Dragoman Digest

Canada could again lead global uranium production

Nuclear energy gains traction as emission-free alternative

Canada is positioning itself to become a global leader in uranium production again.  This move follows a long decline since 2009 relative to Kazakhstan, which currently supplies 43 percent of global demand. Canada, a distant second, produces only 15 percent of global uranium, 80 percent of which is exported, primarily to the US. Spending on uranium exploration and deposit appraisal in Canada increased 90 percent in 2022 and 26 percent in 2023, with an expected compound annual growth rate of 7 percent between 2023 and 2027. Cameco, Canada’s largest producer, said its production would rise by a third in 2024, reaching 27 million pounds, which would elevate Canada’s share of the total global output to 25 percent. The momentum in Canada’s uranium industry comes as Kazakhstan experiences export restrictions as a result of the Russia-Ukraine conflict, and challenges in the supply of production inputs such as sulphuric acid. As a stable and reliable trading partner, Canada is well-positioned to supply uranium to its allied nations, especially the G7.

The surge in demand for uranium is largely driven by the global shift toward emission-free (and reliable baseload) nuclear energy. 31 countries have pledged to triple the deployment of nuclear energy by 2050, and tech giants like Amazon, Google and Meta are exploring nuclear power for their data centres. Uranium prices are following suit, after a decade of reduced demand triggered by the 2010 Fukushima disaster. In early 2024, prices reached US$100 per pound, marking their highest level since 2008. Although recent prices have slightly adjusted to US$73 per pound, they remain well above the decade-long average of under US$50 per pound.

Indian solar exports surge as US seeks China alternatives

Rising PV exports highlight opportunities and challenges in India’s push to become a global manufacturing hub

India’s solar manufacturing sector has experienced unprecedented growth, with photovoltaic (PV) cell exports rising from less than US$100 million in FY2022 to almost US$2 billion in FY2024. Of the US$712 million in exports for the half year to October, 96 percent were destined for the US market, reflecting India’s emerging role as an alternative supplier to China. China’s market share in the US has all but disappeared since being hit with anti-dumping duties from 2012. The US' plan to extend PV tariffs to Southeast Asia, targeting China's efforts to bypass existing duties, opens further opportunities for India’s solar manufacturers. While India’s broader manufacturing ambitions face headwinds, the government sees solar manufacturing and export growth as a strategic priority that could reverse this trend, capitalising on growing global demand for non-Chinese supply chains.

India’s solar PV export push, supported by the government’s Production-Linked Incentive (PLI) Scheme, comes with significant domestic trade-offs. After accounting for exports – which carry significantly higher margins for manufacturers – domestic PV production will only make up for 21-25GW of the 30GW needed yearly to meet India’s 2030 renewable energy targets. Additionally, supply chain vulnerabilities persist as India remains reliant on China for critical materials in the solar PV manufacturing value chain, like polysilicon and wafer components. Overcoming the established cost advantages of China, which accounts for over 80 percent of global PV cell imports, will remain difficult. China’s solar production costs reduced by 40 percent in the last year and are on a trajectory to continue falling as the Chinese government harnesses the solar industry to re-energise its slowed economy. As the potential for trade actions under the Trump administration looms, export diversification will be key.

New York bill to penalise fossil fuel companies

Decision seeks to rebalance taxpayer contributions to climate mitigation funds

In December 2024, New York Governor Kathy Hochul signed a landmark bill requiring fossil fuel companies to pay US$75 billion over the next 25 years to address climate change-related impacts. The Climate Change Superfund Act intends to shift the financial burden of climate change adaptation from taxpayers to oil, gas, and coal companies. Starting in 2028, the funds will be spent on essential infrastructure such as roads, transit systems, water, and sewage systems, as well as recovery efforts from natural disasters. Fossil fuel companies will be levied based on their greenhouse gas emissions between 2000 and 2018, with companies responsible for more than a billion tonnes of global emissions particularly affected. This new policy positions New York as the second US state, after Vermont, to adopt such a measure, following a model similar to federal superfund laws that hold polluters accountable for cleaning up toxic waste. California, Massachusetts and New Jersey have proposed similar legislation.

