XYLENE POWER LTD.

NATURAL AND ENRICHED URANIUM

By Charles Rhodes, P.Eng., Ph.D.

MINED NATURAL URANIUM
Natural uranium, as mined, consists of about 0.7% of the isotope U-235, 99.3% of the isotope U-238 .
 

REACTOR FUEL
CANDU reactors, which use heavy water as a moderator and coolant, can be directly fueled with natural uranium.

Light water reactors, such as are used in the USA, require low enriched uranium. The process of fuel low enrichment typiclly requires 10.0 Kg of natural uranium to produce 1.0 kg of low enriched uranium containing about 4.3 % U-235 and 9.0 kg of depleted uranium containing about 0.3% U-235 and 99.7% U-238.

As a result of about 70 years of nuclear power reactor operation requiring fuel enrichment, there is a considerable US stock of depleted uranium. The low enriched uranium, when used as a fuel for light water cooled/moderated reactors, can be used until its U-235 concentration drops to about 1.0 % at which point the reactor ceases to produce power due to insufficient reactivity. The causes of insufficient reactivity include both the light water coolant/moderator and accumulation of neutron absorbing fission products.

In summary the US lightwater cooled/moderated reactor fleet is 100% dependent on:
a) A sufficient source of natural uranium;
b) Sufficient industrial capacity to convert natural uranium into enriched uranium;
c) Sufficient industrial capacity to fabricate power reactor fuel bundles from enriched uranium.
 

CAPACITIES:
Each of processes a, b and c above is both capital and time intensive, requiring both billions of dollars and multiple years to implement. Consequently, the production capacities of both natural uranium and enriched uranium are nearly fixed. Those capacities are set by the extent to which reactor owners have been willing to enter into long term contracts. Parties in both the uranium mining and uranium enrichment businesses require long term contracts to justify the large capital and specialized staff commitments that must be made to increase production capacity.

Outside of the USA most nuclear power reactors are directly or indirectly owned by government entities. These entities are generally credit worthy and are able to enter into 10 to 20 year contracts. Those contracts provide the capacity guarantees needed by parties in the uranium mining and enrichment businesses to fund capacity maintenance and expansion.
 

URANIUM MARKET:
Historically the uranium mmarket has been disrupted by several major events including:
a) The Chernobyl nuclear accident;
b) Conversion of surplus Russian highly enriched military uranium into reactor fuel;
c) US electricity price deregulation;
d) The accident at Fukashima Diacchi
e) Rapid expansion of the world wide fleet of nuclear power reactors.
f) The invasion of Ukraine by Russia.
g) US trade policy.

The Chernobyl nuclear accident led to irrational public fear of nuclear power, especially in western Europe. That fear impacted government willingness to fund new nuclear power reactors, especially in democracies.

The conversion of surplus Russian highly enriched uranium into low enriched uranium caused a multi-year transient surplus in the supply of low enriched uranium. During the period of that multi-year transient the price of spot market low enriched uranium dropped to the extent that it forced private owners of uranium enrichment facilities out of business and severely impacted the demand for natural uranium that would otherwise be required as a feedstock for making low enriched uranium.

The USA deregulated its electricity market without any application of common sense. There was insufficient awareness of the public need for reliable carbon free base load power. Nuclear reactors need a high load factor to be economic. Any electricity pricing regime that can reduce the reactor load factor undercuts the reactor's return on investment. Foolish electricity regulators in the USA allowed intermittent renewble generation to be dispatched ahead of nuclear power, which reduced the reactor load factor to the extent that the cost per kWhe including term financing exceeded the revenue per KWhe. That cash flow loss led to reactor shutdowns which reduced the demand for both natural and low enriched uranium. Furthermore, the US owners of nuclear power plants did not have future electicity supply contracts that would allow them to in turn enter into long term purchase contracts for low enriched uranium.

Then the accident at Fukashimi Diachi led to a further irrational shutdown of the Japanese nuclear fleet. That shutdown caused a further drop in the world wide demand for both natural and low enriched uranium. For more than a decade the only parties that survived in the uranium mining and enrichment businesses were those that had long term contracts.

As a result of the Russian invasion of Ukraine US president Biden prevented US reactor owners from relying on Russia for supply of low enriched uranium. That restriction converted a spot market surplus of low enriched uranium into a spot market shortage.

In 2025 and 2026 the public in electedd democarcies realized that a major increase in the world wide nuclear reactor fleet capacity is essential to mitigate CO2 induced climate change. China has demonstrated major current and future deployment of light water cooled/moderated reactors. In response the major players in both the natural uranium and uranium enrichment businesses have sold uranium futures based almost entirely on long term contracts. Then an aggressive 18 m0nth trade war by US president Donald Trump against both Canada and Australia caused western uranium producers to contractually commit almost their entire existing capacity to non-US entities.
 

RESULT:
The net result of the Biden restriction of US entities from obtaining fuel from Russia is that for the for the forseeable future The US will not be able to obtain contract uranium supply from existing western mine and enrichment facilities. The US voters will have to recognize that they brought this situation on themselves both by inappropriate valuation of reliable clean base load electricity generation and by electing a president who believed that attacking the economies of allies via tariffs was good economic policy. This problem is further amplified by lack of recent US govermnent investment in sodium cooled fast neutron reactors and supporting fuel reprocessing.
 

MITIGATION
US electricity utilities are now looking at very large fuel costs for meeting their electicity supply requirements. The costs borne by US electrity ratepayers will have to include the costs of financing new uranium exploration as well as development of new mines and enrichment facilities. Without government financing guarantees for both miners and enrichers the demand for both spot market natural uranium and low enriched uranium will exceed supply causing very high reactor fuel prices. Mitigation of this problem will require central planning to address the electricity price structure, the national requirement for enrichment and the national requirement for natural uranium.

This central planning is contrary to much of accepted US corporate culture. A major problem that the US must face is that the Trump administration has in months destroyed the good will that the US built over tha last 80 years. That tolerance of Trump culture has led to international distrust of the USA, especially in foreign trade and military matters. If the US is to relieve its uranium fuel shortage via foreign suppliers, it will likely have to pay multiple billion dollars up front. At a time when the cost to the US government of 30 year bonds is in excess of 5%, that will be a very expensive lesson for US voters. While US voters may tolerate a criminal US president, other nations will not, especially as long as the US president controls US foreign and trade policy.
 

This web page last updated May 17, 2026