Concerns are rising in the West over energy security as it appears to be that Russia and China – but especially Russia – have been both cornering the U308 market. Russia also handles much of the world processing of uranium, an awkward reality amid US plans to sanction Russian uranium imports over the war in Ukraine. These concerns were the focus of a recent Financial Times article.
In the midst of this stands Kazakhstan – around 59mn pounds of U308, constituting 44% of the current global uranium production is sourced from this Central Asian nation, the article noted. This alarm also concerns other countries of course, but Kazakhstan remains a key weak spot in securing the energy security for Western countries. And although the EU has tinkered with the idea of relying on Kazakhstan to bypass Russia, the approach would be as effective as relying on Russia to bypass Russia.
Here is why:
The autonomy of Kazakhstan’s decisions on uranium production and the potential influence exerted by Moscow on it is under question, since Russia’s support of the current Kazakh president, Kassym-Jomart Tokayev stands as the main guarantee of his continued rule. This happens to be the case with multiple leaders in Central Asia, including the previous Kazakh president, Nursultan Nazarbayev. Russia’s unquestionable authority over this was demonstrated during the January 2022 political unrest in Kazakhstan, where the Russia-led OECD’s support played a key role in signalling the Kazakh military to obey Tokayev.
Although the news of Tokayev’s refusal to recognise Russia-occupied territories in Ukraine has made the West hopeful that Kazakhstan is moving away from Russia’s backyard, the reality is that Kazakhstan is simply trying to evade secondary sanctions, while staying as close to Russia as possible.
Beyond the realm of politics, Kazakh-origin uranium, whether directly or indirectly, plays a crucial role in meeting the West’s energy needs, covering 40% of the United States’ utility requirements and a substantial 44% of the European Union’s.
More critically, the state-run uranium operator Kazatomprom, which went public on the London Stock Exchange in 2019 and is 75%-state-owned, operates uranium mines in Kazakhstan independently and through joint ventures, has been indirectly under Russia’s and China’s influence since at least the late noughties. Leaked interrogation videos of Kazatomprom ex-head Mukhtar Dzhakishev – who was arrested and imprisoned in 2009 and released in 2020 – show that Dzhakishev believed (at the time of the interrogation) that his arrest had something to do with Dzhakishev’s decision-making repeatedly stepping on Russia’s foot.
Dzhakishev, who is known for having led Kazatomprom through a period of rapid growth in the early 2000s, noted in the videos that prior to his arrest he was urging Japan and China to grab joint controlling stakes in Uranium One, a Canadian firm that, back then, had indirect control over several key uranium assets in Kazakhstan. After his arrest, the infamous Uranium One deal took place, which led to Russia taking hold of a controlling stake instead. This was just one case of Russia and China’s competition over Kazakh uranium.
Since then, Russia has been maintaining control of over 26% of Kazakh uranium deposits and holds rights to an additional 22% of annual production. Meanwhile, China National Uranium Corporation (CNUC) and its counterparts possess rights to almost 60% of future Kazakh production, with plans for a uranium trading hub in Xinjiang, just across the Kazakh border.
Moreover, even though Kazakhstan is the world’s biggest player in uranium supply, much of its milled uranium travels through Russian conversion plants before it is exported to global markets. The are currently only four main operational uranium converter facilities globally, responsible for producing uranium hexafluoride gas. These facilities, located in Russia, China, France, and Canada, play a crucial role in the conversion process, which is a prerequisite for subsequent enrichment and nuclear fuel production. Russia dominates this sector, accounting for approximately 40% of the world’s uranium conversion infrastructure and supplying roughly one-third of the utilised uranium hexafluoride gas in the global market.
The significance of the conversion process cannot be overstated, as it is an essential step preceding enrichment and the manufacturing of nuclear fuel. In 2020, European Union utilities relied on Russia for about 20% of their uranium and 26% of their uranium enrichment services. Similarly, based on 2021 data, the United States sourced approximately 14% of its uranium and 28% of its uranium enrichment services from Russia.
Kazakhstan’s uranium supply has also recently been harmed by challenges in securing sulfuric acid essential for uranium production last year and this year. Kazatomprom announced this month the possibility of reducing its 2024 production plan due to these challenges. Previously, the company projected uranium production in the range of 25,000-25,500 tonnes for 2024 and 30,500-31,500 tonnes for 2025, compared to 20,500-21,500 tonnes in 2023.
This overall paints a grim picture for the US and the EU, as energy independence from Russia – and, partly from China – may not become a reality any time soon.
This has not deterred some European nations from attempting to ignore Russia’s grip on Kazakh uranium though. Notably, French nuclear company Orano, formerly known as Areva, is, looking to step up its uranium activities in Kazakhstan, where it already mines uranium deposits in a joint venture with Kazatomprom.
KATCO, a joint venture between Orano and Kazatomprom, is reportedly gearing up to commence uranium mining operations at the South Tortkuduk site by the end of 2023, Trend.az reported, citing a source at Orano. The venture, with 51% ownership by Orano Mining and 49% by Kazatomprom, is focused on developing and utilising uranium resources in the Turkistan Region, specifically in the Muyunkum and Tortkuduk areas situated around 300 kilometres (186 miles) north of Shymkent.
Analysts have attributed French President Emmanuel Macron’s visit to Kazakhstan late last year to be primarily driven by the need to secure closer ties over uranium production and import.
As such, perhaps some paths for direct access to Kazakh uranium have not yet been entirely blocked off by Russia, though who is to say this not a matter of time?
