Will ASX uranium shares run higher on this 'historic' supply ban?

The United States President has signed fresh uranium policy into law.

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A trade ban on enriched uranium could further fuel the explosive run witnessed across ASX uranium shares over the past year.

While Australia continues to squabble over whether nuclear energy is viable, the United States is taking steps to secure the energy source domestically.

A glance at ASX uranium shares today may not show it, but the land of the free implemented a major sanction on enriched uranium supply overnight. Despite the tempered reaction, the decision is a major one that will affect 24% of the uranium used by nuclear power stations in the United States.

Biden takes action on Russian reliance

United States President Joe Biden signed the Prohibiting Russian Uranium Imports Act last night.

As per the White House statement, the act aims to bolster the country's energy and economic security. To do this, the United States will reduce — and eventually eliminate — its dependence on Russia for the inputs needed for nuclear power.

Unpacking the magnitude of the decision further, U.S. National Security advisor Jake Sullivan wrote:

This new law reestablishes America's leadership in the nuclear sector. It will help secure our energy sector for generations to come. And—building off the unprecedented $2.72 billion in federal funding that Congress recently appropriated at the President's request—it will jumpstart new enrichment capacity in the United States and send a clear message to industry that we are committed to long-term growth in our nuclear sector.

The ban on Russian enriched uranium imports into the United States will take effect 90 days from today.

Shifting away from Russian supply will be a major undertaking. According to the U.S. Energy Information Administration, nuclear energy accounted for 18.6% of all electricity generation in the country last year.

This might explain why the government is allowing exceptions until 2028 when the absence of Russian supply would result in a reactor shutting down.

What could it mean for ASX uranium shares?

Aussie investors aren't making much of the news today. At the time of writing, some of the most prominent ASX uranium shares are skating lower:

  • Paladin Energy Ltd (ASX: PDN) down 1.49% to $16.225
  • Boss Energy Ltd (ASX: BOE) down 1.58% to $5.60
  • Deep Yellow Limited (ASX: DYL) down 3% to $1.615

There's always a chance the market had already 'factored in' the sanction before today. Hence, the common phrase, 'buy the rumour, sell the news' among traders.

Alternatively, some may see this move as a negative for all uranium producers outside the United States. The country is actively pouring billions into making a local industry, which may present a risk to all foreign demand.

Nevertheless, the price of uranium is still perched near its 17-year-high of US$100 per pound.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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