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Speaker 1: Hi, it's West Kasova. We're taking a break this week

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Speaker 1: for the holidays, so here's an episode you might have missed.

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Speaker 2: Stomic testing.

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Speaker 1: The Russians have a bomb.

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Speaker 2: We're supposed to be years ahead of them, but the Umps,

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Speaker 2: what were you guys doing in Los.

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Speaker 1: Alma's Uranium of all things has become a hot topic

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Speaker 1: this summer, in part, of course, because of the hit

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Speaker 1: movie Oppenheimer about the Manhattan Project and the man often

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Speaker 1: called the father of the atomic bomb.

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Speaker 3: A shark. Time ago, an American aeroplane dropped one bomb

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Speaker 3: on Hiroshima and destroyed its usefulness to the enemy. That

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Speaker 3: bomb has more power than twenty thousand tons of T

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Speaker 3: and T.

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Speaker 1: The bomb President Truman was talking about that devastated Hiroshima

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Speaker 1: on August sixth, nineteen forty five, contained about one hundred

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Speaker 1: and forty one pounds of enriched uranium. Uranium is still

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Speaker 1: used in nuclear weapons, but it's the non military uses

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Speaker 1: that we're talking about today and the reason it's in

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Speaker 1: the news now.

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Speaker 4: Uranium is the basic fuel that's used in nuclear power plants.

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Speaker 4: It's not particularly rare, but the whole process of getting

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Speaker 4: the U two thirty five isotopes concentrated high enough to

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Speaker 4: run in a nuclear power plant. Very complicated.

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Speaker 1: That's Bloomberg's Will weigh He and Jonathan Tyrone report that

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Speaker 1: for decades the US has depended on Russia for much

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Speaker 1: of this hard to enrich uranium needed to fuel nuclear

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Speaker 1: power plants, and that picture has become much more complicated

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Speaker 1: since Russia's invasion of Ukraine.

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Speaker 5: It's not just the enrichment that Russia is supplying, it's

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Speaker 5: also conversion, it's also raw uranium, and so you see

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Speaker 5: weak links along the nuclear fuel supply chain at every stage.

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Speaker 1: Will and Jonathan are here to talk about a new

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Speaker 1: push to rebuild the West's uranium capabilities. Some are likening

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Speaker 1: it to a Manhattan Project two point zero, but this time.

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Speaker 6: For peaceful purposes. I'm Westkasova today on the big take.

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Speaker 1: Can the US wean itself from Russian uranium? Jonathan? Why

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Speaker 1: is the US dependent on Russia of all places for uranium?

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Speaker 5: Well, it goes back to the end of the Cold War,

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Speaker 5: and what happened was the US began a commercial relationship

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Speaker 5: with Russia's national energy company Rosa Tolment. It was called

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Speaker 5: Mega tons to megawatts, and basically we began importing Russian

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Speaker 5: weapons gradeum down blended into a mixture that could be

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Speaker 5: made into fuel assemblies for American nuclear power plants, and

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Speaker 5: that commercial relationship has extended for the last thirty years.

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Speaker 5: In that period of time, there are also serious stresses

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Speaker 5: to the nuclear industry, first and foremost being the Fukushima

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Speaker 5: Daishi nuclear power plants following the earthquake in twenty eleven.

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Speaker 5: Then also we had the fracking boom in the United

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Speaker 5: States with massive supply of natural gas to American electricity generators,

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Speaker 5: which also served to displace participants in the nuclear fuel cycle.

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Speaker 1: Will As Jonathan says, after the Cold War was over

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Speaker 1: in the US and the Soviet Union were no longer

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Speaker 1: competing in an arms race, it set up a whole

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Speaker 1: different dynamic when it came to what uranium was actually worth.

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Speaker 4: Yeah, the whole US uranium industry is kind of almost gone.

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Speaker 4: There's very little mining. The closest big mining is in Canada.

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Speaker 4: There there's almost no enrichment except for the plant in

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Speaker 4: New Mexico, which is actually a European company. There's not

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Speaker 4: a whole lot of conversion. There's one facility, but it

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Speaker 4: was shut down. They're about to reopen it here in

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Speaker 4: the US. In just the past several years, there have

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Speaker 4: been about a dozen nuclear reactors have closed down for

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Speaker 4: economic reasons because they just couldn't compete with the cheap

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Speaker 4: natural gas electricity.

