity by 2028 when all Russian imports cease in entirety.
The result is up to 27 Million lbs of new demand being shifted onto US and allied uranium miners who must supply 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 need to sign new long-term U3O8 supply contracts with US and allied Uranium miners to the tune of up to 27 Million lbs. The Western uranium squeeze is on!
Hope U find this deep dive helpful. Good luck with your own research and investments!
