The decision nixes the plans of Virginia Energy Resources and Virginia Uranium to extract the energy fuel in the state.
After seven months of deliberation, the US Supreme Court has ruled 6-3 in favor of upholding a uranium mining moratorium in Virginia, nixing Virginia Energy Resources (TSXV:VUI,OTCQX:VEGYF) and Virginia Uranium’s plans to extract the energy fuel.
Last November, the US top court heard arguments from the miners, both of which wanted to see an end to the almost four decade ban on uranium mining.
The companies said the ban should not supersede the 1954 Atomic Energy Act, which allows states to regulate mining, but gives the federal Nuclear Regulatory Commission oversight of everything else in the mining space, including the processing of mined nuclear materials such as uranium.
Virginia is believed to hold one of the largest US uranium deposits, an estimated 119 million pounds.
The initial moratorium on uranium mining was enacted in 1982 following a partial meltdown at Three Mile Island in Pennsylvania, which raised awareness and criticism of nuclear energy production, and ultimately the mining of the radioactive material.
Virginia Uranium is a subsidiary of Virginia Energy Resources, and the companies are run in part by the Coles family, which owns the property from which the companies want to extract uranium.
The mining ban issue in Virginia has been compounded by the fact that the Coles believe they should be allowed to extract the resource from their private land without government interference.
“We are still studying the Supreme Court’s opinions, but we are obviously disappointed with the result,” reads Virginia Uranium’s statement. “We continue to think that Virginia’s uranium mining ban is both unlawful and unwise, and we are reviewing other options for challenging the Commonwealth’s confiscation of Virginia Uranium’s mineral estate.”
Virginia Energy Resources is also reviewing the ruling; news of the Supreme Court ruling caused its shares to plummet.
Domestic uranium production in the US has slipped year-over-year for the last decade, according to the World Nuclear Association, with 2017 output weighing in at 940 tonnes.
While the country only ranks ninth globally in terms of production, America is the largest consumer of U3O8, spending US$2 billion annually on imports.
The majority of foreign uranium imported by the US is used to fuel nuclear reactors that provide 1,888 kilowatt hours of electricity.
In 2018, the Trump administration mandated an increase in domestic uranium production as an issue of national security, saying the country is too dependent on foreign imports.
The federal government is also currently considering a US Department of Commerce Section 232 investigation into uranium imports, which could result in a 25 percent domestic quota and a “buy American” clause that would force all government agencies, including the military, to only use domestically produced uranium.
The global uranium sector has been a slump since the beginning of the year, when U3O8 spot prices began sliding. After hitting its year-to-date low at the end of May, the spot price has commenced a slow ascent and is currently sitting at US$24.75 per pound.
Shares of Virginia Energy Resources were down 37.05 percent on Tuesday (June 18), trading at C$0.14.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.