The Trump administration opened an investigation into whether uranium imports threaten national security, a move that may lead to tariffs on the nuclear power plant fuel. U.S. uranium miners rallied on the news while utilities that operate reactors slipped.

The Commerce Department said Wednesday it will probe “whether the present quantity and circumstances of uranium ore and product imports into the U.S. threaten to impair the national security.” The probe will cover the entire uranium sector, from the mining industry to enrichment, defense and industrial consumption, the department said.

The department will investigate the matter under Section 232 of the 1962 Trade Expansion Act. The provision allows for duties without a vote by Congress if imports are deemed a national-security threat, and was used this year to slap tariffs on steel and aluminum imports. The U.S. uranium industry wants the government to shield it from competition from state-owned companies in countries including Russia and Kazakhstan.

The U.S. probed uranium imports under the same legal provision in 1989, but found that foreign shipments didn’t threaten American national security. The conclusion may be different this time.

“This may be the closest issue to what most reasonable people might think as national security,” analysts at Brown Brothers Harriman said in a research note before the decision was announced. “Some foreign producers are state owned, which pose a competitive challenge.”

The investigation adds to trade tensions that the International Monetary Fund warns represents the biggest risk to the global economy. Imposing uranium duties would also deal another blow to nuclear power plants already struggling with low electricity prices and flat demand. U.S. uranium miners supply less than 5 per cent of domestic consumption for the metal and say it’s increasingly difficult to compete with state-subsidized companies abroad.

January Petition

U.S. uranium miners Energy Fuels Inc. and Ur-Energy Inc., which petitioned the Commerce Department in January for the probe, surged. Energy Fuels rose as much as 14 per cent after the announcement and Ur-Energy gained as much as 12 per cent.

Entergy Corp. and FirstEnergy Corp., operators of nuclear power plants, led decliners on the S&P 500 Utilities index, falling as much as 1.7 per cent and 1.9 per cent respectively. Nuclear generators Exelon Corp. and Public Service Enterprise Group also declined, helping drag the the index down as much as 0.9 per cent.

The Defense Department will be consulted about national security requirements for uranium, Commerce Secretary Wilbur Ross said in a separate letter to Defense Secretary James Mattis notifying him of the investigation.

U.S. production of uranium necessary for military and electric power has dropped to 5 per cent of domestic consumption, from 49 per cent, said Ross. Prices for the commodity have slumped since the 2011 Fukushima disaster led big buyers including Japan and Germany to shut down or decommission reactors. Compounding the problem was a global supply glut that prompted Kazakhstan, the world’s biggest producer, to cut back last year. Canada’s Cameco Corp., the top North American supplier, followed suit in November.

Canada and Kazakhstan are the main sources of U.S. uranium imports, each accounting for about a quarter of the total, followed by Australia, Russia and Uzbekistan, according to the U.S. Energy Information Administration. Almost 90 per cent of uranium delivered to U.S. reactors was from foreign nations in 2016, according to the government agency.