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Rebuilding the U.S. Uranium Supply Infrastructure
In 2007, uranium of U.S. origin accounted for 8 percent of the material purchased by the owners and operators of U.S. nuclear power plants. The remainder (47 million pounds) came from foreign sources.⁷

The U.S. uranium production industry is working to increase domestic supplies. For example, 2007 expenditures for uranium exploration in the United States were up 116 percent from 2006. Revitalization of the U.S. uranium production industry also brightens the job outlook. Although the industry remains comparatively small, employment rose 63 percent above the 2006 level.

One of the challenges facing the fuel supply sector—and their customers—is the long lead time to develop new mines and other fuel-cycle facilities. For example, a typical mine requires about 10 years of development before it begins producing commercially. Other challenges include localized opposition to mining, difficulties in hiring skilled employees, technical issues and market risk.

Other Sources of Uranium
In addition to traditional uranium deposits, the U.S. Department of Energy has a stockpile of uranium that it plans to release to the market over the next decade. This is just one of the “secondary sources” of uranium. Others include excess commercial inventories, the expected delivery of low-enriched uranium from Russian warheads, re-enrichment of depleted uranium tails (byproducts from enrichment operations), and possible reprocessing of used nuclear fuel.

Uranium also is available from non-conventional sources, such as the recovery of uranium byproduct from other metal mining (e.g., from copper mining in Utah), phosphate fertilizer mining (e.g., Florida, Morocco and Brazil) or gold mining (e.g., South Africa, where millions of tons of gold mining tailings are being processed for their uranium contents). As an example of the potential value of these sources, worldwide phosphate deposits contain about 22 million tons of uranium.

U.S. Amends Import Restrictions On Russian Uranium
In 2008, the United States and the Russian Federation amended the 1992 U.S./Russian Suspension Agreement that limited imports of Russian low-enriched uranium (LEU).

The amended suspension agreement will give the Russian Federation limited access to the U.S. market starting in 2011 and extending through 2020. The agreement limits Russian exports to 16,559 kilograms (442,000 pounds U₃0₈) of LEU in 2011 and gradually expands the limit to 514,754 kilograms (13.7 million pounds U₃0₈) in 2020. This is material beyond that available under the U.S./Russian High-Enriched Uranium Agreement. The U.S. Commerce Department will amend the limits as indicated based on changing demand projections.

Although the amended agreement retains limits on Russian LEU imports, it will increase the amount of uranium available to U.S. electric companies for nuclear plant fuel.

Fuel Is a Small Part of Nuclear Plant Production Cost
Even with a significant increase in uranium price, nuclear energy has the lowest production costs of any large-scale source of electricity, with the exception of hydroelectric power plants. In 2007, the production cost of nuclear-generated electricity was 1.76 cents per kilowatt-hour (kwh), compared with 2.47 cents per kwh for coal, 6.78 cents per kwh for natural gas and 10.26 cents for oil.

Nuclear fuel accounts for 27 percent of the overall production cost (fuel plus operations and maintenance expenses) of nuclear energy, versus 77 percent for coal and 92 percent for natural gas.⁸

The cost of uranium (without processing) constitutes 35 percent of nuclear fuel. Nuclear fuel costs are not directly related to the spot price for uranium.⁹ The large increases in uranium prices over the past three years only increase the overall production cost of electricity generated at nuclear power plants by a few tenths of a cent per kilowatt-hour. Even with further increases in the price of uranium, the cost of nuclear-generated electricity will remain low and competitive with other electricity sources.

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⁸ Ventyx Velocity Suite; Energy Resources International Inc.
⁹ TradeTech, Utility Data Institute, FERC/Electric Utility Cost Group, Ventyx Velocity Suite.