Russia’s state-owned nuclear power company, whose expansion on the international market in recent years has outstripped the country’s capacity to supply uranium fuel to the new power plants, won a large concession recently to mine uranium in Mongolia.
The company, Rosatom, will form a joint venture that will have roghts to a deposit that could produce about a quarter of Russia’s total current uranium output. The deal was reached during a state visit to Mongolia by President Dmitri Medvedev of Russia and after the two countries agreed on a settlement of $150 million in Soviet-era debt.
The move into Mongolia is a lift for Rosatom at a time when Russia’s industry is making a big push to expand. The company is marketing nuclear reactors bundled with the fuel to power them to developing countries around the world. While best known for its decade-old contract to build a nuclear power plant in Iran, the company is also active in China, India, Eastern Europe and elsewhere.
Outside of Iran, the Russian business is supported by the United States as a productive use of Soviet legacy uranium enrichment plants in Russia. In Iran, the United States opposed the power plant’s construction but approved the Russian fuel shipments. By encouraging the commercial availability of Russian enrichment services, the US deprives other countries of the rationale to have enrichment programs of their own.
Russia is also a major supplier to Western Europe and the US, where a subsidiary of Rosatom now provides about 50 percent of the fuel used in the 104 US nuclear power reactors under a post-cold-war agreement to dilute weapons-grade uranium into fuel suitable for power plants. This agreement is scheduled to expire in 2013 – further increasing demand for mined uranium because the diluted Russian weapons material will no longer be available.
The Russians are eager to maintain their market share in the US by selling fuel enriched from natural uranium, another incentive to secure rights to mines.
In May, the first commercial deals were signed with the American utilities Ameren, Luminant and Pacific Gas and Electric, for fuel sufficient to power 15 million American households.
The business is based on Russia’s taking advantage of excess enrichment capacity that is a legacy of cold war weapons programs. Russia possesses about 40 percent of the world’s enrichment capacity, far more than it needs to service its domestic reactors. Nuclear reactors run on uranium that is composed of 3 percent to 5 percent uranium 235. In nature, uranium is only 0.7 percent uranium 235. Uranium used in weapons is enriched to more than 90 percent.
Russia, however, is not self-sufficient in natural uranium to sustain this business and is on a land grab around the world to secure equity stakes in uranium mines as a guarantee of long-term supply.
“The strategy is to diversify by sources and markets of uranium,” Marina V. Alekseyenkova, an industrial analyst at Renaissance bank in Moscow, said in a telephone interview. “All this fuel fabrication should be supplied with uranium concentrate.”