Hi, it's West Kasova. We're taking a break this week for the holidays, so here's an episode you might have missed.
Stomic testing.
The Russians have a bomb.
We're supposed to be years ahead of them, but the Umps, what were you guys doing in Los.
Alma's Uranium of all things has become a hot topic this summer, in part, of course, because of the hit movie Oppenheimer about the Manhattan Project and the man often called the father of the atomic bomb.
A shark. Time ago, an American aeroplane dropped one bomb on Hiroshima and destroyed its usefulness to the enemy. That bomb has more power than twenty thousand tons of T and T.
The bomb President Truman was talking about that devastated Hiroshima on August sixth, nineteen forty five, contained about one hundred and forty one pounds of enriched uranium. Uranium is still used in nuclear weapons, but it's the non military uses that we're talking about today and the reason it's in the news now.
Uranium is the basic fuel that's used in nuclear power plants. It's not particularly rare, but the whole process of getting the U two thirty five isotopes concentrated high enough to run in a nuclear power plant. Very complicated.
That's Bloomberg's Will weigh He and Jonathan Tyrone report that for decades the US has depended on Russia for much of this hard to enrich uranium needed to fuel nuclear power plants, and that picture has become much more complicated since Russia's invasion of Ukraine.
It's not just the enrichment that Russia is supplying, it's also conversion, it's also raw uranium, and so you see weak links along the nuclear fuel supply chain at every stage.
Will and Jonathan are here to talk about a new push to rebuild the West's uranium capabilities. Some are likening it to a Manhattan Project two point zero, but this time.
For peaceful purposes. I'm Westkasova today on the big take.
Can the US wean itself from Russian uranium? Jonathan? Why is the US dependent on Russia of all places for uranium?
Well, it goes back to the end of the Cold War, and what happened was the US began a commercial relationship with Russia's national energy company Rosa Tolment. It was called Mega tons to megawatts, and basically we began importing Russian weapons gradeum down blended into a mixture that could be made into fuel assemblies for American nuclear power plants, and that commercial relationship has extended for the last thirty years.
In that period of time, there are also serious stresses to the nuclear industry, first and foremost being the Fukushima Daishi nuclear power plants following the earthquake in twenty eleven. Then also we had the fracking boom in the United States with massive supply of natural gas to American electricity generators, which also served to displace participants in the nuclear fuel cycle.
Will As Jonathan says, after the Cold War was over in the US and the Soviet Union were no longer competing in an arms race, it set up a whole different dynamic when it came to what uranium was actually worth.
Yeah, the whole US uranium industry is kind of almost gone. There's very little mining. The closest big mining is in Canada. There there's almost no enrichment except for the plant in New Mexico, which is actually a European company. There's not a whole lot of conversion. There's one facility, but it was shut down. They're about to reopen it here in
the US. In just the past several years, there have been about a dozen nuclear reactors have closed down for economic reasons because they just couldn't compete with the cheap natural gas electricity.
So the last US owned commercial enrichment plant was in Paducah, Kentucky, that used a radically different technology to an enrich uranium called gaseous diffusion. The gasseou diffusion is a way of enriching uranium that uses uranium hexafluorid gas pressed through different membranes transferred through different chambers to enrich the uranium two thirty five isotope into a concentration necessary to sustain a
fission chain reaction. The US is basically the last country to use gaseous diffusion for enriching uranium, the reason being it takes a lot more energy to enrich uranium through
gaseous diffusion. And why did the US do that Because they were drawing massive electricity reserves off of the Tennessee Valley Authority, and so this whole industry of the nuclear fuel cycle in the US was wrapped up with National defense policy is about stockpiling during the Cold War, and the commercial enrichment services for nuclear power plants came from the same plant, but there wasn't much of a cost benefit analysis when it came to looking for the most
efficient way to make uranium for fuel for reactors until after the Cold War ended and the commercial imperatives of competing in the market were thrust upon the US, and that's when they had to start developing what everybody else in the world is using for enriching uranium, which is the centrifuge. Centrifugees which are supersonic spinning cylinders similar to your washing machine. These actually use only about five percent
of the energy requirements that gauisious diffusion requires. Cut refugees became the technology of choice in the post Cold War era.
So will How much uranium does the US get from Russia?
