MOSCOW — Russia's stateowned nuclear power company, whose expansion on the international market in recent years has outstripped the country's capacity to supply uranium fuel to the new power plants, won a large concession last week to mine uranium in Mongolia.
The company, Rosatom, will form a joint venture that will have access to a deposit that could produce about a quarter of Russia's total current uranium output. The deal was reached during a state visit to Mongolia by President Dmitri A. Medvedev of Russia and after the two countries agreed on a settlement of $150 million in Sovietera debt.
The move into Mongolia is a lift for Rosatom at a time when Russia's industry is making a big push to expand.
The company is marketing nuclear reactors bundled with the fuel to power them to developing countries around the world. While best known for its decade-old contract to build a nuclear power plant in Iran, the company is also active in China, India, Eastern Europe and elsewhere.
Outside of Iran, the Russian business is supported by the United States as a productive use of Soviet legacy uraniumenrichment plants in Russia. In Iran, the United States opposed the power plant's construction but approved the Russian fuel shipments.
By encouraging the commercial availability of Russian enrichment services, the United States deprives other countries of the rationale to have enrichment programs of their own that could lead to bomb production.
Russia is also a major supplier to Western Europe and the United States, where a subsidiary of Rosatom now provides about 50 percent of the fuel used in the United States' 104 nuclear power reactors under a post-Cold War agreement to dilute weaponsgrade uranium into fuel suitable for power plants. This agreement is scheduled to expire in 2013 - further increasing demand for mined uranium because the diluted Russian weapons materialwill no longer be available.
The Russians are eager to maintain their market share in the United States by selling fuel enriched from natural uranium, another incentive to secure rights to mines.
In May, the first commercial deals were signed with the American utilities Ameren, Luminant and Pacific Gas & Electric, for fuel sufficient to power 15 million American households.
The business is based on Russia's taking advantage of excess enrichment capacity that is a legacy of cold war weapons programs. Russia possesses about 40 percent of the world's enrichment capacity, far more than it needs to service its domestic reactors.
Nuclear reactors run on uranium that is composed of 3 percent to 5 percent uranium 235. In nature, uranium is only 0.7 percent uranium 235. Uranium used in weapons is enriched to more than 90 percent.
Russia, however, is not selfsufficient in natural uranium to sustain this business and is on a land grab around the world to secure equity stakes in uranium mines as a guarantee of longterm supply.
"The strategy is to diversify by sources and markets of uranium," said Marina V. Alekseyenkova, an industrial analyst at Renaissance bank in Moscow. "All this fuel fabrication should be supplied with uranium concentrate."
Business, Pages 76 on 08/30/2009