ROSATOM TO TACKLE URANIUM SHORTAGE


07.11.06
MOSCOW. (Igor Tomberg for RIA Novosti)

A founding treaty to set up the Uranium Mining Company was signed on November 2 at Russia’s Federal Agency for Nuclear Power (Rosatom). The event marked the beginning of a new era in the Russian nuclear industry, aimed at consolidating all the branch’s uranium production assets.

The agency has proposed to invest between $60 and $70 million in the construction of dozens of nuclear power plants by 2030. These measures and money are expected to prevent a shortage of electric power and increase the share of nuclear energy in Russia’s energy balance to 25%. The plan envisages the construction of two generating units annually with 1 gigawatt capacity each. But the nuclear industry’s ambitious plans both in Russia and abroad may be thwarted by a shortage of uranium raw materials. To tackle the problem, the agency has begun actively implementing its own raw materials program.

The overall volume of discovered uranium reserves whose production costs do not exceed $130 per kilogram is about 4.7 million metric tons, which is enough for 85 years of operation of all the world’s nuclear power plants.

The overall volume of all uranium reserves in the world is probably much greater and is about 35 million tons, says the “Uranium 2005: Resources, Production and Demand” report, prepared by the International Atomic Energy Agency (IAEA) and the Organization for Economic Cooperation and Development.

Country-by-country data differ a great deal. According to some Russian sources, discovered uranium reserves in Russia amount to 615,000 tons (15% of world reserves), and probable reserves to 830,000 tons. U.S. Energy Department data show that the largest reserves are in Australia (about 27% of world reserves, although Australia does not have a single nuclear plant), Kazakhstan (17%), Canada (15%), South Africa (11%), Namibia (8%), Brazil (7%), Russia (5%), and the United States and Uzbekistan (4% each). Ukraine and Kyrgyzstan, which possess sizable uranium reserves, are not included in the report.

Russia produces over 3,000 tons of uranium annually (2004 data), and consumes about 9,000 tons. If the nuclear reform goes through, by 2020 the uranium demand will grow to 16,000 tons. There is a plan to increase its production by a thousand tons by 2010. This is clearly not enough even for home consumption. If, however, production is not increased approximately fivefold, Russia will finally turn from a uranium exporter (a country supplying dozens of foreign reactors) into an importer.

The optimum method of supplying nuclear projects inside and outside the country is for Russia to restore the nuclear industry that existed in the U.S.S.R. With that purpose in view, the Federal Agency for Nuclear Power has begun negotiations with Ukraine and Central Asian countries, above all Kazakhstan. All founding documents are already prepared to set up an international uranium enrichment center based on the Angarsk Electrolysis and Chemical Plant. The center will be set up jointly with Kazakhstan, but third countries interested in uranium enrichment will be able to use its services. Shareholders of the joint venture will have open access to all aspects of its operation, but the enterprise will not be allowed to “touch” military technologies.

Besides, steps have been taken to consolidate the branch’s production, financial, intellectual and raw materials resources to raise natural uranium output and processing to meet the growing requirements of the country’s nuclear industry. The signing of the founding documents of the Uranium Mining Company, which will combine the uranium assets of two large Russian state-owned companies – TVEL and Techsnabexport – is significant in this respect. The world’s third largest uranium mining company has been created.

TVEL will contribute three mining assets to the company: Hiagda, Priargunskoye Production Mining Chemical Association, and Dalur. Techsnabexport will contribute the Elkonskoye deposit in Yakutia and its share in the Russian-Kyrgyz-Kazakh JV Zarechnoye. In addition, the company may include Kazakhstan’s Yuzhnoye Zarechnoye and Budyonnovskoye deposits, and set up JV Akbastau to develop them. Additionally, Techsnabexport is continuing talks to start up a uranium operation in Uzbekistan. The new uranium company might tap world uranium markets and even hold an IPO.

The new mining company will do several things: follow up exploration and exploitation of deposits located in Russia and development of the country’s raw materials, including geological prospecting. The company is also expected to set up joint ventures to produce uranium in and outside the country, and import uranium.

In addition, it will channel Russian and foreign investments into uranium production. The new company may form a partnership with western investors to develop uranium deposits.

For example, Japan’s Mitsui, which signed an agreement with Techsnabexport to finance the advanced development of the Elkonskoye deposit, may become a minority shareholder of the new company. The list also includes Canadian Cameco, and world giants BHP Billiton and Rio Tinto. The presence of foreigners in a traditionally off-limits sector is not an attempt to follow the fashion, but a financial necessity. By establishing a joint mining company, the agency ensures the construction of nuclear power plants in Russia and abroad. Discovering and developing deposits involves massive resources, and the only way to increase processing and to prevent uranium shortages in the future is to attract private foreign investments.

To be competitive the Russian nuclear industry must offer its projects on the world market and work together with its CIS neighbors. In addition to building nuclear facilities abroad, the industry also exports enriched uranium, nuclear fuel, and stable and radioactive isotopes, i.e. has a full spectrum of high-technology services available on the international market.

Supplying raw materials calls for complex organizational, technical and investment decisions. Restoration of Soviet-era cooperation in uranium production and processing might benefit all participants in the process, and make CIS countries producers and exporters of advanced nuclear materials.

Igor Tomberg, Ph.D. (Economics), is a leading research fellow at the Center for Energy Research, Russian Academy of Sciences’ Institute of World Economy and International Relations.

The opinions expressed in this article are those of the author and may not necessarily represent those of RIA Novosti.–0-