Currently, Kazakhstan is the world's third largest uranium exporter--after Australia and Canada. At 1.5 million metric tons, it holds roughly 19 percent of the world's uranium reserves. More than 50 percent of Kazakh reserves are suitable for extraction by in-situ leaching, a cheap and environmentally friendly method compared to extracting uranium from open pits or deep shaft mines. In 2007, the country produced 6,637 metric tons and is projected to produce 9,445 metric tons this year. The country is gearing up to produce 18,700 metric tons of uranium annually by 2015 and 27,000 metric tons by 2025. (See "Uranium Production in Kazakhstan in 2007.")
Although Goldman Sachs JBWere projects that the country will become the world's second largest uranium producer by 2011, Kazatomprom, Kazakhstan's state-run energy company that oversees all uranium production, plans to become the world's largest a year earlier. Kazatomprom bases this forecast on the increased production capability that 16 new mines in southern Kazakhstan will provide.1 With world uranium consumption projected to be 117,193 metric tons by 2030, Kazakhstan is expecting quite a financial windfall (in Russian).
Ambition #2: To become a significant supplier of nuclear fuel
Kazakhstan plans to maintain its integrated full fuel cycle with Russia, but also does not want to depend exclusively on its northern neighbor for nuclear fuel production.
As of now, all initial stages of uranium mining and milling into yellowcake are carried out in Kazakhstan; the yellowcake is then transported to Russia for gasification and enrichment. The next stage of producing fuel pellets is carried out in Kazakhstan, while the final production of fuel rods takes place in Russia. Joint projects between the two countries include construction of a gas centrifuge enrichment plant (with the first phase to be completed by 2011) next to existing Russian facilities in Angarsk, Siberia. The new enrichment facility, which Kazatomprom has a 50 percent stake in, will produce 5 million separative work units (SWU) annually by 2013 or about 757,863 kilograms of low-enriched uranium.2 It will be a technological "black box" for Kazatomprom's specialists, meaning they won't have access to enrichment technology per se but will be able to enrich uranium, adding to the value of the country's exports.3 Kazatomprom President Moukhtar Dzhakishev has said his company would continue to contract the sensitive stage of enrichment to Russia to alleviate proliferation concerns. Kazakhstan will have priority for buying SWU from the Angarsk plant, while Russia will have priority access to 6,000 metric tons of raw Kazakh uranium--enough to cover Russia's current nuclear power plants plus two new planned reactors.
The International Uranium Enrichment Center (IUEC), also at Angarsk, is another important Russian-Kazakh collaboration that will provide countries without fuel-cycle capacity access to nuclear fuel. It began operating in September 2007 and currently pairs Russia's Techsnabexport, the export arm of Moscow's nuclear complex, with Kazatomprom--although Techsnabexport possesses a much larger stake (90 percent total) in IUEC. The distribution of ownership will change as new IUEC members acquire some of Russia's share. A memorandum of understanding has been signed with Ukraine; Armenia is in the process of joining; and Mongolia and South Korea have expressed strong interest, according to a statement by Rosatom, Russia's atomic energy agency. Fuel production is planned to start by late 2008.
But Kazakhstan isn't relying solely on its partnership with Russia. It is actively pursuing deals with other countries. Cameco, a Canadian company, is studying the feasibility of building a uranium oxide to uranium hexafluoride conversion facility at Ust-Kamenogorsk in northeastern Kazakhstan, which, if completed, will allow one more stage of fuel fabrication (conversion into gas) to occur inside Kazakhstan.
Japan's entrance into the Kazakh uranium market was solidified in October 2007 when Kazatomprom acquired 10 percent of Westinghouse Electric Corporation from Toshiba for $540 million. As a result, Westinghouse gained access to Kazakh uranium and potentially more fuel fabrication capacity; in return, Kazatomprom gained access to the world nuclear fuel market. Toshiba-Westinghouse Electric will become Kazatomprom's technical partner in the production of fuel assemblies. Construction of a fuel assembly production facility at Ust-Kamenogorsk will be completed in 2011 or 2012 and will allow Kazakhstan to produce the final product (fuel assemblies). (See April 2007 Kazatomprom press release.) It is expected to increase Kazakhstan's 1 percent share of Japan's uranium market to 30 or 40 percent by 2010, making it one of Japan's largest suppliers. According to Kazatomprom's Dzhakishev, annual uranium sales to Japan will rise to 4,000 metric tons by 2010. In April 2007, 150 Japanese government and private sector representatives visited Astana, the Kazakh capital, and signed 24 bilateral trade deals, including the purchase of a stake in a Kazatomprom uranium mine by Marubeni Corporation. In addition, Toshiba pledged to help Kazakhstan build nuclear power plants, and the Japanese delegation agreed to provide Kazakhstan with technological assistance for processing uranium fuel and building reactors.4
Kazakhstan's cooperation with China also grew last year. In May 2007, Kazatomprom and China Guangdong Nuclear Power Group (CGNPG) concluded a deal to produce nuclear fuel for China's developing nuclear power sector. Four months later, Kazatomprom, CGNPG, and the China National Nuclear Corporation agreed to establish a joint mining venture to exploit Kazakh uranium deposits. All natural uranium mined by the venture will be delivered to China in the form of nuclear fuel. According to Dzhakishev, Kazatomprom will start supplying fuel pellets and yellowcake to Beijing in two years and start selling nuclear fuel by 2013, bypassing China's traditional fuel suppliers such as Areva, a French company. Kazatomprom and China are discussing plans to work together on fuel assembly production in the future.5
But despite these attempts to expand its nuclear partners, Kazakhstan will remain dependent on Russian enrichment facilities for the foreseeable future, even after two more stages of the fuel cycle--processing uranium oxide into uranium hexafluoride and production of fuel assemblies--become possible domestically.
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