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Speaker 5: So the last US owned commercial enrichment plant was in Paducah, Kentucky,

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Speaker 5: that used a radically different technology to an enrich uranium

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Speaker 5: called gaseous diffusion. The gasseou diffusion is a way of

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Speaker 5: enriching uranium that uses uranium hexafluorid gas pressed through different

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Speaker 5: membranes transferred through different chambers to enrich the uranium two

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Speaker 5: thirty five isotope into a concentration necessary to sustain a

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Speaker 5: fission chain reaction. The US is basically the last country

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Speaker 5: to use gaseous diffusion for enriching uranium, the reason being

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Speaker 5: it takes a lot more energy to enrich uranium through

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Speaker 5: gaseous diffusion. And why did the US do that Because

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Speaker 5: they were drawing massive electricity reserves off of the Tennessee

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Speaker 5: Valley Authority, and so this whole industry of the nuclear

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Speaker 5: fuel cycle in the US was wrapped up with National

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Speaker 5: defense policy is about stockpiling during the Cold War, and

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Speaker 5: the commercial enrichment services for nuclear power plants came from

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Speaker 5: the same plant, but there wasn't much of a cost

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Speaker 5: benefit analysis when it came to looking for the most

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Speaker 5: efficient way to make uranium for fuel for reactors until

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Speaker 5: after the Cold War ended and the commercial imperatives of

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Speaker 5: competing in the market were thrust upon the US, and

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Speaker 5: that's when they had to start developing what everybody else

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Speaker 5: in the world is using for enriching uranium, which is

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Speaker 5: the centrifuge. Centrifugees which are supersonic spinning cylinders similar to

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Speaker 5: your washing machine. These actually use only about five percent

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Speaker 5: of the energy requirements that gauisious diffusion requires. Cut refugees

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Speaker 5: became the technology of choice in the post Cold War era.

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Speaker 1: So will How much uranium does the US get from Russia?

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Speaker 4: Well, Russia is the world's biggest supplier of enriched uranium.

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Speaker 4: About a quarter of the fuel and our nuclear power

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Speaker 4: plants comes from Russia. The uranium supply chain is long

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Speaker 4: and complicated. You start with raw uranium ore. It's milled

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Speaker 4: down into a powder they call it yellow cake. The

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Speaker 4: yellow cake is mixed with a fluorine gas and it's

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Speaker 4: converted into uranium hexafluoride. That's the conversion step of the process.

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Speaker 4: The UF six gets sent to the enrichment site and

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Speaker 4: that's where they concentrate it into the five percent necessary

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Speaker 4: for fuel. And once you have the enriched uranium, and

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Speaker 4: remember that's what we get mostly from Russia, then enriched

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Speaker 4: uranium gets sent to a fabricator where they create nuclear

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Speaker 4: fuel rods out of it.

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Speaker 1: And so this can pass through a lot of different

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Speaker 1: countries and a lot of different companies on the way

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Speaker 1: to being the final product.

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Speaker 4: It can, but it doesn't have to. Russia has all

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Speaker 4: of the steps, China has all of the steps. It's

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Speaker 4: only the US and Europe that's really broken it down

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Speaker 4: into so many different places and people, and that kind

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Speaker 4: of makes the whole process a lot more complicated.

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Speaker 1: Does any of the uranium that comes from Russia wind

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Speaker 1: up in US and nuclear weapons?

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Speaker 2: No.

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Speaker 5: The dirty secret is that there's not a lack of

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Speaker 5: nuclear fuel, It just that it's in the wrong place.

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Speaker 5: Like the US has a lot of nuclear fuel, it

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Speaker 5: just all in bombs. We could really screw up the

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Speaker 5: nuclear fuel market if we decide to disarm and start

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Speaker 5: to downblend. You can downblend the highly enriched uranium found

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Speaker 5: in nuclear weapons and reconvert that into a lower enriched

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Speaker 5: blend necessary for power plants.

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Speaker 4: It's like, you're unenriching it.

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Speaker 1: And will you visited the only enricher of uranium in

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Speaker 1: the US. It's a company called Urinko. What was that like.

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Speaker 4: Well, it's in a tiny town called Unice, New Mexico.