Well, Russia is the world's biggest supplier of enriched uranium. About a quarter of the fuel and our nuclear power plants comes from Russia. The uranium supply chain is long and complicated. You start with raw uranium ore. It's milled down into a powder they call it yellow cake. The yellow cake is mixed with a fluorine gas and it's converted into uranium hexafluoride. That's the conversion step of the process.
The UF six gets sent to the enrichment site and that's where they concentrate it into the five percent necessary for fuel. And once you have the enriched uranium, and remember that's what we get mostly from Russia, then enriched uranium gets sent to a fabricator where they create nuclear fuel rods out of it.
And so this can pass through a lot of different countries and a lot of different companies on the way to being the final product.
It can, but it doesn't have to. Russia has all of the steps, China has all of the steps. It's only the US and Europe that's really broken it down into so many different places and people, and that kind of makes the whole process a lot more complicated.
Does any of the uranium that comes from Russia wind up in US and nuclear weapons?
No.
The dirty secret is that there's not a lack of nuclear fuel, It just that it's in the wrong place. Like the US has a lot of nuclear fuel, it just all in bombs. We could really screw up the nuclear fuel market if we decide to disarm and start to downblend. You can downblend the highly enriched uranium found in nuclear weapons and reconvert that into a lower enriched blend necessary for power plants.
It's like, you're unenriching it.
And will you visited the only enricher of uranium in the US. It's a company called Urinko. What was that like.
Well, it's in a tiny town called Unice, New Mexico. It's right on the eastern border of New Mexico. It's a mile from Texas. It was this spotless, pristine industrial site and out in the middle of the desert. There's armed guards, a lot of security getting in. It's been open for a long time, but it was spotless, just spotless that all the machines were gleaming. I was really impressed by how clean it is. So they take us into the room with the centrifuges and there's just hundreds
and hundreds of them all in a row. It just stretches on to the end of this vast room. I couldn't even see the end of it. They're spinning so fast. There's this really high pitched wine. We had to wear ear protection and it didn't sound that loud, but they told us that the frequency is exactly the right frequency that'll really damage your ears if you're not careful. So all the centrifuges, they look like long, thin tubes about
twenty something feet tall. I couldn't tell for sure. The tops of it were concealed by these curtains because that's where they have the piping that connects one to the next, to the next to the next. They call that a cascade, and that is apparently a really important trade secret on how they managed to get the gas to flow from one to the next. They wouldn't let anybody see what that looks like.
And once the process there is done, what happens with that uranium? Where does it go?
Then it gets sent to the fabricator where it is converted into fuel pellets. The pellets are inserted into fuel rods. Every reactor has its own specific design for what those fuel rods are supposed to look like, and those get sent to the power plants.
After the break. What is the US doing to limit its reliance on Russian uranium? So, Jonathan, we've been talking about how and why the US is so dependent on Russia for uranium, and now the US government seems to have up to the fact that they need to change this what are they doing.
They're working with their allies to address this as a common security problem and not just a national security problem. There's different levels of concern. It's not just the US, it's also Eastern European allies, which as former Soviet satellites, are operating about two dozen so called Vveer reactors which are almost exclusively fueled by Rosatum, Russia's national nuclear giant. So I mean that's a very acute problem affecting European
power supplies. Then you move over to the North American supply chains, the nuclear supply chains, and there we see it's not just the enrichment that Russia is supplying, it's also conversion, it's also raw uranium, and so you see weak links along the nuclear fuel supply chain at every stage. So when President Biden met his Canadian counterpart Justin Trudeau earlier this year, they to reboot North American nuclear fuel cycle.
Because of our shared prosperity is deeply connected to our shared security in the past. In the past years have proved the Canada the United States are not insulated from the challenge to impact the rest of the world.
They subsequently went to the G seven meeting in Sapporo, Japan. A couple of weeks later in April, they convinced the UK and France to come on board, and the joint statement from Sapporo they said that they want to push Vladimir Putin and RuSHA out of the nuclear fuel cycle entirely. Now, that will be pretty hard, because you know, even during the darkest times in the Cold War, the US, for example, was buying titanium from the Soviets for their nuclear deterrence.
I think the important point to recognize is that it won't be easy to knock Roseat to them out of the nuclear fuel business. They continue supplying Eastern European utilities with the fuel they need for their reactors, and that business has in fact grown in the twelve months after the war began and continues to this day.
