Fuel and fuel cycle

Kazakh ambition

31 August 2007

Kazakh officials have repeatedly made clear Kazakhstan’s intention to become the world’s biggest uranium producer and to move from being just a raw material supplier to a key producer of nuclear fuel. By Judith Perera

Over the past few months, Kazakhstan has entered into a series of deals with Japan, China, Canada and Russia. The deals broadly entail an agreement to supply uranium in return for the technology to develop its own fuel industry. The relationship with Russia is especially close as Kazakhstan does not intend to build its own uranium enrichment facility and will have to rely on the use of Russian-based plants for this service.

Kazakhstan’s Ulbinskiy Metallurgical Plant (UMP), part of national nuclear company Kazatomprom, has started building three nuclear fuel production plants costing $848 million, the head of East Kazakhstan Region, Zhanibek Karibzhanov, said in July.

Karibzhanov said the plants under construction were for the production of uranium hexafluoride and fuel assemblies which “makes it possible to complete the full cycle of nuclear fuel production in Kazakhstan and to supply third generation nuclear reactors with fuel.” Underpinning these deals are plans for a massive increase in uranium production.

Production increases

Kazatomprom now plans to increase annual production to 18,000t in 2010, company president Mukhtar Dzhakishev said in April. In 2004 Kazatomprom announced plans to increase production to 15,000t/y by 2010 – almost a five-fold increase – to cover expected shortfalls, but these targets have now been revised again. He pointed out that in Soviet times annual production totalled 13,200t and involved over 200,000 people. Today the 18,000t/a target envisages no more than 5000 specialists, the equivalent of a 60-fold increase in productivity. The company plans to launch new mines in three years, compared with western practice that usually takes 7-8 years, Dzhakishev said.

Kazatomprom plans by 2009 to add 12 new mines. Production began at two using in situ leaching (ISL) in 2006 and the company will add five more in 2007 through joint ventures with Cameco (Canada), Areva (France), UrAsia (Canada), and Tenex (Russia). Four more ISL mines and one shaft mine will be added in 2008 with supporting infrastructure, a sulfuric acid plant and other facilities.

Dzhakishev said production at old and new mines would reach a maximum of at least 20,000t by 2015, which would continue until 2027. “We figure after 2030 we’ll need to invest in geological exploration to maintain production, including at fields where shaft mines are used,” he said. This will involve investment of more than $220 million in exploration in 2015-2040 to maintain production at the same level and should increase reserves by at least 400,000t.

The company currently provides about 10% of the world’s uranium, making it the fourth largest supplier. Income from uranium sales accounts for more than half of Kazatomprom earnings.

Kazakhstan holds a quarter of the world’s uranium and has 129 fields and deposits in six provinces with resources totalling 1.69 million tU. Uranium is being produced using ISL in Chu-Sarysu at Uvanas, Mynkuduk, Kanzhugan, and Moinkum, and in Syrdarya at the North and South Karamurun fields. In North Kazakhstan it is extracted through shaft mines at Vostok field.

Joint ventures

Kazatomprom also holds stakes in the Inkai, Katko, and Appak, Kyzylkum LLP, Baiken-U, Zarechnoye and UKR TVS joint ventures. Kazatomprom owns 40% of Inkai, and Cameco (Canada) 60%. Inkai, in Suzak, is developing the field of the same name. The proven commercial reserves at block N1 total 42,849tU (recoverable reserves total 35,129tU), with commercial production set to begin next year. Construction of the main plant began in 2005 and construction of the other two is planned by 2009. Production capacity will grow to 2000t/y in 2010 or 5.2 million pounds U3O8. Blocks N2 and N3 hold at least 200,000t, but these are yet to be proven.

Katko was formed in 1996 as a joint venture between France’s Areva (51%) and Kazatomprom (49%). It is developing Moinkum field and blocks N1 and N2.

Appak is a joint venture set up with Japan’s Sumitomo and Kansai Electric Power in 2005 to develop West Mynkuduk field. Marubeni, Tokyo Electric Power and Chubu Electric Power acquired a share interest from Kazatomprom in Kyzylkum and Baiken-U in April. Kyzylkum develops Kharasan-1 mine, while Baiken-U operates Kharasan-2. Industrial production at Kharasan is scheduled for 2007, the design annual production capacity at the field is planned to increase up to 5000tU by 2014. Uranium reserves of both Kharasan blocks are estimated at 160,000tU. Dzhakishev also said that after Kharasan-1 and Kharasan-2 hit their design capacity, the company’s export proceeds will total $1.5 billion.

Working with Russia

Zarechnoye was formed in 2001 under intergovernmental agreements to integrate the Russian and Kazakh nuclear energy industries and for joint development of the Zarechnoye field in South Kazakhstan. Kazatomprom owns 49.33%, Tenex 49.33%, Atomredmetzoloto 0.67%, and the Kara-Balta Mining Combine (Kyrgyzstan) 0.67%. Construction began in December 2004 and the enterprise should reach full capacity of 1000t/y in 2009.

UKR TVS was formed in September 2001 by Kazatomprom, Russia’s Tvel, and Ukraine’s State Property Fund. It has charter capital of $450,000 and the partners hold equal shares. The joint venture produces uranium in Kazakhstan, enriches it in Russia, and produces fuel pellets in Kazakhstan. It supplies nuclear fuel for Ukrainian reactors.

Kazakhstan distanced itself from Russia following the collapse of the Soviet Union, but close cooperation is now being re-established. Russia and Kazakhstan in October 2006 set up three joint nuclear ventures to produce uranium in Kazakhstan, enrich it in Russia and develop a new kind of small nuclear reactor to be promoted in other countries.