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Speaker 4: It's right on the eastern border of New Mexico. It's

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Speaker 4: a mile from Texas. It was this spotless, pristine industrial

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Speaker 4: site and out in the middle of the desert. There's

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Speaker 4: armed guards, a lot of security getting in. It's been

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Speaker 4: open for a long time, but it was spotless, just

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Speaker 4: spotless that all the machines were gleaming. I was really

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Speaker 4: impressed by how clean it is. So they take us

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Speaker 4: into the room with the centrifuges and there's just hundreds

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Speaker 4: and hundreds of them all in a row. It just

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Speaker 4: stretches on to the end of this vast room. I

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Speaker 4: couldn't even see the end of it. They're spinning so fast.

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Speaker 4: There's this really high pitched wine. We had to wear

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Speaker 4: ear protection and it didn't sound that loud, but they

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Speaker 4: told us that the frequency is exactly the right frequency

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Speaker 4: that'll really damage your ears if you're not careful. So

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Speaker 4: all the centrifuges, they look like long, thin tubes about

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Speaker 4: twenty something feet tall. I couldn't tell for sure. The

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Speaker 4: tops of it were concealed by these curtains because that's

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Speaker 4: where they have the piping that connects one to the next,

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Speaker 4: to the next to the next. They call that a cascade,

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Speaker 4: and that is apparently a really important trade secret on

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Speaker 4: how they managed to get the gas to flow from

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Speaker 4: one to the next. They wouldn't let anybody see what

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Speaker 4: that looks like.

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Speaker 1: And once the process there is done, what happens with

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Speaker 1: that uranium? Where does it go?

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Speaker 4: Then it gets sent to the fabricator where it is

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Speaker 4: converted into fuel pellets. The pellets are inserted into fuel rods.

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Speaker 4: Every reactor has its own specific design for what those

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Speaker 4: fuel rods are supposed to look like, and those get

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Speaker 4: sent to the power plants.

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Speaker 1: After the break. What is the US doing to limit

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Speaker 1: its reliance on Russian uranium? So, Jonathan, we've been talking

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Speaker 1: about how and why the US is so dependent on

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Speaker 1: Russia for uranium, and now the US government seems to

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Speaker 1: have up to the fact that they need to change

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Speaker 1: this what are they doing.

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Speaker 5: They're working with their allies to address this as a

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Speaker 5: common security problem and not just a national security problem.

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Speaker 5: There's different levels of concern. It's not just the US,

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Speaker 5: it's also Eastern European allies, which as former Soviet satellites,

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Speaker 5: are operating about two dozen so called Vveer reactors which

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Speaker 5: are almost exclusively fueled by Rosatum, Russia's national nuclear giant.

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Speaker 5: So I mean that's a very acute problem affecting European

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Speaker 5: power supplies. Then you move over to the North American

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Speaker 5: supply chains, the nuclear supply chains, and there we see

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Speaker 5: it's not just the enrichment that Russia is supplying, it's

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Speaker 5: also conversion, it's also raw uranium, and so you see

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Speaker 5: weak links along the nuclear fuel supply chain at every stage.

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Speaker 5: So when President Biden met his Canadian counterpart Justin Trudeau

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Speaker 5: earlier this year, they to reboot North American nuclear fuel cycle.

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Speaker 2: Because of our shared prosperity is deeply connected to our

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Speaker 2: shared security in the past. In the past years have

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Speaker 2: proved the Canada the United States are not insulated from

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Speaker 2: the challenge to impact the rest of the world.

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Speaker 5: They subsequently went to the G seven meeting in Sapporo, Japan.

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Speaker 5: A couple of weeks later in April, they convinced the

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Speaker 5: UK and France to come on board, and the joint

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Speaker 5: statement from Sapporo they said that they want to push

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Speaker 5: Vladimir Putin and RuSHA out of the nuclear fuel cycle entirely. Now,

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Speaker 5: that will be pretty hard, because you know, even during

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Speaker 5: the darkest times in the Cold War, the US, for example,

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Speaker 5: was buying titanium from the Soviets for their nuclear deterrence.

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Speaker 5: I think the important point to recognize is that it

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Speaker 5: won't be easy to knock Roseat to them out of

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Speaker 5: the nuclear fuel business. They continue supplying Eastern European utilities

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Speaker 5: with the fuel they need for their reactors, and that

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Speaker 5: business has in fact grown in the twelve months after

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Speaker 5: the war began and continues to this day.

