Uranium Stockpiling: The Rise of Nationalism or an Energy Security Effort?

Since 2019, energy security has become one of the most pressing issues facing countries around the globe, with COVID-19 showcasing how fragile interconnected supply chains can be amid a global health crisis.

This was evidenced again when Russia invaded Ukraine, putting Europe's oil and gas supply in limbo.

While these recent issues have brought discussions around energy security to the forefront, questions about long-term, sustainable energy supply have been growing for a long time. In 2020, then-US President Donald Trump proposed the building of a strategic uranium stockpile that would be supplied by domestically mined uranium.

Much like the country's Strategic Petroleum Reserve, which boasts 4.7 million barrels of stored capacity at four sites, the uranium reserve was to hold a stockpile of U3O8. The idea was to ensure the uninterpreted supply of electricity from nuclear reactors, as well as the fulfillment of military needs.

A domestic uranium reserve would be especially important for the US, which uses nuclear reactors to generate 20 percent of its electricity and 55 percent of all clean energy, yet imports 90 percent of its uranium.

Production of uranium has been on the decline in the US since the 1990s and was further lowered in 2011 post-Fukushima, when the market was flooded with excess supply that drove prices lower. Subsequently, the market value of U3O8 fell to a 12 year low of US$17.16 per pound by November 2016.

At those lows, uranium mining and exploration is uneconomical, and most US-based production was curtailed.

Although Trump was unable to secure the presidency in 2020, the concept and need for a strategic uranium stockpile has remained and gained support. In late 2020, Congress approved the Consolidated Appropriations Act, which earmarks US$75 million for the Department of Energy's (DOE) Uranium Reserve Program.

The cash infusion prompted the DOE to make an open request for information on how the stockpile should be built and how the uranium should be procured.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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