May 22, 2024
RBC Uranium Watch
Takeaways from US DoE exemptions guidelines
Our view: We see several key takeaways from the US DoE guidelines to receive an exemption to Russian uranium import bans — 1) a formal process is in place and the DoE does not want supply disruptions, but the timeline is very tight and there is some near-term risk to supply disruption; 2) the requirements to receive a waiver will likely become stricter over time and US utilities will be more active in the term market to seek alternative sources; and 3) re-exports of uranium through the US to allies remains unaddressed and could cause supply disruptions in other countries. Additionally, while the risk of a Russian retaliatory export ban appears low for now, we note a Bill proposing sanctions on Rosatom is being considered in the US House and could raise the risk of a retaliatory ban if the Bill gains traction.
Within our coverage, we think Cameco would benefit from a near-term increase in uranium prices as an incumbent producer while NexGen would benefit from a tight long-term market outlook.
US DoE releases guidance on exemptions to Russian import ban: US Bill HR1042 banning the import of Russian uranium was signed into law by President Biden on May 13 and the ban goes into effect starting August 11, 2024. The US DoE may grant waivers for imports prior to January 1, 2028 if — 1) no alternative viable source of LEU is available to sustain the continued operation of a nuclear reactor or a US nuclear energy company; or 2) the importation of Russian LEU is in the national interest. The US DoE released guidance on the waiver process yesterday.
Tight timeline to receive waivers and ensure no supply disruption: The US DoE expects a minimum 30- day processing period from receipt of the waiver request. Russian supplier Tenex issued a notice to US utilities they have 60 days to secure a waiver to ensure no supply disruption (July 14, 2024). Assuming utilities may take 1-2 weeks to complete a waiver submission and a minimum 30-day processing period, waivers may be granted by early July, which would meet the Tenex timeline, but any delays in the waiver process could result in supply disruption.
Waiver process likely becomes increasingly strict over time: For waivers seeking exemption from the ban based on demonstration of "no alternative viable source", the US DoE will require a detailed description of efforts made to obtain an alternative source and an explanation for why an alternative source could not be obtained. The US DoE further clarifies that the level of documentation and evidence needed to obtain a waiver will increase for imports associated with reactor refuelings at a later date.
US re-export remains an uncertainty: Bill HR1042 bans all uranium imports, including any material that is imported into the US for processing into fuel, and the US DoE guidance makes no mention of exemptions for re-export. This may be an issue for nuclear operations in other countries that rely on the US nuclear fuel chain, particularly in Mexico and Japan, which would need to also seek alternative sources. However, the US DoE could also clarify the issue of re-exports at a later date.
Bill 8046 "Rosatom Sanctions Enforcement Act" would be more restrictive, could threaten retaliatory export ban: A Bill seeking to impose sanctions on Rosatom is working its way through the House of Representatives and was passed by the House Foreign Affairs Committee on May 16. The Bill is still in the early stages of the legislative process, but will be important to watch. We think if the Bill gains traction, we see risk that Rosatom responds by threatening a retaliatory ban on uranium exports to the US.