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Speaker 4: But you know what, we should point out that they

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Speaker 4: are starting to lose some of that business. Westinghouse, the

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Speaker 4: US nuclear company, just this year, has picked up a

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Speaker 4: couple contracts to supply fuel rods to those Eastern European reactors,

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Speaker 4: and they're going to have to build a new design

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Speaker 4: fuel rod to fit those reactors.

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Speaker 1: And will you also write in the story that the

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Speaker 1: Biden administration is pushing Congress to spend a lot of

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Speaker 1: money to try to jumpstart the US uranium process.

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Speaker 4: Again, there's a push in Congress right now to create

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Speaker 4: a domestic stockpile of nuclear fuel. It'd be kind of

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Speaker 4: like the Strategic Petroleum Reserve, which is exactly what it

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Speaker 4: sounds like. It's a huge amount of oil that stored

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Speaker 4: and they released that oil to adjust pricing when necessary.

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Speaker 4: And so the US wants to have a stockpile of

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Speaker 4: nuclear fuel just as a buffer against any kind of

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Speaker 4: international tensions.

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Speaker 1: You said earlier that Russia has their entire uranium fuel

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Speaker 1: cycle in their own country. They do it from beginning

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Speaker 1: to end, and the US doesn't. What will it actually

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Speaker 1: take for the US to get that same capability.

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Speaker 4: It would take long term commitments from customers. Especially remember

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Speaker 4: talking to the head of Converdine, that's the company that

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Speaker 4: does conversion, the process of turning the yellow cake into

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Speaker 4: UF six. He said that they'd be happy to do it.

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Speaker 4: It's not that complicated, but it's not that cheap. He'd

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Speaker 4: need long term commitments, like long term means about ten

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Speaker 4: years from about ten customers to justify really going into

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Speaker 4: the expansion in a way that would be big enough

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Speaker 4: to displace the Russians.

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Speaker 1: To have that many customers will would that mean that

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Speaker 1: the US would have to really ramp up its nuclear energy.

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Speaker 4: It would mean that the utilities that operate nuclear power

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Speaker 4: plants now would need to start signing contracts to buy

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Speaker 4: all of their fuel from US suppliers instead of international suppliers.

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Speaker 4: And in fact, the people at Urenko in New Mexico

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Speaker 4: told me that since Russia invaded Ukraine, their orders have

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Speaker 4: gone up about twenty five percent because their American utility

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Speaker 4: customers have come to them and said, we'd like to

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Speaker 4: start buying more from the United States than from Russia.

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Speaker 5: And there's another dimension as well, which is more future oriented,

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Speaker 5: and it involves the next generation of American reactors. Foreseeing,

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Speaker 5: these are the so called small modular reactors, which require

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Speaker 5: a different kind of nuclear fuel, a higher concentration. It's

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Speaker 5: called high assay low enriched uranium. Rather than five percent

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Speaker 5: uranium two thirty five bus toopes, you're looking closer to

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Speaker 5: nineteen nineteen point seventy five percent. And the reason is

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Speaker 5: that if you're deploying more nuclear reactors that are smaller,

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Speaker 5: you want to have to refuel them less often, and

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Speaker 5: so the higher grade, the higher concentration nuclear fuel, allows

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Speaker 5: them to burn longer without being refueled. And right now

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Speaker 5: the US is one hundred percent dependent on Russia for

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Speaker 5: high essay low enriched uranium. And this is a key

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Speaker 5: bottleneck that has to be solved right now because if

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Speaker 5: we want to be deploying SMR reactors at the end

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Speaker 5: of this decade, then that part of the supply chain

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Speaker 5: has to be solved now. Because these are all long

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Speaker 5: engineering processes. Factories have to be built, lines have to

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Speaker 5: be built, environmental regulations, safety regulations. It takes a long process.

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Speaker 5: So if we want to get it done by twenty thirty,

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Speaker 5: it has to start now.

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Speaker 1: And you write that some plants that had closed down

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Speaker 1: are now being reopened.

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Speaker 4: Well, the converdyine conversion facility in Illinois that was shut

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Speaker 4: down if several years ago for economic reasons because the

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Speaker 4: market was so oversupplied. They basically said, we can't make

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Speaker 4: money selling this stuff. We're just going to sell out

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Speaker 4: of inventory until further notice. And now they're starting to

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Speaker 4: reopen that because the price has gone up about tenfold.

