A fantastic analysis by Clay Montgomery on Twitter
16 Facts the DoE does not want you to know about the US Nuclear Industry1. The DoE was slow to recognize the looming shortage of conversion and enrichment capacity to produce LEU (Low Enriched Uranium) to fuel the US nuclear fleet. Secretary Granholm was ignoring the nuclear industry, but was forced to push back against Congress' desire to ban Russian fuel imports, to avoid the disaster of idling 20% of the US electric grid generation.2. A serious shortage of LEU for US nuclear plants still looms large, within 2 years. The DoE advised utilities to accelerate their Rosatom deliveries as much as possible through 2023, probably in violation of the new RSA import limits strengthened under Trump. So, there is more LEU inventory on-shore now, but very little construction of domestic fuel infrastructure has begun, yet.3. The domestic US nuclear fuel industry was destroyed by decades of cheap LEU imports from Russia. Converting Russia's weapons-grade uranium into fuel was good, except that nuclear utilities were allowed to game the RSA import limits for way too long. The irony is that the RSA import limits are finally enforcible now, but they are still being ignored because of fears of a shortage.4. The DoE negotiated a secret waiver with Canada to exempt the only freight company that transports Russian LEU to the US, when Canada enacted new economic sanctions on Russia in response to the Ukraine war. Biden met with Canadian Foreign Affairs in March, 2023, to extend that waiver. The terms of this deal have never been made public. That is probably because it was either embarrassingly expensive, or it would reveal how serious the looming LEU shortage is, or both.5. The recently announced Sapporo 5 alliance is not likely to help the US at all, in a crisis. Most of the member countries have LEU supply problems of their own, so they are not likely to share LEU with the US.6. The DoE already built the new American Centrifuge cascade once before, in Ohio, in 2012. Their exclusive contractor, USEC, built and tested 120 large centrifuges and was planning to expand it to 11,500 at an estimated cost of $3.5 billion. 11,500 centrifuges was considered a full-scale commercial cascade at that time. But, by 2016, USEC disassembled the cascade and destroyed the components. The official explanation was vague. They had used components that were "foreign-sourced", which would not even matter for commercial production. The real problem was probably paying the estimated $3.5 billion from the military budget and/or undisclosed technical problems. While waiting on Congress to decide how to fund it, USEC went bankrupt.7. The DoE must keep Centrus Energy alive since they have all the expertise to build and run the new/rebuilt 16 centrifuge cascade. When USEC emerged from bankruptcy to become Centrus Energy, their monopoly on brokering LEU imports was weakened as the larger utilities negotiated supply contracts with Rosatom, directly. So, more of their revenue now comes from the HALEU Availability Program, which was passed by Congress before they decided to punish Russia with import bans.8. The Centrus cascade was intended to be a demonstration of boosting LEU to make HALEU (5% to 20% High Assay LEU). It's too small to produce LEU commercially and the cost to scale it up to the required 11,500 centrifuges is likely to top $10 billion, today. The military could pay that, since it was designed for them anyway. The fact that they have not stepped up suggests they are looking at newer technology now, like laser enrichment.9. Despite the name of the HALEU Availability Program, it has been commandeered to fund the construction of LEU capacity for existing nuclear plants, as its top priority. The HALEU needs of SMR vendors have become secondary in this program that was intended to provide them the advanced fuel that they need.10. The DoE desperately needs laser enrichment commercialized, now. They will award contracts to multiple uranium enrichment providers within a few months. The DoE avoids mentioning laser enrichment since USEC failed to develop it in 2010. But, they did promote it when it was invented at Los Alamos Labs, back in 1976. They still need laser enrichment to recycle acres of tanks of depleted UF6, which is a problem they own. Anti-nuclear activists and cheap Russian imports kept laser enrichment on the shelf for 48 years. There could be political ramifications of awarding a large contract to the foreign-owned start-up (GLE) that persevered and finally commercialized it, but they have little choice, now.11. The DoE doesn't have enough LEU to run the Centrus cascade for long. Because it was built for the military, they can't use LEU from Rosatom, and Urenco and Orano are prohibited from supplying any military use, by European law. The LEU they are using now has been in storage since the obsolete gaseous diffusion plants were decommissioned in 2008 and the quantity must be very limited.12. The DoE (NNSA) has a stockpile of weapons-grade uranium from retired warheads, but only a small portion of that material is allocated to make HALEU and what remains belongs to the military. Since this material is essential to the US Navy, they can't share more of it with the commercial sector.13. It's impossible to license any new nuclear plants in the US now. The NRC spent 3 years expanding the licensing rules from 50 to 1100 pages and Obama and Biden stacked the NRC with anti-nuke commissioners who act as gatekeepers to prevent any new projects from getting through the regulatory process. So, although Biden has signed some bills that appear pro-nuclear, they really only prevent the premature closing of existing plants and promise to rebuild domestic LEU infrastructure to replace Russian fuel imports and to support exports to other countries.14. Questions about fuel supply and the anti-nuke leadership of the NRC are the actual reasons US nuclear SMR start-ups are languishing. The US has the best new nuclear technologies, including NuScale, X-Energy, TerraPower and Oklo. But, NuScale just cut its workforce by 40%, while others are postponing IPO plans. Oklo's design certification was rejected by the NRC after they spent more than 2 million labor hours and $500 million on the application. The reason cited is difficult to even describe. It was either a "bureaucratic change" or a "misunderstood procedural technicality" that appeared to revoke their unfinalized contract with the USAF. If the military can't get an SMR built on an airbase in Alaska, how are commercial utilities ever going to do it?15. The anti-nuclear NRC has effectively throttled the nascent SMR industry, globally, by preventing their construction in the US. It's safer for most countries to buy new nuclear plants from Russia or China, which already build most new nuclear plants. They have proven track records, lower costs, reliable schedules and fuel supply. Untested SMR designs from Western companies that have never been built before and have serious questions about fuel supply are risks that most utilities simply can't afford.16. Many countries desperately need new nuclear, now. But, they are being forced to make really tough choices between doing business with Russia or China (for the next 80 years), rely on imported LNG or keep building more coal-fired plants. Most are choosing the latter two. So, indirectly, Obama and Biden's NRC is probably the largest single contributor to future CO2 production in the world.
SLX Price at posting:
$4.74 Sentiment: Buy Disclosure: Held
(20min delay)
