Washington Commits $2.7 Billion to Break Russia’s Grip on Nuclear Fuel

"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.

Under the contracts, the three companies will be required to meet specific milestones related to the enrichment of low-enriched uranium and high-assay low-enriched uranium, or HALEU, for both existing and new nuclear power plants, including smaller modular reactors (SMRs). HALEU is uranium enriched to contain 5% to 20% of the fissile uranium-235 isotope, a higher concentration than the 3-5% typically used in traditional reactors but significantly less than weapons-grade uranium (above 20%). This enriched fuel enables smaller, more efficient advanced reactors such as SMRs to operate longer, produce more power, and generate less waste, making it crucial for next-generation nuclear energy. In essence, HALEU bridges the gap between current reactor fuel and military-grade material, unlocking significant performance gains for future nuclear power.

Currently, Centrus Energy’s American Centrifuge Operating is the only U.S.-owned, NRC-licensed facility to produce HALEU in the United States. The company completed Phase I of its existing contract with the DoE by delivering an initial 20 kilograms in late 2023, and successfully met its Phase II goal of producing an additional 900 kilograms by June 30, 2025.

The DOE exercised an option to extend the contract through June 30, 2026, for additional production, with options for up to eight more years beyond that date. This ensures a continued domestic HALEU supply for advanced reactor development.

Centrus is actively working with the DOE and other private sector partners like TerraPower and X-energy to scale up production and meet the emerging market demand for HALEU, which is vital for the future of U.S. nuclear energy.

The company has initiated design for a large expansion in Piketon, Ohio, to establish a large-scale, U.S.-owned enrichment capability. This includes an investment in a centrifuge manufacturing facility in Oak Ridge, Tennessee, to support the growth and reduce reliance on foreign supply chains. The material produced at the Piketon facility is crucial for fueling next-generation advanced nuclear reactors and helps reduce U.S. dependence on Russian HALEU supply, which has been the only commercial source globally.

Wall Street generally rates Centrus Energy's unique position as the sole HALEU producer in the United States as a strategic advantage, leading to "Buy" or "Outperform" ratings, especially after recent DOE HALEU contract awards. However, some analysts suggest caution due to high valuation, debt and dependence on future capacity expansion. Key positives include critical government support, reducing execution risk, and validating its technology, while concerns focus on premium pricing and financing the significant scale-up needed for full HALEU production.

LEU stock has been on fire, rocketing 276% over the past 12 months and 1,270% over the past five years. On the other hand, stocks of companies involved in Small Modular Reactors (SMRs) have been highly volatile, with significant peaks and steep declines, generally underperforming the broader market despite periods of strong investor interest. Shares of Oklo Inc. (NYSE:OKLO) have nearly tripled over the past year despite a big pullback since October; NuScale Power Corp.(NYSE:NU) is down -22.4% while BWX Technologies (NYSE:BWXT) has returned 68.5% over the timeframe.

Similarly, Cameco's shares have been on a tear, surging 85.2% over 52 weeks thanks to the global resurgence of interest in nuclear energy, a structural uranium supply deficit, strategic business decisions including the acquisition of a stake in Westinghouse Electric, and government partnerships that position the company as a key player in the clean energy transition. Cameco is a major global supplier of uranium fuel for nuclear power, operating mines, and providing processing services (refining and conversion) across the nuclear fuel cycle to help generate clean, reliable electricity. The company focuses on low-cost uranium production from tier-one assets in Canada and Kazakhstan, supplying utilities worldwide with nuclear fuel solutions and investing in technology to support the growing demand for nuclear energy.

Overall, the ongoing nuclear energy boom in the United States and globally is expected to have lasting power, driven primarily by the massive, consistent power demands of AI and large language models, pushing for reliable, carbon-free baseload energy. Indeed, Bloomberg has predicted that the AI boom will drive a $350 billion-plus build-out of nuclear infrastructure, leading to a 60% increase in U.S. nuclear capacity to 159 gigawatts by 2050.

By Alex Kimani for Oilprice.com