Splitting The Atom's Supply Chain

A disruption to the West would equate to a crisis. Nearly all producers are fully booked for years, and soaring uranium spot prices hint that warehoused sources may be depleted.

To avoid sleepwalking into a larger dilemma brought on by a captive Kazakh uranium industry, policymakers not only should empower the Department of Energy to reshore enrichment but also should firm up the broader nuclear fuel supply chain with trusted partners.

Once known as the steady“floor” for global supply, Kazatomprom has been beset by geopolitical risks, and is on its fourth CEO in two years.

First, its primary transport route through Russia was impacted by international sanctions. Now, the bubbling Azerbaijan-Armenia conflict threatens to complicate the Trans-Caspian Route it had promoted as an alternate solution.

With access to Europe constricted and US influence in Central Asia waning, Kazakhstan has little choice but to be more accommodating towards its two assertive neighbors, who are already (by far) its most important
partners
in trade.

In May, Rosatom took a bite out of Kazatomprom, acquiring a 49% stake in its prized Budenovskoye-6 and -7 uranium deposits. Several executives
quit
as a result, fueling speculation that it was a“backdoor deal”
imposed
by Astana in cooperation with Moscow.

Once developed, this uranium mine complex is expected to become the world's largest, capable of
supporting
Rosatom's downstream dominance in conversion, enrichment, and fuel fabrication for many years to come.

When Russia invaded Ukraine, there were signs of Kazakhstani president Kassym-Jomart Tokayev
distancing
himself from Vladimir Putin, but the opposite has instead played out. The two have
met
in person at least a dozen times since, with energy
cooperation
a frequent focus.

Beijing has also factored Kazatomprom into its energy strategy. China is
undergoing
a massive buildout of new nuclear power plants, on track to become the world's top producer by 2030. In his first post-Covid trip abroad, Xi Jinping visited Tokayev to lay the groundwork for deeper bilateral
collaboration
– with energy, again, a priority area.

Since then, the China National Nuclear Corporation has secured a major long-term uranium supply contract in excess of 50% of Kazatomprom's total book value.

Additionally, the China General Nuclear Power Corporation has started receiving nuclear fuel assemblies from the Ulba Metallurgical Plant on the Kazakh-Chinese border – a joint venture slated to provide 200 tons of nuclear fuel each year until 2041.

Signs of deepening Russia-China cooperation over nuclear fuel may further fan this hotspot of security concerns. In March, the US House Armed Services Subcommittee on Strategic Forces was briefed on reports of Rosatom supplying highly enriched uranium to fast breeder reactors in China, a well-established pathway for weapons of mass destruction.

While there is no indication that Kazakhstan collaborates with Russia or China toward nuclear arms, evidence of an increasingly captive uranium industry presents a glaring liability for energy security in the US and Europe.

All this is coming to a head as demand for uranium is returning in force. With grids around the globe struggling to replace coal reliably with the variable generation of wind and solar, nuclear power is
gaining
recognition as a necessary component in the clean energy transition at large.

Nuclear plant developers from China, France, South Korea and the US are presently
vying
for business across Africa, Asia and the Middle East – eager to catch up with Rosatom's lead.

And the most ominous driver of supply chain bifurcation may be the
resuming
buildup of nuclear weapons between great powers. China has been expanding its arsenal for years, and with Russia's recent suspension of the“New START” arms control treaty, the US is
pressured
to modernize its own capabilities.

America should restore long-term nuclear fuel security before a crisis puts critical infrastructure at risk. The Nuclear Fuel Security Initiative can be maximized by (1) stockpiling uranium as disruption insurance, (2) reshoring critical bottlenecks like HALEU manufacturing and enrichment and (3) proactively friend-shoring the upstream stages of the supply chain among trusted allies.

The first two are already off the ground, with a strategic uranium reserve recently established and Ohio-based Centrus Energy beginning enrichment operations just this month.

Sign up for one of our free newsletters

• The Daily Report Start your day right with Asia Times' top stories
• AT Weekly Report A weekly roundup of Asia Times' most-read stories

But they require greater urgency. The reserve's current inventory would cover only nine days of US commercial demand, and Centrus has a long way to go in scaling up to create a meaningful shift away from Rosatom.

The process building at the American Centrifuge Plant in Piketon, Ohio. Photo: Centrus Energy / American Nuclear Society website

The United States is fortunate that Canada and Australia are the number 2 and number 4
suppliers
of uranium after Kazakhstan. However, the problem is that
ramping
up enough production to quit Kazatomprom would take many years, given the mining sector's
challenging
workforce as well as lending and regulatory conditions.

Friend-shoring through policy incentives or consortium-building can accelerate this process by signaling a commitment to decoupling from the Russian nuclear industry – thereby boosting investor confidence and diverting capital otherwise flowing to marginally cheaper producers, like Namibia or Uzbekistan.

The surprising coup in Niger and its impact on France's nuclear firm, Orano, should be lesson enough regarding dependence on states with elevated political risk for uranium supply.

Since the dual-use nature of uranium and the oligopolistic conditions of the space will never allow it to become a true commodity market, scruples over government intervention should be saved. The United States allowed Russia to maneuver into its commanding position by privatizing, then outsourcing, this critical supply chain.

Expeditiously rebuilding supply security at home and industrial capacity among allies is the first step to making a comeback in an industry that will undoubtedly remain vital within energy, technology and national security arenas for decades to come.

Brandt Kekoa Mabuni
( ) is a resident WSD-Handa fellow at Pacific Forum in Honolulu.

This article was first published by Pacific Forum and is republished with permission. The article is a primer to a longer forthcoming report by the author titled“Splitting the Atom's Supply Chain: Analysis & 3S Implications for a Disintegrating Nuclear Fuel Industry.”

Like this:Like Loading...