When will the U.S. lift restrictions on Russian uranium exports?

14/ 04/ 2006

MOSCOW, (RIA Novosti political commentator Pyotr Goncharov)

Late last week Moscow hosted the fourth national energy forum on "Russia's
Fuel and Energy Sector in the 21st Century."

The forum organizers and guests agreed that nuclear industry had entered a
period of renaissance, which is logical in view of the common intention to
reduce the share of hydrocarbons in the global energy balance.

However, participants in the roundtable that was held after the forum also
pointed to certain "atavisms" in the development of the nuclear industry
that do not fit the logic of constructive and equitable energy relations
between Russia and the United States.

Why the two countries? Russia is the world's main provider of enriched
uranium, and is likely to keep this position in the future, while the U.S.
stubbornly upholds anti-dumping restrictions on the export of Russian
uranium to the American market.

Delegates from private U.S. consumers of uranium, who attended the
roundtable, clearly spoke for reviewing the policy of the US Department of
Commerce regarding Russian suppliers.

Pacific Gas & Electric Corporation is for opening markets to various
components of the nuclear fuel cycle and to uranium enrichment and
conversion services, said the company's Vice President James A. Tramuto.
This will allow diversifying the portfolio of suppliers by stipulating work
with existing and future nuclear power plans, and in this way ensure the
growth of supplies.

There are no reasons to keep the restrictions because the situation has
changes since their introduction, said James Malone, Vice President of
Nuclear Fuels, Exelon, the largest nuclear operator in the US.

Jeff Combs, President of the UX Consulting Company, said retaining the
restrictions would slow down the development of the nuclear industry.

Uranium prices have doubled in the last two years. The world needs Russian
uranium, and Russia should keep its leading place on the global uranium
market, especially because American companies have 103 nuclear power units
and only one fuel supplier in the U.S. This is clearly not enough to ensure
the nuclear safety of the country now, let alone in the future when the U.S.
will start building 13 new nuclear blocks.

As representatives of private companies, we are well aware of this, but the
Department of Energy does not want to see the problem, the American guests
of the Russian energy forum said.

According to Russia's Techsnabexport (Tenex), one of the world's largest
producers and exporters of nuclear materials, services and equipment with
the annual turnover of $2 billion, Russia has 50% of the world's uranium
enrichment facilities. Russian enrichment technologies are the most
efficient and profitable in the world. If Russia is given equal conditions
with other countries on the global market of the nuclear fuel cycle, it will
satisfy 25-30% of the world's demand, said Tenex head Vladimir Smirnov.

The anti-dumping restriction on Russia's uranium exports were imposed during
the Soviet era, when the Soviet Ministry of Nuclear Energy delivered a huge
amount of natural uranium on the world markets, including the United States,
sending prices crashing. The anti-dumping procedure was complemented with
restrictions on the Russian ministry. As a result, Russia now may operate on
the U.S. market only through a special agent, who is actually its rival.

But the most paradoxical thing is that the world's most liberal American
economy, of which Washington is rightly proud, is doing its best to save the
unprofitable domestic producer. In fact, the U.S. uranium producers, who are
using the technologies of the dawn of the nuclear era, survive only thanks
to the Russian nuclear industry. Russian nuclear technologies have surged
far ahead, and uranium export restrictions are doing colossal damage to the
Russian enrichment and nuclear generation sectors.

Low enriched uranium is not the natural uranium against which the
restrictions were designed, but fuel for nuclear power plants (NPP). Russian
producers and American consumers cannot understand why enriched uranium,
which is a high-tech service, should suffer from the restrictions.

But this is not all.

The anti-dumping procedure that is being used in the United States and
several European countries does not spread to the 1993 HEU-LEU (highly
enriched uranium - low enriched uranium) agreement signed for 20 years.

Under it, Russia removes 500 metric tons of highly enriched uranium from its
scrapped warheads, converts it into low enriched uranium and delivers it to
the Untied States as fuel for American NPPs.

The restrictions were suspended for the duration of the investigation, but
the U.S. has set a quota stipulating a restrictive 116% duty on uranium
exports made in excess of the quota. Russia has exhausted its quota in 2002.
It can continue working despite the high duty, said Smirnov, but Tenex would
appeal the size of the duty in case of the lifting of the anti-dumping
measures. It will rely on the precedent of French company Areva, for which
the duty was cut to near zero.

The next hearing on the anti-dumping measures is set for May 23 in
Washington. Russia will demand the lifting of the discriminating
restrictions on Russian deliveries of nuclear materials to the Untied States
and Europe.

The Economics Ministry and the Federal Atomic Energy Agency of Russia have
sent a letter to the U.S. Department of Commerce requesting that the
anti-dumping measures regarding Russian suppliers of nuclear materials and
services should be lifted and that they should be ensured free access to the
American market.

The stand taken by the U.S. energy companies promises a positive solution,
especially because the implementation of the ambitious nuclear program
recently announced by the U.S. administration would be impossible without
the liberalization of the American market of nuclear fuel and stable
deliveries of Russian uranium.

The opinions expressed in this article are those of the author and may not
necessarily represent the opinions of the editorial board.