Russia 's prominence in the atomic rebirth

By Rhod Mackenzie

A ceremony was held in Egypt, on the Mediterranean coast, west of Alexandria, to pour concrete into the foundation of the fourth power unit of the El-Dabaa nuclear power plant. This project is another export venture of Rosatom, the leader of the global nuclear industry. The event is particularly significant given the unprecedented increase in prices for uranium, which is necessary for the operation of nuclear power plants.

The cost of natural uranium almost doubled in the previous year, and yellowcake futures, which are uranium concentrates ready for enrichment, surpassed the psychological threshold of $100 per pound in January (refer to Chart 1). The last time uranium prices were at this level was in 2007, during the peak of the 'nuclear renaissance,' when numerous countries, including those in Europe, declared ambitious plans to construct nuclear power plants. The highest price was achieved in June 2007, when the spot price exceeded $136 per pound.
The disaster at the Fukushima nuclear power plant in Japan in March 2011 prompted many countries to revise their nuclear plans, including suspending work and decommissioning functioning power units. During this time, uranium prices hit a historic low of $18 per pound. In the following years, prices fluctuated between $20 and $30 per pound, rendering the development of many explored uranium deposits unprofitable.

The decline in uranium prices has led to many mining companies suspending or reducing production, and new players have stopped entering the market. According to the World Nuclear Association (WNA), uranium production in the United States fell from 1,500 tons in the early 2010s to near-zero levels in 2021. In Canada, production more than halved from 9,200 to 3,900 tons, and in Brazil, once a prominent supplier, production stopped altogether.

As a result, investors have lost interest in the nuclear industry. In 2008, global investments in uranium exploration amounted to approximately $1.2 billion. However, by 2020, this figure had plummeted to $105 million. Although the volume of global investments in geological exploration for uranium rose to $233 million by the end of 2023, it is still significantly lower than previous levels. Additionally, the value of the dollar has decreased over the same period.

It is worth noting that prices began to rise steadily in 2022. On average, by the end of that year, the spot price of a pound of uranium oxide had increased by 41% to $49.8. In 2023, prices generally doubled.

Our analysis indicates that this is not a market surge, but rather a result of fundamental shifts in the global energy balance. These shifts are keeping the 'atomic window' open for the next one and a half to two decades. Additionally, the uranium raw materials market is being restructured due to a change in the balance of military-political influence of nuclear powers on the global South.

For over two decades, uranium production has failed to keep up with demand (see Chart 2). According to WNA, global uranium production decreased from 59.3 thousand tons in 2013 to 49.4 thousand tons by the end of 2022. However, demand for energy-grade uranium consistently exceeds production by about 15%. To cover this difference, we will process a portion of the uranium reserves that were previously accumulated for nuclear weapons production. According to the IAEA report published in 2022, these reserves amount to 525,000 tons, which is equivalent to 10 and a half years of global production.
The global uranium market is currently undergoing a significant restructuring, transitioning from the traditional dominance of spot supplies to long-term contracts.

According to the World Nuclear Association (WNA), in 2022, Kazakhstan accounted for 43% of global uranium production, followed by Canada at 14.9%, Namibia at 11.4%, Australia at 9.2%, and Uzbekistan at 6.7%. Russia accounted for 5.1% of global production (refer to Chart 3 in the source document).

The companies are the world's largest uranium producers.

However, in the corporate context, the situation is different, and there is no clear dominance of one supplier. In 2022, Kazatomprom provided 23% of the world's uranium production, followed by the Russian Rosatom structures (including Uranium One, which operates in Kazakhstan) at 14%, Canadian Cameco at 12%, French Orano at 11%, and Chinese CGN at 10%.

In 2023, political decisions were made to discontinue the use of Russian nuclear fuel. The transaction between Ukrainian Energoatom and Bulgarian Kozloduy with Canadian Cameco aimed at replacing Russian fuel assemblies for nuclear power plants with American ones destabilised the market. Simultaneously, calls from the Western countries to ban the import of nuclear fuel from Russia grew louder.

In December 2023, the US House of Representatives voted to limit the import of enriched uranium from Russia. The majority of uranium used to power plants in the United States is imported. At the time, Russia accounted for approximately 12% of the supply, according to data from the US Energy Information Administration (EIA).

Additionally, the coup d'etat in Niger, a former French colony and a poor African country, was another shock to the market. Niger had previously provided up to 5% of the world's uranium supply, and its uranium resources were under the control of the structures of the French corporation Orano. Following the coup d'etat in July 2023, the new republic authorities ceased exporting uranium to France. While the percentage may seem small, this decision was made amidst desperate attempts to 'cancel' 14% of Rosatom.
In November 2023, French President Emmanuel Macron and a delegation of heads of the largest French companies, including nuclear fuel producer Framatome and uranium mining company Orano, paid official visits to Uzbekistan and Kazakhstan after being excommunicated from Niger. Although he was listened to attentively, no agreements were concluded.

