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Kazakhstan aims to emerge as world’s No1 uranium exporter

kazhak-and-russiaKazakhstan and Russia rank second and third in uranium reserves after Australia, with over 1 million metric tons and 800,000 tonnes…

respectively. In the new “great game” for the Caspian’s hydrocarbon riches, one of the new petro-states, Kazakhstan, is seeking to diversify its energy exports by increasing its uranium exports. Western investors have focused on the country’s massive oil and natural gas reserves — hardly surprising in light of the fact that Kazakhstan has the world’s second-largest proven uranium reserves after Australia, estimated at 15 percent of the world’s uranium deposits. According to Kazakh geologists, the country’s reserves stand at an impressive estimated 1.5 million tons. Kazakhstan’s resources are dwarfed by Australia, which has the world’s largest known recoverable resources of uranium, estimated by the World Nuclear Association at 23 percent, but Kazakhstan’s reserves are half again as large as Russian reserves, estimated at 10 percent.

While a central tenet of the tussle over Caspian oil and natural gas has been the struggle between Russia and Western nations and multinationals, led by the United States, in developing its uranium assets, Astana is partnering with a relative newcomer on the scene — China.

Looking well beyond its petroleum industry, Kazakhstan has made a major effort to develop its uranium industry; so far this year uranium exports have grown by 42 percent to 9,400 tonnes from last year’s exports of 6,600 tonnes. While Western economists have focused on the spectacular growth of Kazakhstan’s oil and natural gas industries, in fact its uranium exports have outpaced the country’s hydrocarbon industry; in 1997 Kazakhstan exported 795 tonnes of uranium, but a decade later uranium exports had risen by an impressive 830 percent.

According to Kazakhstan’s State-owned uranium company, Kazatomprom, Kazakhstan and China have agreed jointly to mine uranium and process it into nuclear fuel in the Central Asian country. The agreement fits in neatly with Astana’s plans to surpass Australia and Canada to become the world’s top producer by 2010. According to Kazatomprom head Mukhtar Dzhakishev, under the agreement Kazatomprom, in conjunction with China Guandong Nuclear Power Co. and China National Nuclear Corp., will involve the Kazakh Irkol, Semizbai and Zhalpak mines in Kazakhstan as part of the project. Dzhakishev added that Irkol, which can extract 500 tonnes annually, already had begun production, while operations at Semizbai, which can produce 500 tonnes per year, are slated to begin in 2009. Dzhakishev also named the Zhalpak mine, which produces 700 to 750 tonnes per year, as part of the project.

According to Dzhakishev, the consortium intends to start enrichment reprocessing of the uranium for nuclear fuel rods for atomic power plants by 2013.

The deal is a critical one for China, as it lacks raw materials to develop its nuclear energy. China’s uranium reserves are estimated at less than 1.5 percent of the world’s total, and its uranium production last year amounted to 870 tonnes, which met only half of the country’s current needs.

While the global economy recently has experienced an abruptly sharp downturn in oil prices due to the worldwide recession, Kazatomprom projects a future strong demand for uranium due to rising interest in nuclear power generation in China, India and Russia, which are all due to build new reactors, and in the West as well, as it seeks both to diversify its energy sources and reduce greenhouse gas emissions. Accordingly, Kazatomprom is pressing on with increasing its uranium production next year to 11,000 tonnes, with a goal for 2010 of 15,000 tonnes. Impressive as these figures are, by 2015-16 the company is aiming to increase production to 27,000 tonnes.

There are some dark clouds on Astana’s sunny horizon, however. The global economic slowdown has impacted the uranium market, where on Oct. 21 weekly spot prices fell to $44 per pound, their lowest level since May 2006. Kazatomprom Vice President Sergei Iashin noted that spot prices were highly speculative and could rebound to about $65 per pound by year’s end.

Underlying reasons for the earlier uranium price bubble included Russia halting its dumping practices combining with Western hedge funds providing massive infusions of cash prior to the recent global downturn. Accordingly, uranium prices climbed from their record low of $7 per pound in 2001 to a record high of $136 per pound in June 2007. Despite the price gyrations, Kazakh producers remain optimistically bullish on uranium’s long-term prospects, primarily because of rising Asian demand.