AMN - NAMIBIA: Bannerman welcomes Trump decision

Bannerman Resources has welcomed resolution of the section 232 trade investigation into uranium imports into the United States with a clear and positive decision by President Trump. The company's Etango Uranium Project in Namibia is well-positioned to benefit for the decision.

On July 12, 2019, President Trump announced the completion of the section 232 trade investigation undertaken by the United States Department of Commerce. This investigation was initiated under section 232 of the Trade Expansion Act after two US uranium producers petitioned the Department of Commerce in January 2018, seeking an order that US nuclear utilities be required to purchase 25% of their uranium from US domestic production.

President Trump decided to take no trade action, which has lifted concerns that a quota, tariff or other trade action would be imposed under the broad power delegated to the President under section 232.

Instead, President Trump has initiated a review of the domestic nuclear supply chain (uranium production, conversion, enrichment and fabrication) in the context of the 2017 White House initiative to revive, revitalise and expand the nuclear energy sector.

Since January 2018 the breadth of potential outcomes, including the potential to adversely affect term contracting arrangements, had created uncertainty that has resulted in most utility procurement programs being suspended or sharply curtailed. Other market activity was also substantially reduced in the immediate lead-up to a decision, resulting in low spot volumes.

Bannerman regards this no trade action outcome as highly positive for the uranium sector, given that global uranium market activity is now expected to return towards more normalised levels. Moreover, this outcome is particularly positive for non-US uranium companies as it maintains open market access to the US uranium market.

Given the partial hiatus in a number of uranium market operations, the company expects enhanced activity from utilities, traders, producer-buyers and speculators during the remainder of calendar 2019.

Cameco has confirmed its intention to recommence spot purchasing during 2019 in order to meet term contract delivery obligations that it must fill after placing its McArthur River mine onto care and maintenance in July 2018.

Although President Trump did not agree that uranium imports threaten to impair the national security of the United States, he acknowledged that the United States uranium industry faces significant challenges in producing uranium domestically and that this is an issue of national security (because, for instance, the US Navy must use domestically produced uranium for its maritime nuclear power).

Accordingly, to address concerns regarding the production of domestic uranium and ensure a comprehensive review of the domestic nuclear supply chain, the President directed that a Nuclear Fuel Working Group be established. This group will include the Secretary of State, Secretary of Energy and Secretary of Defence, amongst other key officials, and will develop recommendations for reviving and expanding domestic nuclear fuel production (that is, uranium, conversion, enrichment and fuel fabrication).

Within 90 days the Working Group must submit a report to the President making recommendations to further enable domestic nuclear fuel production. Recommendations from the Working Group are likely to produce positive outcomes for the uranium market as a whole, given the section 232 powers to impose trade actions are now ended and the Working Group is enabled to find more holistic solutions to the challenges facing the US nuclear energy sector.

The US nuclear fleet represents a quarter of current uranium demand globally, so any steps the US government takes to revitalise and expand this sector is positive for uranium suppliers internationally.

Further, the section 232 process and associated publicity have raised awareness of the importance of supply diversity and geopolitical factors in the uranium sector.  These geopolitical factors are likely to be further examined by the working group, which is directed to "reinvigorate the entire nuclear supply chain, consistent with United States' national security and non-proliferation goals".

African projects in jurisdictions without fixed geopolitical allegiances are well-positioned for the resulting interest from both US and non-US uranium consumers seeking to reduce supply risk.    

Bannerman's CEO Brandon Munro said: "We welcome the strong and decisive resolution of the section 232 trade investigation, which has been a distraction to the uranium sector for 18 months. This no trade action outcome maintains open access to the US uranium market and is particularly positive for non-US uranium companies.

"With a renewed focus on supply diversity and geopolitical risk, Bannerman is particularly well-positioned with its Etango project situated in Namibia, a premier uranium development jurisdiction with good bilateral relations with all major uranium consumption markets, including the US, China, Russia and France.

"Bannerman is set to benefit from renewed uranium market activity, with an advanced project of world-class scale in a premier jurisdiction and robust cash balance."

Bannerman's principal asset is its 95%-owned Etango project situated near Rio Tinto's Rossing uranium mine, Paladin's Langer Heinrich uranium mine and CGNPC's Husab uranium mine.

www.bannermanresources.com