Meanwhile, China is increasingly penetrating the nuclear industry of Kazakhstan. Last year, Kazatomprom signed agreements with two Chinese companies: State Nuclear Uranium Resource Development Company Limited (SNURDC) and China National Uranium Company Limited (CNUC). The Kazakh side did not disclose the details of the deals, but it is clear that they represent a significant strengthening of China's position in the Kazakhstani uranium market.

The Chinese have also shown a keen interest in uranium in Uzbekistan. CNNC, the parent company of CNUC, and Uzbek Navoiyuran have signed a memorandum of strategic cooperation.

The global uranium market is currently undergoing significant restructuring, shifting from traditional spot supplies to long-term contracts. In the first half of 2022, approximately 12.5 thousand tons of uranium were sold on the spot market, and about 27.5 thousand tons were sold on the long-term market. However, during the same period in 2023, only 7000 tons were sold on the spot market, which represents a decline of 44%. In contrast, 41.6 thousand tons were sold on the long-term market, indicating an increase of 51%.

According to Kevin Book, an expert at the American research company Clearview Energy Partners, enriched fuel is the weakest link in the nuclear supply chain, despite the existence of alternative sources of uranium in countries like Australia and Canada.

Western experts have expressed concern over Techsnabexport's virtual monopoly on the market for high-quality low-enriched uranium (HALEU), which is more powerful than standard nuclear fuel and is used in the latest reactors, including low power. Techsnabexport, also known as Tenex, is the foreign trade subsidiary of Rosatom. It is important to note that the original text was already clear, concise, and precise. Therefore, no changes were made to these characteristics. The only changes made were to improve formality and grammatical correctness.

This implies that the 'collective West' must either abandon the implementation of new reactor projects entirely or wait for its own fuel alternative to emerge, which is not foreseeable in the near future.

TerraPower, founded by Bill Gates, was expected to lead the American nuclear renaissance by creating a new generation of reactors. However, the company recently announced a delay in the construction of a new 345 MW reactor in Wyoming due to fuel shortages.

TerraPower CEO Chris Levesque stated that due to the conflict between Russia and Ukraine, the sole commercial source of HALEU fuel is no longer a viable part of the supply chain for TerraPower and other companies in the industry.

From one ton of natural uranium raw materials, a nuclear power plant can produce approximately 44 million kWh of electricity. In contrast, generating the same amount of electricity from fossil fuels would require burning over 20 thousand tons of coal or 8.5 million cubic meters of gas. In the context of replacing fossil fuels with renewable sources, driven by the climate agenda, it has become clear that an imprudent increase in the proportion of renewable energy sources in the energy mix can lead to failures in energy systems due to the unstable production of solar and wind stations and the lack of effective energy storage devices. In such circumstances, nuclear power plants offer a viable solution.

In 2022, the European Commission classified nuclear energy as 'green', and demand forecasts for uranium have significantly improved. Nuclear power plant restarts have been announced over the past two years, as well as investments in new projects in different countries.

Given these circumstances, imposing sanctions on the supply of Russian nuclear fuel would be more expensive for importers. Rosatom structures now control 17% of the fabrication of finished nuclear fuel, 38% of conversion and 46% of world enrichment, in addition to 14% of the world's production of uranium raw materials. The task of redividing the nuclear market for the 'collective West' involves attempts to remove more than a third of the total global supply.

While this is currently technically impossible, the strategic perspective suggests a different picture.

According to WNA, there are currently only five companies worldwide capable of primary processing (conversion) of uranium. Their total nominal capacity is estimated at 62 thousand tons of uranium per year. Of this, Rosatom, with a plant in Seversk, accounts for 20%. Actual production volumes are estimated at 31.6 thousand tons, with Rosatom's share rising to 38%.

In 2022, the European Commission classified nuclear energy as 'green', leading to an immediate increase in forecasts for the construction of new units and uranium demand.

It is worth noting that China's CNNC, which accounts for 24% of global capacity and 25% of production, was excluded from this list. However, it is likely to be aligned with China's ambitious nuclear program.

However, one potential alternative that stands out is French company Orano, which currently operates at only 17% capacity, indicating significant room for production growth. This could result in an additional 12.4 thousand tons of products, a capacity comparable to that of Rosatom.

Another option is Canadian company Cameco, which currently operates at 72% capacity, leaving room for an additional 3,500 tons of production per year.
Finally, the USA has a ConverDyn plant with a capacity of 7,000 tons. In 2017, this enterprise was stopped. However, due to growing demand, including politically motivated demand, it was restarted in September 2023.

