Canada could face a larger trade dispute with the U.S. after the Department of Commerce launched another national security investigation, this time by looking into uranium imports.
Commerce Secretary Wilbur Ross announced the investigation Wednesday, noting U.S. production of uranium for military and electric power has decreased to five per cent of its consumption from 49 per cent in 1987.
“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,” Ross in a statement.
Canada is not mentioned by name, but it was the largest foreign supplier of uranium to the U.S., accounting for 25 per cent of U.S. imports in 2016, the U.S. Energy Information Administration said.
The investigation came as Prime Minister Justin Trudeau shuffled his cabinet partly designed to signal Canada’s intention to redouble efforts to diversify its trading partners in the face of U.S. protectionism.
Canada is the world’s second-largest producer of uranium after Kazakhstan, with 23 per cent of global production in 2016, said Natural Resources Canada. The country produced 14 kilotonnes of the ore, all coming from Saskatchewan mines.
Ross said the investigation, which follows a January petition from two U.S. uranium mining companies, will canvass the uranium sector from mining through enrichment, defence and industrial consumption.
Uranium fuels 99 U.S. commercial nuclear reactors that produce 20 per cent of the power for the country’s electricity grid. It is also needed for its nuclear arsenal and powers submarines and aircraft carriers.
Under Canada’s nuclear non-proliferation policy, Canadian uranium can be used only for peaceful purposes.
The U.S. Commerce Department said the two petitioners that account for more than half of all uranium mined in the U.S., have laid off more than half their workforce over the last two years and operate at nine and 13 per cent of their respective capacity.
The investigation comes a day before the department holds a hearing on whether the imports of automobiles and automotive parts threaten U.S. national security.
Petitioners Energy Fuels Inc. and Ur-Energy Inc. said they were pleased by the investigation.
“While U.S. producers can fairly compete with foreign production on a level playing field, it is difficult for them to compete with heavily subsidized foreign production,” they said in a joint statement.
They singled out companies in Russia, Kazakhstan and Uzbekistan that together supplied more than one-third of U.S. demand last year. Domestic producers are projected to fulfil only about two per cent of total U.S. commercial demand.
The companies added they expected more nuclear fuel from state-subsidized companies in Russia and China will be imported in the coming years, likely further displacing U.S. production.
“If Russia and its allies take control of this critical fuel, the threat to U.S. national and energy security would be incalculable.”
The department has 270 days to investigate and report to the president, who has up to 90 days to act on Ross’s recommendations.
In their petition, the companies proposed import quotas that would reserve one quarter of the U.S. market for domestic uranium production.
They also want U.S. federal utilities and agencies to buy U.S. uranium in accordance with President Donald Trump’s Buy American policy.
Ross Marowits, The Canadian Press