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Speaker 1: When we come back, what would it take for the

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Speaker 1: West to cut Russia out of the international nuclear fuel cycle.

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Speaker 4: Nazier's new military rulers are in a standoff with the

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Speaker 4: West and some of their neighbors, refusing to hand back

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Speaker 4: power to the man they ousd it. Nizer's coup leaders

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Speaker 4: have closed the country's airspace until further notice.

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Speaker 5: The regional bloc Ekowas has said it wants a diplomatic

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Speaker 5: and peaceful resolution to the takeover, but that no options

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Speaker 5: are off the table.

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Speaker 1: Jonathan, you write that the recent coup in Niger, which

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Speaker 1: is one of the top uranium producers in the world,

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Speaker 1: shows the geopolitical stakes of this business. What should other

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Speaker 1: countries take away from what's happening there?

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Speaker 5: So Nizier's the sixth biggest producer of uranium or in

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Speaker 5: the world. It's a key supplier for Friends and other

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Speaker 5: European utilities. The lesson of is what the companies called

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Speaker 5: depth and defense. They need to have a redundant supply chain.

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Speaker 5: And so you all see or no investing in Canadian minds.

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Speaker 5: You see additional Canadian minds responding to tightness in the

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Speaker 5: ore market by opening up mothballed minds. Just another example.

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Speaker 5: Everybody is talking about nize right now. But you see

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Speaker 5: Rosatom displacing US and European fuel makers and entering into

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Speaker 5: a new agreement with South Africa to reboot that country's

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Speaker 5: nuclear fuel cycle. So the thing to pay attention to

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Speaker 5: isn't just income statement the balance sheet, it's also the

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Speaker 5: geopolitical states that are shifting as Western companies try to

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Speaker 5: displace Russia and vice versa.

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Speaker 4: I think the lesson from Niger is the same lesson

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Speaker 4: from Russia, which is you don't want to be dependent

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Speaker 4: on countries that may not be stable as your supplier.

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Speaker 4: And also we saw in South Africa, uranium isn't just

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Speaker 4: a product you buy and sell to make a profit.

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Speaker 4: It's a key part of international diplomacy.

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Speaker 1: That's a really interesting point, will and you write Jonathan

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Speaker 1: that the US government is grappling with this very question.

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Speaker 5: The US Department of Energy has what is called the

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Speaker 5: one two to three Agreement, which is nuclear agreements that

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Speaker 5: it enters into with different states which will trade US

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Speaker 5: nuclear technology as long as countries do not enter the

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Speaker 5: nuclear fuel cycle. This is what we've seen in the

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Speaker 5: United Arab Emirates. This is the crux of negotiations with

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Speaker 5: Saudi Arabia. This is why the US takes such a

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Speaker 5: grim view of Iran entering into the nuclear fuel cycle.

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Speaker 5: So this is a big deal because of its dual

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Speaker 5: use potential and just in terms of how you can

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Speaker 5: build this resiliency in your supply chain. The CEO of

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Speaker 5: Urenco told me something interesting. He was talking about the

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Speaker 5: fact that some of his oldest centrifuges operating in Europe

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Speaker 5: have been running now for fifty years. Imagine your washing

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Speaker 5: machine on the spin cycle running for the last fifty

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Speaker 5: years without ever stopping. In those centrifugias, They've been running

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Speaker 5: through three Mile Island, they've been running through Chernobyl, they've

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Speaker 5: been running through the Fukushima meltdowns. And he said, you know,

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Speaker 5: the only thing that they don't like is to stop.

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Speaker 5: He was talking about in terms of like a very

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Speaker 5: physical material sense, and that you know, when you try

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Speaker 5: to stop something spinning at supersonic speeds, sometimes mistakes happen

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Speaker 5: and they spin out of control, so you want to

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Speaker 5: keep them running. But more broadly, it's an anecdote about

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Speaker 5: the commitment that economies need to make nuclear power profitable,

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Speaker 5: and it requires a long term vision, probably sometimes with

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Speaker 5: state support. That is nurturing a strategic industry, you know,

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Speaker 5: touches far more than simple company profit and loss statements.

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Speaker 1: You've talked about how it'll take many years and a

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Speaker 1: lot of money for the US to be able to

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Speaker 1: be independent of Russia and other places for uranium. What

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Speaker 1: happens if the situation in Ukraine escalates and the US

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Speaker 1: and Russia no longer do any business. What would that

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Speaker 1: mean for the US industry?

