US awards $2.7B in uranium enrichment orders

The United States Department of Energy awarded contracts worth $2.7 billion (C$3.7 billion) to three companies in a bid to boost domestic uranium enrichment capacity over the next decade and cut the country’s reliance on foreign producers such as Russia.

American Centrifuge Operating and General Matter will each receive $900 million to develop domestic high-assay low-enriched uranium enrichment (HALEU) capacity, while a unit of France’s Orano will receive the same amount to expand U.S. production of low-enriched uranium, the energy department said Monday in a statement. HALEU is a more advanced type of fuel that will be needed for next-generation nuclear reactors.

“While not a total surprise, this does highlight the U.S. government’s increased focus on critical mineral self-sufficiency,” BMO Capital Markets commodities analysts Helen Amos and George Heppel said Tuesday in a note.

Specific milestones

The awards – which result from a competitive solicitation issued in December – will require the companies to meet specific milestones, the energy department said without providing details. Another $28 million was allocated to Global Laser Enrichment to support next-generation enrichment technologies, the department said.

Uranium enrichment is essential for producing fuel that powers the 94 U.S. commercial nuclear reactors that generate a key portion of the nation’s electricity.

U.S.-based nuclear plants depend on imports for most of their uranium needs, according to the U.S. Energy Information Administration (EIA). Of the uranium oxide the U.S. purchases, 57% comes from Kazakhstan, Uzbekistan, Australia and Russia, and 27% comes from Canada, EIA data shows.

Round the clock

Appetite for nuclear energy in the U.S. is rising as tech companies such as Amazon, Microsoft and Facebook owner Meta ramp up efforts to build data centres amid surging demand for cloud computing and artificial intelligence-related computing power. Nuclear energy is especially prized because it’s available around the clock and doesn’t emit planet-warming air pollution. 

Global demand for uranium is projected to triple by 2040. It already outstrips production by 50 million to 60 million lb. a year, according to World Nuclear Association data.

“Today’s awards show that this administration is committed to restoring a secure domestic nuclear fuel supply chain capable of producing the nuclear fuels needed to power the reactors of today and the advanced reactors of tomorrow,” Secretary of Energy Chris Wright said.