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PRINT EDITION
U.S. targets uranium imports, raising fears of tariff fallout
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Cameco, Canada's largest producer, has the most at stake in national security probe that could lead to a levy on Canadian exports or a quota for American producers
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By SALMAAN FAROOQUI
  
  

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Thursday, July 19, 2018 – Page B1

The United States will investigate imports of uranium over nationalsecurity concerns, raising the prospect of damaging tariffs for Canadian producers of the metal.

U.S. Commerce Secretary Wilbur Ross said on Wednesday that the investigation was prompted by a petition from two U.S. uranium mining companies.

He pointed to a drop in U.S. production of uranium, which is used to power 99 commercial reactors, the U.S. Navy's nuclear submarines and aircraft carriers, and in the country's nuclear weapons arsenal.

"Our production of uranium necessary for military and electric power has dropped from 49 percent of our consumption to five percent," Mr. Ross said in a statement. "The Department of Commerce's Bureau of Industry and Security will conduct a thorough, fair, and transparent review to determine whether uranium imports threaten to impair national security."

The investigation is similar to the one undertaken by the United States before it imposed tariffs on imports of steel and aluminum from several countries including Canada.

Canadian uranium producers could face either a tariff on uranium exports or a quota for U.S. producers that would secure more market share for them.

Cameco Corp., the Saskatchewan-based uranium company that accounts for 18 per cent of the world's uranium production and sells 30 per cent of its uranium to the United States, said it's too early to know the effect of the investigation.

"We will need to see what the investigation finds, if any trade action is recommended and what specific remedies might be pursued before the potential impact, positive or negative, can be determined," Cameco chief executive Tim Gitzel said.

"If the issue in question is the overreliance of the United States on uranium supplied by statecontrolled enterprises from countries not aligned with American policy interests, this clearly does not apply to Canada or Cameco," he said.

RBC Dominion Securities analyst Andrew Wong said analysts originally believed that Canada would be exempt from any tariffs when the petition for an investigation was first launched in January. But analysts are no longer sure of that after Canada was included in a 25-per-cent tariff on steel and a 10-per-cent tariff on aluminum this summer the United States also imposed on national-security grounds.

Canada currently supplies 25 per cent of the United States' uranium, according to the U.S. Energy Information Administration.

Cameco, Canada's largest uranium company, has the most to win or lose in the situation.

"Overall, we currently view the investigation as neutral to Cameco, assuming ... any import tariffs that are implemented would likely be passed on to the US utilities in the near-term as the US imports [more than] 90% of material," Mr. Wong said in a note to investors, adding that the United States was not likely able to increase domestic production in the short term to replace imports.

Shares of Cameco dropped about 1 per cent in Wednesday trading.

"If Canadian material is exempt or considered as 'domestic' material, that could be positive for Cameco," Mr. Wong wrote.

The note also said any action would likely be targeted at Kazakhstan and Russia, which together account for just less than 40 per cent of U.S. uranium imports.

A spokesman for Canada's Foreign Affairs Minister, Chrystia Freeland, said shutting out Canadian imports would harm U.S. nuclear reactors that rely on Canadian suppliers.

"Canadian uranium is not a threat to the national security of the United States. We are a stable and reliable supplier of uranium for American civilian nuclear power reactors," Adam Austen said. "Canada has been working with the U.S. to address the issue of global excess capacity in other sectors and will continue to advocate for a North American approach to this issue."

Friday, July 20, 2018
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