To most U.S. citizens, Russian President Vladimir Putin is a movie-quality villain. He’s a former KGB officer. He meddles in presidential elections. People that speak out against him tend to disappear.
That’s why most Americans would be astonished and angry to learn how U.S political leaders have put America in a vulnerable situation… and dependent on Russian uranium to keep its lights on.
Remember, as I noted in this essay, the U.S. generates 20% of its electricity from nuclear power. It consumes just over 45 million pounds of uranium each year. Yet, it gets just 7% of its supply from domestic U.S. uranium mines.
The U.S. gets a little uranium from its rapidly-declining stockpile of decommissioned nuclear warheads, a little from Canada, and a little from Australia.
But the U.S. gets the bulk of its uranium (more than 50%) from unfriendly, Russia-influenced sources.
This is a dangerous positon for the United States. Over the past decade, Russia and the United States have gotten into a variety of low-level disagreements. They have one currently in Syria.
If a disagreement were to escalate, Vladimir Putin could easily “play the uranium card” and cut off Russian uranium supplies to the United States. Putin could also exert influence over Kazakhstan and block uranium shipments to the U.S. This would cause an American power crisis.
The U.S. cannot rely on big producers like Canada and Australia for uranium imports. Neither country can supply enough uranium to fulfil American demand. More importantly, both Canada and Australia have signed long term agreements with India and China. This means there is even less uranium available for U.S. imports.
Raw, physical uranium is of no use to nuclear power producers. It must be refined or “enriched” to a specific grade to be of use. This refinement process is extremely expensive, extremely difficult, and extremely time consuming. In the uranium market, enrichment capacity is even more important than raw, physical uranium supply.
Russia controls over 50% of the world’s uranium enrichment capacity. The enrichment facilities in the U.S. and in countries friendly to the U.S. are running virtually flat out.
A trillion pounds of uranium could magically appear in the U.S., and couldn’t be used to produce power because the U.S. doesn’t possess or have access to the needed enrichment capacity. Building this capacity would take more than 10 years.
The U.S. cannot simply “flip a switch” and get its electricity from other power sources like dirty coal, solar, wind, or natural gas. It does not have the infrastructure to do so. Building it would take a decade.
The U.S. has painted itself into a corner. It must have nuclear energy or the lights will go out.
This mishandling of America’s energy supply has given Russian President Vladimir Putin a ridiculous amount of leverage over America. Just imagine if the U.S. depended on Russia for more than 50% of its crude oil needs. People would be protesting in Washington D.C.
The U.S. has just one possible path forward in the short term if it wants to keep the lights on for the equivalent of two Californias. It will have to pay tens of billions of dollars to secure enriched uranium from Russian-controlled sources… at prices much higher than the current spot price or long-term price.
As for the long-term, the U.S. must encourage a massive expansion in domestic mine supply and enrichment capacity. This includes “fast tracking” the permitting process for new mines and enrichment facilities.
Over the past ten years, the U.S. made amazing advancements in domestic oil production by encouraging shale oil projects. It needs to do the same with uranium.
It’s literally in the interest of U.S. national security to take these steps. (If you happen to know anyone with any say in the U.S. government, please forward them this essay.)
Again, American citizens would be protesting in the streets if they were heavily dependent on Russian-controlled oil to power their cars. They should be equally concerned about being so dependent on Russian-controlled uranium for much of their electricity needs.
In summary…
Climate change is the number one worry for many people around the world. However, those people also want reliable, reasonably priced electricity to power their modern way of life. Nuclear energy provides stupendous amounts of secure, always on, always there, base load power. And as amazing stories like what happened at Onagawa show us, nuclear power can be very safe.
I expect more and more people to realize what is going on… which will be very rewarding for contrarians who take positions right now in deeply depressed uranium stocks. These stocks have been obliterated over the past five years. The industry is in crisis. But the worse a situation is, the greater the upside when things turn around. That’s why I’m making uranium one of my biggest bets of 2017.
Regards,
Marin Katusa
P.S. Back in December, I began writing about how uranium is setting up to be a big opportunity. Since then, uranium stock prices have jumped. But just a few days ago, a major uranium company announced news that caused a big correction in the sector. My team and I are tracking every company in the uranium space. We’re preparing a special report for paid subscribers that will share our best ideas for making huge gains in the sector. You can learn how to come on board as a Katusa Resource Opportunities subscriber here.
