How West's dependence on Russia does not stop with natural gas

While the global energy crisis, triggered by the Russian war in Ukraine, is mainly associated with a spike in crude oil and natural gas prices, nuclear fuels are another energy source that reveals the West's dependence on Russia as a supplier. The Times has analyzed the economic and geopolitical network that exists behind the uranium-enriched energy product. Caliber.Az reprints this article. 

"In a memorable scene from the film Oppenheimer, scientists making the first atomic weapon keep a tally of the special materials they will need — enriched uranium and plutonium — by dropping marbles into glass bowls. When the bowls are full they will have enough to build the bomb.

Although the film pays it only fleeting reference, the manufacturing effort required to make the metals was colossal, consuming the lion’s share of the Manhattan Project’s $2 billion — in 1940s dollars — budget. It gave the United States and Britain, America’s key ally in the project, a crucial head start in making not only the atomic bomb but also the industrial apparatus needed to make fuel for civil nuclear power plants.

Eight decades later another conflict, Russia’s invasion of Ukraine, has revealed a starkly different state of affairs in the modern supply of nuclear fuels. Just as Europe became dependent on Russian gas, America and some other Nato states have developed a heavy reliance on Russia for the enriched uranium they need to keep their nuclear plants running.

Tellingly, the trade was not subject to sanctions after the invasion of Ukraine but western governments and companies are scrambling to fill the gap by rebuilding their own industrial capability, an uncertain process that is expected to take several years. 'This is a cautionary tale, not just for the nuclear industry, but energy policy in general', Darya Dolzikova, a research fellow at the Royal United Services Institute’s proliferation and nuclear policy programme, said.

The US government’s own figures show the important role that Russia plays in its nuclear power generation. Last year American power companies bought nearly a quarter of their fuel supplies from Russia, a proportion that has changed little in the past five years. Another 16 per cent (using the standard industry measure, the separative work unit, or 'swu', the amount of effort required to enrich one kilogramme of uranium) came from France, China or unidentified sources, which industry experts believe probably masks some 'rebadged' Russian work. In total, America imports 73 per cent of the uranium it uses for power generation.

Dolzikova, who has examined trade records to try to track down the value of the business, calculates that the US and France together spent $1.2 billion on Russian nuclear services last year, most of which went to Rosatom, a nuclear-services group owned by the Kremlin.

Independent estimates suggest global demand of about 48 million swu a year. Non-Russian plants have the capacity to produce about 33 million a year. The price of swus — tradable assets with quoted prices — has jumped sharply this year from about $125 to $135. It fell to close to $50 after the Fukushima nuclear disaster in Japan, when an atomic power plant was overwhelmed by a tsunami.

The reliance on Russia has spooked western governments. In April five G7 nations — the US, Britain, France, Japan and Canada — agreed to join forces to bolster their own industries.

Enriching uranium is a demanding industrial process. Mined uranium contains a tiny percentage of lighter atoms, Uranium 235, which are useful for atomic power plants. There are different techniques for separation but most modern plants use centrifuges, where uranium hexaflouride gas is swirled at high speed. The lighter atoms move to the centre of the drum, where they are siphoned off and sent to the next centrifuge to be enriched again. Cascades of centrifuges, hundreds in some plants, are needed to produce the required amount of enriched uranium.

The UK has an ace up its sleeve: it owns one third of Urenco, the world’s leading uranium enrichment company. It has plants in Germany, the Netherlands, the US and at Capenhurst in Chester. It was created in 1970 by the Treaty of Almelo between Britain, West Germany and the Netherlands aimed at tackling America’s then-dominance in the supply of nuclear fuel.

That dominance has withered in the intervening years, in part because of a programme to help to reduce the number of nuclear weapons in eastern Europe after the break-up of the Soviet Union. The 'Megatonnes to Megawatts' programme, agreed in 1993, had about 500 tonnes of weapons-grade uranium from Russia converted into fuel for US power plants.

Daniel B Poneman, chief executive of Centrus, a Nasdaq-listed enrichment company that plans a big expansion to replace Russian imports, is a former deputy US energy secretary and, when serving as an adviser to the National Security Council in the 1990s, was close to the negotiations with the Russians. 'I used to tell people that one in ten light bulbs in America were powered by fuel that used to be in missiles pointed right at them', he said. The cheap new fuel was a boon to power companies but a problem for US players trying to compete. 'It lulled the US into a misguided complacency', Poneman said.

Five years after the deal with the Russians was signed, the American government pushed through the privatisation of US Enrichment Corporation, a company created from state-owned nuclear assets that were descendants of the Manhattan Project. It floated on the New York Stock Exchange, a deal that earned the US Treasury about $3 billion. Its relatively high-cost plants struggled to compete with the Russian imports, however, and it filed for Chapter 11 bankruptcy in 2014.

After a financial restructuring a new company, Centrus Energy, was formed. Earlier this year it opened a new enrichment line at its existing facility in Piketon, Ohio, which is designed to produce the higher-quality fuels needed for planned new reactor types. 'This is the first new enrichment capacity in the US since 1954', Poneman said.

Centrus says it could have another, much larger facility ready in less than four years. Long-term funding is required and Poneman said that some kind of 'public-private partnership' was needed. 'There is a very robust dialogue with the government going on at all levels'.

Urenco is also stepping up production at its US facility at Eunice, New Mexico, a six-hour drive south of Robert Oppenheimer’s original bomb-making centre. It will spend an undisclosed sum on a 15 per cent increase in capacity that should be complete in four years’ time.

The company is already benefiting from increased demand. Half-year results in August showed that sales were up 14 per cent year on year, and profits up 6.6 per cent. The war in Ukraine and growing interest in civil nuclear projects has left it with an order book worth about £10 billion".