Uranium Stocks Fall Over 11% on Friday on Potential Russian Sanctions

Uranium stocks fell by over 11% after the potential for sanctions on low-cost Russian uranium could seriously harm uranium companies in the United States.

Amy Legate-Wolfe

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Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Published March 4, 2022 4:15 pm EST

Uranium stocks fell by over 11% on Friday after news that the United States nuclear power industry continues to lobby the U.S. government to allow imports of uranium from Russia. This sent American uranium stocks down at the news.

What happened?

As inflation continues to hurt cash flow around the world, the U.S. nuclear power industry believes Russian imports of uranium is essential to keep energy costs down. This despite the ongoing Ukraine conflict after Russia invaded the country.

The U.S. continues to impose sanctions on Russia, yet uranium stocks remain unaffected at this point. The nuclear power industry continues to lobby the White House to maintain this position. Russian uranium currently powers about half of U.S. nuclear power plants, which produce about 20% of U.S. electricity.

Shares of Fission Uranium (TSX: FCU), Denison Mines (TSX: DML) and Ur-Energy (TSX: URE) all fell by over 11% at the news.

So what?

Should sanctions on Russian uranium come into effect, the United States, as well as uranium stocks, would be in serious trouble. There is no current uranium production or processing in the country at this time. While some companies are trying to sign onto some long-term supply contracts, and other have some reserves, nothing is being produced.

Australia and Canada also have large reserves of uranium, with lots of processing capabilities in those countries and in Europe. However, Russian offers a low-cost option that would help keep energy costs down. This has been something the Biden administration continues to work on. It’s also why Biden believes the move towards renewable energy isn’t just good for business but could be a national security threat.

Now what?

Whether you’re invested in uranium stocks or not, you may still feel the sting of Russian sanctions on uranium. The Ukraine conflict continues to be at the top of news headlines around the world. Whether asked to or not, many companies continue to impose their own blocks of exporting or importing Russian products. That includes uranium.

As for Canada, about 85% of uranium is exported at this time. That could increase further with the potential of sanctions on Russia. Meanwhile, it’s a good time to take a step back and see what happens should the bull run in uranium stocks come to a crashing halt.