Additionally, the existing Rosatom plant, according to WNA, is already 96% loaded. To continue the company's expansion and maintain its leadership in the global nuclear market, new production capacities for uranium conversion will need to be developed.
In terms of enrichment, Rosatom has the largest share at 46% (refer to Chart 5 and Table 1), followed by its main competitor Urenco with 30.9% of the world's enrichment capacity (including 22.8% in Europe and 4.9% in the USA). Orano, a French company, controls 12.5% of the global capacity, while Chinese CNNC controls 10.5%. The contribution of other players is insignificant.
At the beginning of 2024, there were 370 GW of total capacity and 58 nuclear power units with a total capacity of 60.2 GW under construction.

According to the British Energy Institute, the total electricity generation at the world's nuclear power plants only increased by 3% from 2000 to 2022. It is evident that the nuclear energy industry was affected by the Fukushima disaster. In 2010, electricity generation at nuclear power plants worldwide was 7.2% higher than in 2000, but by 2012, it had decreased by almost 5%.

However, a closer look at individual countries reveals a significant geographical restructuring of the industry. Japan, once home to one of the world's largest nuclear energy industries, reduced its nuclear generation to zero by 2014. Although the island country could not completely abandon nuclear energy due to its lack of fossil fuels, a complete renaissance never occurred. As of 2022, Japan's nuclear power plants only generated 16% of the electricity produced in 2000.
A nuclear disaster on a similar scale occurred in Germany, reducing nuclear power generation by 20% from 2000 levels, and in France, where it decreased by 30% over two decades.

Meanwhile, South Korea increased its nuclear generation by 1.6 times, Russia by 1.7 times, and China by 25 times over the same period. However, it should be noted that China's increase is due to a low starting point: in 2000, China produced only 16.7 TWh of nuclear energy (0.6% of the world's total), whereas in 2022, it produced 417.8 TWh (15.6% of the global total).

The United States remains the leader in the world nuclear energy industry, accounting for 30% of global nuclear generation. The American Energy Information Administration (EIA) predicts that the number of operating nuclear power units worldwide will increase to 422 by 2030, 446 by 2035, and 451 by 2040.
China is expected to be the main driver of this growth, with the number of operating nuclear power units more than doubling in the forecast period. The forecast also anticipates nuclear energy development in India, Africa, and the Middle East.

The American EIA predicts that China will be the driving force behind the growth of the global nuclear energy industry until the mid-century, with the number of operating nuclear power units more than doubling.

The forecast suggests that Russia should maintain its existing nuclear energy framework, while the 'collective West' will experience a steady decline.

The IAEA's recent forecast, 'Energy, Electricity and Nuclear Power Estimates for the Period up to 2050', is optimistic. Even under the low scenario, the planet should have 458 GW of nuclear generation operating by the middle of the century. With a positive outlook (high forecast), global nuclear generation capacity could reach 890 GW by 2050, more than double the current level.

The IAEA and NEA (OECD Nuclear Energy Agency) report 'Uranium 2022: Resources, Production and Demand' predicts that the capacity of nuclear power units worldwide will increase from 390 GW in 2021 to 479 GW by 2030 and to 677 GW by 2040.

As a result, the demand for uranium will inevitably increase significantly.
Given the ambitious plans, it will not be feasible to rely on previously accumulated reserves. However, according to the IAEA, the capacity of new, planned, and promising uranium mining facilities alone could reach 77.1 thousand tons per year by 2040, which significantly exceeds the current demand for uranium.

Nevertheless, there are no indications of a decrease in uranium prices in the foreseeable future. Furthermore, it is likely that more costly sources of uranium will need to be utilized, potentially leading to conflicts over access. Rosatom, the current leader in uranium production, is unlikely to become complacent.

Rosatom, the current leader in
uranium production, is unlikely to become complacent. In September 2022, power unit No. 4 of the Beloyarsk NPP in the Sverdlovsk region reached 100% power level for the first time with the core fully loaded with plutonium-based MOX fuel. After 2030, advanced BN-1200 reactors are planned to be commissioned, which are expected to have comparable economic indicators to the current standard domestic VVER-1200 ($5-5.5 billion per unit under export contracts).

In BN-type reactors, plutonium-239 is not considered waste but rather serves as fuel. When it undergoes 'combustion', it releases a large number of free neutrons (much more than a uranium reactor), which irradiate uranium-238 placed at the border of the reactor core. This process enables the closing of the nuclear fuel cycle, allowing for the intensive economic circulation of uranium-238.

Let our 'partners' who do not possess fast neutron reactor technologies fight for the increasingly expensive uranium.