But you know what, we should point out that they are starting to lose some of that business. Westinghouse, the US nuclear company, just this year, has picked up a couple contracts to supply fuel rods to those Eastern European reactors, and they're going to have to build a new design fuel rod to fit those reactors.
And will you also write in the story that the Biden administration is pushing Congress to spend a lot of money to try to jumpstart the US uranium process.
Again, there's a push in Congress right now to create a domestic stockpile of nuclear fuel. It'd be kind of like the Strategic Petroleum Reserve, which is exactly what it sounds like. It's a huge amount of oil that stored and they released that oil to adjust pricing when necessary. And so the US wants to have a stockpile of nuclear fuel just as a buffer against any kind of international tensions.
You said earlier that Russia has their entire uranium fuel cycle in their own country. They do it from beginning to end, and the US doesn't. What will it actually take for the US to get that same capability.
It would take long term commitments from customers. Especially remember talking to the head of Converdine, that's the company that does conversion, the process of turning the yellow cake into UF six. He said that they'd be happy to do it. It's not that complicated, but it's not that cheap. He'd need long term commitments, like long term means about ten years from about ten customers to justify really going into the expansion in a way that would be big enough to displace the Russians.
To have that many customers will would that mean that the US would have to really ramp up its nuclear energy.
It would mean that the utilities that operate nuclear power plants now would need to start signing contracts to buy all of their fuel from US suppliers instead of international suppliers. And in fact, the people at Urenko in New Mexico told me that since Russia invaded Ukraine, their orders have gone up about twenty five percent because their American utility customers have come to them and said, we'd like to start buying more from the United States than from Russia.
And there's another dimension as well, which is more future oriented, and it involves the next generation of American reactors. Foreseeing, these are the so called small modular reactors, which require a different kind of nuclear fuel, a higher concentration. It's called high assay low enriched uranium. Rather than five percent uranium two thirty five bus toopes, you're looking closer to
nineteen nineteen point seventy five percent. And the reason is that if you're deploying more nuclear reactors that are smaller, you want to have to refuel them less often, and so the higher grade, the higher concentration nuclear fuel, allows them to burn longer without being refueled. And right now the US is one hundred percent dependent on Russia for
high essay low enriched uranium. And this is a key bottleneck that has to be solved right now because if we want to be deploying SMR reactors at the end of this decade, then that part of the supply chain has to be solved now. Because these are all long engineering processes. Factories have to be built, lines have to be built, environmental regulations, safety regulations. It takes a long process. So if we want to get it done by twenty thirty, it has to start now.
And you write that some plants that had closed down are now being reopened.
Well, the converdyine conversion facility in Illinois that was shut down if several years ago for economic reasons because the market was so oversupplied. They basically said, we can't make money selling this stuff. We're just going to sell out of inventory until further notice. And now they're starting to reopen that because the price has gone up about tenfold.
When we come back, what would it take for the West to cut Russia out of the international nuclear fuel cycle.
Nazier's new military rulers are in a standoff with the West and some of their neighbors, refusing to hand back power to the man they ousd it. Nizer's coup leaders have closed the country's airspace until further notice.
The regional bloc Ekowas has said it wants a diplomatic and peaceful resolution to the takeover, but that no options are off the table.
Jonathan, you write that the recent coup in Niger, which is one of the top uranium producers in the world, shows the geopolitical stakes of this business. What should other countries take away from what's happening there?
So Nizier's the sixth biggest producer of uranium or in the world. It's a key supplier for Friends and other European utilities. The lesson of is what the companies called depth and defense. They need to have a redundant supply chain. And so you all see or no investing in Canadian minds. You see additional Canadian minds responding to tightness in the ore market by opening up mothballed minds. Just another example.
Everybody is talking about nize right now. But you see Rosatom displacing US and European fuel makers and entering into a new agreement with South Africa to reboot that country's nuclear fuel cycle. So the thing to pay attention to isn't just income statement the balance sheet, it's also the geopolitical states that are shifting as Western companies try to displace Russia and vice versa.
I think the lesson from Niger is the same lesson from Russia, which is you don't want to be dependent on countries that may not be stable as your supplier. And also we saw in South Africa, uranium isn't just a product you buy and sell to make a profit. It's a key part of international diplomacy.
That's a really interesting point, will and you write Jonathan that the US government is grappling with this very question.
