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Competition heats up for uranium

High oil prices have fuelled a revival in the nuclear power industry and the scramble for Central Asian energy resources has broadened to include uranium, the feedstock for atomic plants

International investors have been competing for oil and gas fields in Central Asia for over a decade. But the region can also provide a rich source of alternative energy, writes Isabel Gorst. High oil prices have fuelled a revival in the nuclear power industry and the scramble for Central Asian energy resources has broadened to include uranium, the feedstock for atomic plants.

Kazakhstan's 472,000 tonnes of uranium reserves account for 15% of the world total and are second only to those of Australia, according to the World Nuclear Association. The country plans to quadruple its 4,300 tonnes a year (t/y) of production by 2010, which would see it overtake Canada and Australia to become the world's biggest uranium producer.

Uzbekistan holds 103,000 tonnes of uranium reserves, 3% of the world total. It also has ambitious plans to boost output to 3,000 tonnes in 2010, up from 2,301 tonnes in 2004. Kyrgyzstan's reserves are smaller than those of its neighbours, but with world uranium prices soaring, mining ventures in the republic can be highly profitable.

Russia, meanwhile, is seeking to recover the control over the region's atomic industry that it enjoyed during the Soviet era. In January, President Vladimir Putin and Kazakhstan's President Nursultan Nazarbayev signed a joint declaration to co-operate in the peaceful use of nuclear energy.

Russia has plentiful uranium reserves, but production at developed deposits is declining. Rosatom, the nuclear power monopoly, is seeking new sources of uranium in Central Asia both to feed its own power plants and to supply export markets. Russia plans to increase nuclear power production to ease domestic electricity shortages and free up oil and gas feedstocks for export. Kazakhstan is thinking along similar lines.

In October, Rosatom and its Kazakhstani counterpart, Kazatomprom founded a joint venture to exploit the South Zarechnoye and Budyennovsk uranium deposits in south Kazakhstan (PE 9/06 p38). The two companies have also set up a company, Atomic Stations, in Almaty to develop and promote small and medium-sized nuclear power plant projects in Russia, Kazakhstan and elsewhere.

A third venture, registered in Angarsk, eastern Siberia, will operate a uranium-enrichment centre for peaceful purposes. The two companies are also negotiating to take control of Kyrgyzstan's Karabalta uranium-processing plant, not far from the country's border with Kazakhstan.

At the same time as drawing closer to Russia, Kazakhstan is inviting other countries into uranium ventures, mirroring a geopolitical balancing act it has already accomplished in the oil industry. Mining deals have been signed with French, Canadian and Japanese companies, and more are under negotiation.

A strong role for Japan

Japan has fallen behind international competitors in the race for Central Asian oil, but looks set to play a strong role in uranium mining in the region. In August, Junichiro Koizumi became the first Japanese prime minister to pay an official visit to Central Asia, shortly before leaving office. In Kazakhstan, Koizumi presided over the signing of a nuclear co-operation pact expected to smooth a path for Japanese mining companies in the republic.

Sumitomo and Kansai Electric Power have already entered an agreement to produce uranium at West Myndukuk deposit in south Kazakhstan with Kazatomprom. Meanwhile, Itochu has signed a 10-year deal to import uranium from the country. And other Japanese trading houses and utilities are seeking mining deals in Kazakhstan.

Japan's Nuclear Security Fund is an active participant in an international project to improve safety and waste monitoring at Soviet-built nuclear fuel processing facilities in Kazakhstan.
Koizumi also visited Uzbekistan for talks about possible mining ventures. Western governments have grown increasingly critical of human-rights abuses in Uzbekistan in recent years. The government of President Islam Karimov has side-lined Western investors. However, an exception may be made for Japanese mining companies. Speaking at a press conference during Koizumi's visit, Karimov said: "We are prepared to offer our resources to supply uranium to Japan."

Uranium mining in Uzbekistan is dominated by state-owned Navoi Mining and Metallurgy, which also controls rich gold and diamond deposits. The country's uranium deposits are in the Kyzylkum desert. Korea Resources has a protocol of intent to support a joint venture to produce uranium from a deposit in the central part of the desert. Navoi is also discussing a uranium-mining venture with a Russian investor.

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