Uranium Exclusive: Interview with Former Energy Secretary Spencer Abraham
Publisher's Note: I had the honor once again of getting access to former U.S. Energy Secretary Spencer Abraham. This comes in the wake of the Nuclear Fuel Working Group's report to President Trump that included, among many other things, direct purchases from U.S. uranium producers to create a National Uranium Reserve. Currently, the U.S. produces zero uranium. So today, right now, is the ground floor.
Spencer is also the chairman of Uranium Energy Corp. (NYSE: UEC), one of only a few companies capable of producing American uranium.
This is all extremely timely considering that the coronavirus has taken some 50% of global uranium production offline. As oil prices have collapsed, uranium prices are surging. More info on all this here.
Enjoy the interview.
Nick Hodge: We’ve witnessed a historic event for the U.S. Nuclear Energy Industry with the recent release of a Department of Energy report and recommendation to revitalize our uranium mining and nuclear power infrastructure in the U.S., including a $1.5 billion proposed budget to establish a National Uranium Reserve, similar to the strategic petroleum reserve.
As a former U.S. Energy Secretary, how far do you think the actions outlined in the recent DOE report go toward achieving the President’s vision of a vibrant and self- sustaining U.S. nuclear energy industry for both defense and commercial needs?
Spencer Abraham: The decisions and the proposed $1.5 billion National Uranium Reserve are indeed historic and go a long way toward addressing America’s vulnerability to foreign imports of critical parts of the nuclear fuel cycle.
Once they are translated into action, we will definitely see the U.S. uranium production sector revitalized.
The Nuclear Fuel Working Group report outlines a sound, strategic framework that will re-establish the infrastructure America needs to support our long-term nuclear defense needs, critical for our national security.
The commercial sector should also benefit from actions put into place, that will in time, reduce America’s overdependence on foreign imports from Russia and other former Soviet Union (FSU) countries that distort free market pricing.
America’s current lack of a viable nuclear fuel supply chain exposes a vulnerability to other countries’ actions that are not always aligned with U.S. interests. This is an unacceptable position for our long-term security. The predatory market threats from State-Owned-Enterprises (SOEs) must be stopped or the U.S. risks serious exposure to trade actions that can cause serious disruptions to American prosperity and our way of life.
Nick Hodge: How long would it take, starting from zero, for the U.S. to become essentially self-sufficient in uranium production like it's done with oil?
Spencer Abraham: The Uranium Producers of America polled its members as to the incentive cost of production, capital requirements, human resources, and the status of permitted and licensed projects that can be developed or restarted. The poll revealed, with sufficient incentive pricing, the domestic uranium industry could ramp back up to 20 million pounds of annual U3O8 production within 10 years.
While this does not reach the 47 million pounds of average annual U.S. commercial reactor requirements, there are no technical limits to produce higher quantities. The United States Geological Survey estimates that over 2 billion pounds of uranium resources are either known, or likely to be discovered, in the United States. It should be recognized that not all U.S. mines are equal with respect to production costs, and some, like Uranium Energy Corp's fully permitted in-situ recovery (ISR) mines, will have a distinct advantage over higher-cost conventional mines.
Nick Hodge: The report makes frequent mention of small modular reactors. How do they fit, in your view, into America's clean energy future?
Spencer Abraham: Small Modular Reactors (SMRs) are going to play an important role in America’s future for the highly reliable, carbon-free energy that nuclear power provides.
The safe and effective deployment of SMRs in our fleet of aircraft carriers and submarines since the 1950s has proven the U.S. leadership and proficiency in this technology. We have seen recent bipartisan legislation pass the U.S. Congress, providing support for these innovative and advanced reactors.
SMRs are typically small 50-100 MWe reactors that can be built in a factory, shipped, and installed on-site in a scalable fashion.
In addition to the clean energy and carbon-free benefits, shorter construction times, lower upfront capital, and faster return on investment will make them an attractive option for energy planners.
The U.S. military is also committed to the deployment of micro-reactors at foreign military bases to avoid dependence on unreliable local grids and reduce the amount of vulnerable fuel oil convoys in active conflict zones.
Uranium Energy Corp. (UEC) believes the use of this technology will continue to grow and will be a robust component of expanding uranium demand.
Nick Hodge: How important is it for this technology and the fuel to be American-made, in the context of our current reliance on foreign nations for fuel and the sensitivities around security for the entire nuclear supply chain?
Spencer Abraham: The COVID-19 crisis has highlighted the importance of supply chain security with respect to essential components. U.S. national security is threatened with over reliance on foreign supply sources for many critical materials necessary for our economy and our defense systems.
Uranium is an essential critical mineral and is needed to maintain our electricity grid since 20% of our power supply comes from America’s 95 operating reactors. We have an additional 108 reactors in our fleet of 84 aircraft carriers and submarines that must, by international treaty, run on 100% domestic uranium fuel.
Our overdependence on FSU countries’ nuclear fuel supply has hampered U.S. policy objectives. In this regard, our nuclear fuel supply from Russia hamstrings the Administration’s ability to impose sanctions on Russia for their support of Iran’s nuclear enrichment program that could easily be weaponized against the U.S. or our allies.
Also, underscoring the risk to our supply chain, more than 50% of global uranium production is currently shut down due to the coronavirus pandemic and there is no production currently in North America. We simply cannot remain dependent on FSU countries and others to be our source of supply for something as critical as our nuclear fuel supplies.
Nick Hodge: As the Chairman of Uranium Energy Corp., what does this mean for the future of uranium mining in America?