The US Department of Energy has what is called the one two to three Agreement, which is nuclear agreements that it enters into with different states which will trade US nuclear technology as long as countries do not enter the nuclear fuel cycle. This is what we've seen in the United Arab Emirates. This is the crux of negotiations with Saudi Arabia. This is why the US takes such a grim view of Iran entering into the nuclear fuel cycle.
So this is a big deal because of its dual use potential and just in terms of how you can build this resiliency in your supply chain. The CEO of Urenco told me something interesting. He was talking about the fact that some of his oldest centrifuges operating in Europe have been running now for fifty years. Imagine your washing machine on the spin cycle running for the last fifty
years without ever stopping. In those centrifugias, They've been running through three Mile Island, they've been running through Chernobyl, they've been running through the Fukushima meltdowns. And he said, you know, the only thing that they don't like is to stop. He was talking about in terms of like a very physical material sense, and that you know, when you try to stop something spinning at supersonic speeds, sometimes mistakes happen and they spin out of control, so you want to
keep them running. But more broadly, it's an anecdote about the commitment that economies need to make nuclear power profitable, and it requires a long term vision, probably sometimes with state support. That is nurturing a strategic industry, you know, touches far more than simple company profit and loss statements.
You've talked about how it'll take many years and a lot of money for the US to be able to be independent of Russia and other places for uranium. What happens if the situation in Ukraine escalates and the US and Russia no longer do any business. What would that mean for the US industry?
Oh, you mean the worst case scenario, like if Russia decides to completely cut US off or we decide to completely boycott them, that would be bad. Most utilities tend to keep about eighteen months of inventory on hand. They have to refuel the reactors every eighteen months, so basically it's like they've got one spare set of fuel rods laid around to put in when they need it, and eighteen months after that, if they don't have another set of fuel rods, then they have to turn the reactor off.
No gas, out of gas. Personally, I don't think that's going to happen. I think that the chances of that are near zero. But yeah, if there was no uranium supply, if there was no nuclear fuel rod supply, that's what happens. Nuclear power plants aren't magic. You've got to fill the tank every so often.
And why do you think it's a near zero chance? Given how holt All the situation is right now.
I think the international community would come together somehow. They could figure out who needs some today and who could wait six months. I think there would be some ability to coordinate if necessary.
It's not just a American problem. This is a transatlantic problem. And right now there is an installed industrial base that is underutilized in Europe and or No For example, the French National Champion is also sitting on a potential two billion expansion of its uranium enrichment capacity. But just like conver Dyninge the conversion company here in the US, they're also waiting signals from clients that they're ready to enter into long term contracts. So there's a lot of money
sitting on the sideline. There's a lot of ways to expand capacity, to create redundancies and supply chains, but it's a slow train that's just starting to get moving.
Will looking ahead is someone who covers this industry. Where do you think it goes from here? Do you think the US eventually does wean itself from Russian uranium.
Maybe not one hundred percent, but I think there's a really strong desire to build up enough domestic capacity to not be so dependent upon them.
The US was the biggest enricher of uranium during the nineteen seventies that supplied all Western capitalist economies. It was the biggest player out there. That's when Uranka was just starting, right. So this is like around nineteen seventy two, seventy three, seventy four. You fast forward a half a century and the US looks like it's a rebooting Manhattan Project version
two point zero, this time for exclusively peaceful purposes. It's a massive undertaking, but the US has proven its capable and up to the task before it can do so again. But in terms of accomplishing some of the loftier goals of the G seven statement of pushing Russia out of
the international nuclear fuel cycle entirely, that's probably less likely. Russia, even if it loses the Western markets, is busy building new reactors in Bangladesh, Egypt, Turkey, Iran, a bunch of different countries, and they're filling their pipeline up with new customers for decades ahead.
Jonathan Will, thanks so much for coming on the show. Thanks thanks for listening to us here at the Big Take. It's a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen. And we'd love to hear from you. Email us questions or comments to Big Take at Bloomberg dot net. The supervising producer of the Big Take is Vicky Vergalina U. Your producer is Catherine Fink. Federica Romaniello
is our producer. Our associate producer is Zenobsidiki. Hilde Garcia is our engineer. Our original music was composed by Leo Sidrin. I'm west Kasova. We'll be back tomorrow with another Big Take.