Paducah Sun

PUMMELED Valid reasons exist for uranium tariffs


Wednesday, 8 August, 2018

It is fascinating and a bit worrisome to observe how insignificant a player the United States has become in the nuclear industry. The U.S. after all led the world into the Atomic Age.

Paducah is painfully aware of the trend. The 1950s-era Paducah Gaseous Diffusion Plant ended production in May 2013. It was in its day the economic engine of the community, employing more than 2,000 people -- many of them engineers, chemists and technical specialists -- in some of the best-paying jobs in Kentucky.

The PGDP enriched uranium for conversion to reactor fuel during much of its existence. But the gaseous diffusion technology was obsoleted by more-modern centrifuges. Today foreign companies dominate the field.

Difficult as life has been in the domestic enrichment business, that pales compared to what has happened to domestic uranium mining. A lengthy article last week on the website of financial network CNBC reports that last year American mines produced just 7 percent of the uranium purchased by domestic enrichment plants. Total U.S. ore production came to 2.4 million pounds -- about 5 percent of what was mined in the U.S. in 1980.

What happened?

The core problem is that American uranium reserves are less rich and harder to mine than deposits in Australia and Canada. Those nations have a lower per-unit production cost that allows them to undercut American producers on price. They along with a handful of Western allies now have half of the U.S. market.

Adding to the problem are imports from the former Soviet enclaves of Russia, Kazakhstan and Uzbekistan. U.S. firms say they cannot compete on price with uranium imported from those sources because those nations' governments subsidize the cost of production.

Domestic uranium mining boomed in the U.S. from the beginning of the Atomic Age until the end of the Cold War because it was protected by trade barriers on national security grounds. The government also subsidized production for a time, offering 10-year price guarantees. But guarantees disappeared in the 1960s and trade protections were dismantled in the 1980s, triggering domestic miners' precipitous slide.

The dilemma for the U.S. in security terms has more to do with defense than domestic energy. Nuclear plants generate about 20 percent of the nation's electricity. But the bigger worry is having a domestic source of nuclear fuel for aircraft carriers, submarines and weapons maintenance.

The military believes it has enough supply to last until 2060. But what becomes of the domestic uranium industry in the intervening four decades?

Two U.S. producers have persuaded the Commerce Department to open an investigation to determine whether these concerns justify tariffs on imported uranium. This is the same national security tariff mechanism being used by the Trump administration to threaten levies on Japanese cars. The latter is absurd. But in the case of uranium imports, there is a valid argument to be made.

We believe in today's world maintaining a beginning-to-end domestic nuclear industry is just common sense. If that requires imposing tariffs on some uranium imports, we say so be it.