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Speaker 4: Oh, you mean the worst case scenario, like if Russia

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Speaker 4: decides to completely cut US off or we decide to

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Speaker 4: completely boycott them, that would be bad. Most utilities tend

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Speaker 4: to keep about eighteen months of inventory on hand. They

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Speaker 4: have to refuel the reactors every eighteen months, so basically

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Speaker 4: it's like they've got one spare set of fuel rods

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Speaker 4: laid around to put in when they need it, and

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Speaker 4: eighteen months after that, if they don't have another set

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Speaker 4: of fuel rods, then they have to turn the reactor off.

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Speaker 4: No gas, out of gas. Personally, I don't think that's

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Speaker 4: going to happen. I think that the chances of that

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Speaker 4: are near zero. But yeah, if there was no uranium supply,

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Speaker 4: if there was no nuclear fuel rod supply, that's what happens.

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Speaker 4: Nuclear power plants aren't magic. You've got to fill the

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Speaker 4: tank every so often.

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Speaker 1: And why do you think it's a near zero chance?

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Speaker 1: Given how holt All the situation is right now.

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Speaker 4: I think the international community would come together somehow. They

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Speaker 4: could figure out who needs some today and who could

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Speaker 4: wait six months. I think there would be some ability

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Speaker 4: to coordinate if necessary.

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Speaker 5: It's not just a American problem. This is a transatlantic problem.

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Speaker 5: And right now there is an installed industrial base that

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Speaker 5: is underutilized in Europe and or No For example, the

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Speaker 5: French National Champion is also sitting on a potential two

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Speaker 5: billion expansion of its uranium enrichment capacity. But just like

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Speaker 5: conver Dyninge the conversion company here in the US, they're

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Speaker 5: also waiting signals from clients that they're ready to enter

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Speaker 5: into long term contracts. So there's a lot of money

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Speaker 5: sitting on the sideline. There's a lot of ways to

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Speaker 5: expand capacity, to create redundancies and supply chains, but it's

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Speaker 5: a slow train that's just starting to get moving.

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Speaker 1: Will looking ahead is someone who covers this industry. Where

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Speaker 1: do you think it goes from here? Do you think

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Speaker 1: the US eventually does wean itself from Russian uranium.

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Speaker 4: Maybe not one hundred percent, but I think there's a

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Speaker 4: really strong desire to build up enough domestic capacity to

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Speaker 4: not be so dependent upon them.

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Speaker 5: The US was the biggest enricher of uranium during the

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Speaker 5: nineteen seventies that supplied all Western capitalist economies. It was

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Speaker 5: the biggest player out there. That's when Uranka was just starting, right.

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Speaker 5: So this is like around nineteen seventy two, seventy three,

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Speaker 5: seventy four. You fast forward a half a century and

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Speaker 5: the US looks like it's a rebooting Manhattan Project version

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Speaker 5: two point zero, this time for exclusively peaceful purposes. It's

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Speaker 5: a massive undertaking, but the US has proven its capable

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Speaker 5: and up to the task before it can do so again.

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Speaker 5: But in terms of accomplishing some of the loftier goals

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Speaker 5: of the G seven statement of pushing Russia out of

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Speaker 5: the international nuclear fuel cycle entirely, that's probably less likely. Russia,

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Speaker 5: even if it loses the Western markets, is busy building

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Speaker 5: new reactors in Bangladesh, Egypt, Turkey, Iran, a bunch of

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Speaker 5: different countries, and they're filling their pipeline up with new

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Speaker 5: customers for decades ahead.

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Speaker 1: Jonathan Will, thanks so much for coming on the show.

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Speaker 1: Thanks thanks for listening to us here at the Big Take.

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Speaker 1: It's a daily podcast from Bloomberg and iHeartRadio. For more

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Speaker 1: Email us questions or comments to Big Take at Bloomberg

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Speaker 1: dot net. The supervising producer of the Big Take is

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Speaker 1: Vicky Vergalina U. Your producer is Catherine Fink. Federica Romaniello

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Speaker 1: is our engineer. Our original music was composed by Leo Sidrin.

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Speaker 1: I'm west Kasova. We'll be back tomorrow with another Big Take.