KAZAKHSTAN: India to Buy Nuclear Fuel

By IPS Correspondents Reprint | | Print |

Andrei Ivanov

MOSCOW, Sep 28 1996 (IPS) - Kazakhstan is to sell India nuclear fuel as part of a defence and energy co-operation agreement that also involves an exchange of scientists.

“This arrangement will benefit everyone,” says an official from KATEP, the Kazakh State Atomic Power Engineering and Industry Corporation.

India faces restrictions in buying nuclear fuel because it has so far refused to sign the nuclear Non-Proliferation Treaty (NPT). Kazakhstan, on the other hand, desperately needs to sell its uranium to finance the development of its own nuclear sector.

“We have uranium and all the facilities we need to manufacture fuel elements, except uranium enrichment,” explains the official.

Kazakhstan is the biggest producer of strategic raw materials among the former Soviet republicss accounting for around eight percent of world uranium production. Its total uranium reserves are put at 1,168,000 tonnes located in six provinces — Chu- Saryssu (42.8 percent), Kokchetav (17.9 percent), Syr-Darya (12.2 percent), Ily (11.1 percent), Pribalkhask (10.5 percent), and Prikaspian (6.5 percent).

For the moment, mining has stopped at Pribalkhash. Nine separate companies operate within KATEP at five mining complexes. Three of these companies — Stepnoye Mining Combine, Central Mining Combine, and Combine No. 6 — use in-situ leaching (ISL) methods to mine uranium in the sandstone deposits in Chu-Saryssu and Syr-Darya.

Two companies, which use open pit mining to extract uranium as a by product, are part of the joint stock company KASKOR (formerly the Prikapisky Mining and Metallurgical Combine). The other four are part of the Tselinny Mining and Chemical Combine (TMCC). These use mainly underground mining methods in Kokchetav.

Uranium production has been falling in recent years in face of low world demand and the imposition of anti-dumping policies by the West. Output from TMCC’s mines fell from 1,200 tonnes in 1991 to less than 800 tonnes. TMCC’s mill has a capacity of 3,000 tonnes. The Stepnoye Mining Combine in southern Kazakhstan mines uranium at the Uvanas and Mynkuduk deposits using ISL methods.

Production has fallen from 800 tonnes in 1991 to less than 600 tonnes. The decline in production is expected to end this year following a sudden upturn in world demand which was expected to bring in Western investment of up to 60m US dlrs from foreign partners.

However, trade with India could still prove useful as a means of diversifying customers in face of restrictive measures introduced by the West to protect their own uranium industries.

Before the breakup of the USSR, Kazakh uranium was all sold through the Soviet (now Russian) Tekhsnabexport organisation. But KATEP now markets much of its uranium through western companies and in 1994 it became the first former Soviet enterprise to become a full member of the London-based Uranium Institute. Under a long- term contract Nukem (Germany) buys most of the uranium obtained by ISL from the Central and Stepnoye mines.

TMCC’s uranium is bought mainly by Energy Resources of Australia (ERA) while Uranium Exploration and Mining (UEM) and Cameco (both of Canada) signed a marketing and investment agreement in 1993. They mainly take uranium from ISL operations by Combine No. 6. Kazakh uranium exports to the west, however, are restricted through an elaborate system of price-linked quotas.

Kazakhstan also has a fuel fabrication facility, the Ulbinskii Metallurgicheskii Zavod Manufacturing Association (Ulba) in Ust Kamenogorsk which processes a large number of different metals, including uranium. The plant manufactures equipment for nuclear power stations including pellets for fuel elements with a zirconium casing.

Nuclear fuel production began in 1973. The plant was then an integral part of the Soviet nuclear industry. It depends on Russia for enrichment of its uranium — a vital stage in the manufacture of some types of nuclear fuel.

Russia continued to be the main customer for the plant after the break up of the USSR, but the past few years have seen a decline in output reflecting the falling demand for nuclear fuel from Russia, and also a deliberate move on Russia’s part to place more business with its own enterprises.

Ulba has faced financial problems and the failure of various management deals with multinational companies over the past few years. These included a joint Russian-Kazakh group, Interross, which took over in August 1995 and a similar attempt by Canadian companies. The government came up with a rescue package in June 1996.

At the time of this intervention the company owed its employees eight months’ pay and had run up debts to the budget, the pension fund, suppliers and others of more than 2b tenge, primarily because 80 percent of its output was shipped to Russia where consumers were unable to pay for it. The government rescue package involved eight million US dollars, enabling Ulba to clear most of its wage arrears, pay taxes and obtain some working capital.

Company officials said repayment of the loan would fall due soon and the company did not intend to borrow any more but raise funds itself.

It has radically redirected its sales policy to countries outside the former Soviet Union, where payment is more reliable. India could be a key player in pursuing this strategy.