New Yorkers are projected to pay over US$500 billion in taxes by 2050 due to extreme weather events that are linked to climate change. The law is expected to encounter pushback from large oil and gas companies, largely around whether a state has the authority to penalise a company for air pollution that happens elsewhere. Historically, such issues have been the purview of the federal government: the advent of the Trump administration is likely to result in federal opposition to states penalising fossil fuel companies for their emissions, by way of excise or levy regimes.

Japan stakes semiconductor future on Rapidus’ ambitious leap

Government’s backing of advanced chip venture reflects growing urgency to secure strategic supply chains amid regional tensions

Japan’s bid to revive its semiconductor industry faces a crucial test as state-backed Rapidus prepares to begin prototype production of advanced 2nm chips in April. The chips, designed for artificial intelligence and high-performance computing applications, represent an ambitious technological leap for a country that has largely retreated from cutting-edge semiconductor manufacturing. In the 1980s Japanese firms controlled more than 50 percent of the global market. They now control just 15 percent. The project comes amid mounting concerns over semiconductor supply chains: 75 percent of global manufacturing capacity is concentrated in East Asia, and Taiwan produces 90 percent of the world’s most advanced chips.

The scale of Tokyo’s commitment was underscored in November when Prime Minister Ishiba Shigeru announced a JP¥10 trillion (US$63 billion) package to develop Japan’s AI and chip industries through 2030. Rapidus, founded in 2022, faces considerable technical and commercial hurdles before its planned mass production launch in 2027. The company has partnered with IBM to train 150 engineers and has secured a potential breakthrough deal to manufacture for Broadcom. However, a failure to attract private sector investment beyond initial shareholders, which include Toyota and Sony, has led to a financing gap of JP¥5 trillion (US$31 billion). The shortfall is largely due to concerns about competing with established players like Taiwan’s TSMC and has prompted new legislation for government loan guarantees.

Rapidus’ strategy has so far focused on targeting 30-40 select customers, differentiating itself from TSMC’s standardised mass production model. Experts are questioning whether Rapidus’ emphasis on customisation can overcome TSMC’s economies of scale and established ecosystem, as well as its significant head-start. The Japanese government maintains that Rapidus’ approach is strategically vital, not just for commercial success, but also to ensure domestic capability in critical technologies. With Japanese taxpayers already contributing JP¥920 billion (US$5.9 billion), the upcoming prototype phase could be crucial in shaping both domestic and global perceptions of Japan’s semiconductor ambitions.

Argentina diverts from protectionist course, removes long-standing tariffs

Questions as to whether this is solving the larger issue of domestic industry competitiveness

Argentina’s President Javier Milei is implementing significant economic reforms aimed at reducing consumer prices and addressing the country’s long-term inflation crisis, including by slashing tariffs on imported goods. The administration has increased the annual limit for personal overseas orders to US$3,000, with the first US$400 exempt from tariffs, simplified the customs process and allowed citizens to make purchases from global e-commerce platforms, including Amazon, for the first time. Milei’s tariff and import regime changes are but one component of a sweeping reform program. Public spending has been slashed by 30 percent, 36,000 public sector employees have lost their jobs and subsidies for domestic utilities have been cut. The result has been a fiscal surplus and a ten-fold reduction in inflation, from 26 to 2.7 per cent a month. GDP is set to rebound, from a contraction of 2.8 per cent in 2024 to a forecast growth of 5 per cent in 2025.

Milei is yet to embark on addressing a high tax regime and rigid labour market, which have long contributed to Argentina’s lack of competitiveness. He has stated that Argentina should rely on sectors in which it has a competitive advantage, such as agriculture, mining and energy, which are underpinned by abundant supplies of fertile land and water supply.

The president's economic reforms have sparked broad concerns, especially in the manufacturing sector which accounts for 20 percent of employment (as opposed to 12 percent for the agriculture, mining and energy sectors). Manufacturing activity declined 12.7 percent in the first three quarters of 2024, compared to the same period in 2023. Unemployment, currently at 7.6 per cent, is expected to spike. Milei will be relying heavily on much reduced inflation and signs of renewed economic growth, to sustain the political momentum generated by popular recognition of the need for reform and his recent election. While there is some consensus that the reforms will lead to a more competitive economy, business and labour will be concerned that the reforms are too rapid, or will oppose them outright, citing impacts on local industry.