Kazatomprom plans to start exporting Kazakh-made nuclear fuel in about five or six years

The first venture, the uranium enrichment centre, was registered in Angarsk, Siberia, in October and enriches uranium at Russia’s long-established Angarsk Electrolysis Plant. The same facility is to be the site of the world’s first international uranium enrichment centre, in which Kazakhstan is also a partner. Russian and Kazakh companies will participate in all projects on an equal basis. The

formation of the joint ventures was outlined in memoranda signed by Tenex and Atomstroyexport of Russia and Kazatomprom in July 2006 and the combined assets of the three ventures are expected to reach $10 billion in the next few years with a potential turnover for each company of tens of billions of dollars. Russia and Kazakhstan are shortly to set up yet another uranium exploration and drilling joint venture – Rosburmash-Kazakhstan.

International trade

Kazatomprom will start selling nuclear fuel to China by 2013, bypassing companies such as Areva. Kazakh nuclear fuel will also be exported to Japan and Europe. “Kazatomprom plans to start exporting Kazakh-made nuclear fuel in about five or six years,” Dzhakishev said in May. “The fuel will be sold to China, Japan, Europe and, possibly, to the USA,” he said.

In July, Japan’s Toshiba announced plans to sell a 10% stake in its US-based Westinghouse subsidiary to Kazatomprom, hoping to secure a stable supply of uranium. Toshiba, which owns 77% of Westinghouse, hopes to strengthen its presence on the global nuclear power plant market by forming a conglomerate capable of covering everything from uranium mining to plant construction, Japanese industry sources said. Access to uranium will be key to winning contracts, they added.

A visit by Toshiba’s president, Atsutoshi Nishida, in April resulted in an agreement to work with Kazatomprom on nuclear fuel and power plant construction. Toshiba officials agreed to start negotiations for a strategic alliance with Kazatomprom centred on the purchase of uranium in exchange for fuel cycle technology. The share purchase makes Kazatomprom the third largest shareholder in Westinghouse. Toshiba acquired its 77% stake in Westinghouse from BNFL last year; another 20% went to the US engineering company The Shaw Group, and 3% to Ishikawajima-Harima Heavy Industries. Sumitomo, which earlier considered buying a stake, has given up on the plan, sources said.

Kazakhstan has agreed to pay $540 million for the stake in Westinghouse. US government approval is required for transactions in which a foreign entity takes a stake in an American business possessing nuclear technology. However, US officials have indicated that the deal poses no problems, according to Japanese sources.

Over the past few months Kazakhstan has also discussed possible cooperation in fuel manufacture with China and South Korea. Agreements were reached with China in May and Japan earlier in the year for the transfer of the necessary technology in return for uranium supplies. However, Kazatomprom has so far been unable to agree a joint venture with any South Korean companies, Dzhakishev said.

Kazatomprom plans to start supplying fuel pellets and powder to China in two years, Dzhakishev, noted. In the meantime, Kazatomprom expects to obtain the necessary certification, he said. “We need to certify these products for the reactors used in China today, in particular Guangdong Nuclear Power.” Eventually, Kazatomprom and China intend to work together in fuel assembly production, he added.

Also in May, Canada’s Cameco and Kazatomprom agreed to build a conversion facility to process uranium oxide into uranium hexafluoride. Cameco will provide the technology and plans to sign binding agreements with Kazatomprom this year and a feasibility study will be ready by the end of the year. “Cameco will be responsible for the technological part of the project and … will shoulder the design and engineering,” Dzhakishev said.

Nuclear power plans

In July, Kazakhstan also made available an initial 152 million tenge ($1.24 million) for a feasibility study for a nuclear plant. Energy and mineral resources minister Bakhtykozha Izmukhambetov said it would be completed by 2009 and would cost 12 billion tenge ($100 million). The Caspian town of Aktau is being considered as a possible site for the 600MWe plant. In addition, Kazakhstan’s National Nuclear Centre (NNC) has proposed a programme aimed at energy supply to small towns, involving the construction of 20 small nuclear plants with capacity of 50-100MWe each. “It’s very expensive to build a large reactor, but small power is cheaper, more flexible and easy to deploy,” said NNC director Kairat Kadyrjanov.

Kadyrjanov said the relevant technology was being tested. A modular small power reactor could be built in the city of Kurchatov, he suggested. “If the issue of building new power generating capacities is not solved shortly, Kazakhstan will have to buy electricity from neighbours by 2012,” he warned.

Kadyrjanov also announced plans to establish a Nuclear Medicine and Biophysics Centre in the village of Alatau near Almaty. This project is developed in cooperation with the cancer treatment centre being built in Semipalatinsk and the diagnostics centre in Astana. The cancer centre should be ready within three years, but Kadyrjanov acknowledged that there were delays due to funding problems. However, the NNC’s Nuclear Physics Institute has made considerable progress in the production of radiopharmaceuticals since its research reactor in Almaty restarted operation after being closed for nine years.

Construction of the Tokamak experimental complex in Kurchatov is another significant project. Russia’s Kurchatov Institute is scientific supervisor and the Yefremov Research Institute of Electrophysical Instruments in St Petersburg is the chief designer. The complex is scheduled to open in 2008.

With all these developments underway and the prospect of further increases in the uranium price, Kazakhstan’s nuclear future looks bright. And its potential has clearly been recognised not only by neighbouring Russia but also by the other major players on the international nuclear market.

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