Ban On Russian Uranium’s Import to US: How Will This Affect Kazakhstan?

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Since the beginning of Russia's war against Ukraine, hundreds of sanctions have been imposed on the former’s key economic sectors: oil and gas, metallurgy, etc. The nuclear sector, however, has been spared hitherto. 

Rosatom, despite almost two years of war, has remained untouched. This may change soon, though. The U.S. House of Representatives has approved a bill banning uranium imports from Russia. It still needs to pass through the Senate and be signed by the president, but the odds are still high.

It would seem this is an opportunity Kazakhstan cannot afford to miss. Yet, the experts has talked to are not so optimistic.

No Changes

Kazakhstan is a world leader in uranium mining. According to Kazatomprom, in 2022, its production in Kazakhstan amounted to 21,279 thousand tons. All of it is exported, as the Republic has neither nuclear power plants nor nuclear weapons.

According to information cited by Reuters, a quarter of all uranium used in the United States is supplied from Kazakhstan. Only Canada outpaces us. Russia for the time being accounts for 12%. 

I think that we will remain at the level of those supplies for which contracts have already been signed with the United States. Because to increase the volume of supplies, it is necessary to increase production volumes,
 says Mukhtar Dzhakishyev, former head of Kazatomprom.
Mukhtar Dzhakishyev. Photo:

Kazakhstan, in addition to being a leader in production, occupies second place in terms of uranium reserves. Two issues may end up being a roadblock for the republic's replacement of Russia. The first one concerns production facilities. According to Dzhakishyev, Kazakhstani deposits’ capacities created by 2009 amounted to 28 thousand tons per year, but mining preparation was not carried out everywhere. In other words, there is no guarantee they will be able to start mining promptly.

The second problem is tied to market behavior. According to Kazatomprom, from 2012 to 2022, the volume of production ranged from 20.9 to 24.6 thousand tons. It peaked in 2016 and then declined, fluctuating. There is a simple explanation - increased supply reduces price.

Dynamics of uranium production in Kazakhstan in 1997-2022. Photo: Kazatomprom

 Dzhakishyev gives two examples regarding this from the late 2000s and early 2010s. Firstly, the US’s Soviet-era anti-dumping measures had been pulled back for Kazakhstan. Secondly, Russia was running out of stocks of highly enriched weapons-grade uranium, which it converted into low-enriched uranium and sent to American nuclear power plants. It was then, in the late 2000s, that Kazakhstan made a full-fledged entrance into the nuclear market, having started active production.

In the early 2010s, Kazatomprom began to increase active production, having no markets, and thereby decreased the price of uranium. They mined a lot of it, but it was cheap,  the expert says.

Economist Marat Abdrakhmanov also holds the opinion that Kazakhstan is unlikely to start increasing capacity, much less developing new uranium deposits.

Kazakhstan has two more major undeveloped uranium deposits, but they are unlikely to be started even in this century. Because the other capacities are sufficient, the expert says.

He also spoke about the potential competition. Indeed, Canada is close by, while Australia, the leader in uranium reserves, is another option.

Сould Be Worse

Experts also point out the matter regarding the type of Russian uranium that’s on the chopping block, as Kazakhstan’s nuclear industry is closely intertwined with Russia’s.

A significant part of the uranium sold under the Russian Federation’s flag is of Kazakhstani origin. Rosatom has a stake in several joint ventures producing in the Republic of Kazakhstan. And since May 2023, it has complete ownership over the Budennovskoye field via UraniumOne.

Natural uranium is considered to be Kazakhstani, and it is not subject to sanctions. That is, we can sell to anyone. However, the legal owner of uranium is Russian companies,
 says Asset Nauryzbayev, an expert on nuclear energy.
Asset Nauryzbayev. Photo: Downpour

This could still bring about the opposite effect. In the context of sanctions, Russia may pay mind to the uranium being Kazakhstani especially when a share of the enterprises continues to belong to Kazatomprom.

But if this concerns nuclear fuel, Nauryzbayev also sees risks for the Republic of Kazakhstan in American sanctions. Kazakhstan’s uranium is largely used for it in Russia. There are also deposits in the Russian Federation, i.e. in Buryatia and Transbaikalia. The production volumes are nonetheless much higher in Kazakhstan. Thus, a decrease in Russian exports may affect the volume of uranium purchases in Kazakhstan.

The expert also believes there could be a potential blow stemming from American sanctions for the Ulba Metallurgical Plant in Oskemen. It produces a uranium fuel pellet that is exported. It is made in the Republic of Kazakhstan, but Russia is also present in the technological chain.

We do not have technologies for uranium enrichment and will not. This is prohibited by the Treaty on the Non-proliferation of Nuclear Weapons, which Kazakhstan has signed. Therefore, the uranium extracted from us is first enriched in Russia, and then sent to the plant in Oskemen, Asset Nauryzbayev explains.
A uranium fuel pellet. Photo: Ulba Metallurgical Plant

While the bill has not been adopted, it is not entirely clear what the United States will pay attention to. If we look at the entire production chain, then the uranium pellet from the East Kazakhstan region can also be considered partially Russian. If not, then it will remain Kazakhstani. The details remain unclear: will the United States abandon Russian fuel itself, or will they make sure that the Russian Federation does not supply it to other countries? In the second case, the Ulba Machine-Building Plant will be affected.

There is, of course, the option of supplying enriched uranium from other countries, but it seems unlikely to me, Nauryzbayev believes.

According to the expert, so far the decision of the House of Representatives raises many questions. This is especially true considering the included waivers permitting the import of low-enriched Russian uranium provided the US energy secretary deems there is no alternative available for a US nuclear reactor or a US nuclear energy company, or if such shipments are considered a national interest. The waivers must be discontinued no later than 1 January 2028, however.

Andrey Ozharovsky, a nuclear physicist and antinuclear campaigner, in an interview with “The Insider”, said the US likely has enough time to figure out how to forgo using Russian uranium, as nuclear energy purchases can be done for several years at a time. 

Meanwhile, Kazakhstan's Uranium supplies to China have broken records. The cost of selling processed uranium abroad for 10 months of 2023 amounted to $2.46 billion. This figure is a third more than last year, reports the First Credit Bureau.

There is also notable growth in exports to the Russian Federation. Revenue for 10 months amounted to about $1.2 billion. This is 72% more than in the same period last year.

Original Author: Igor Ulitin

DISCLAIMER: This is a translated piece. The text has been modified, the content is the same. Please refer to the original piece in Russian for accuracy. Details have been added as of 20/12/23 to reflect the current situation. 

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