When the Soviet Union collapsed, the international community anxiously watched to see what newly independent Kazakhstan would do with the thousands of nuclear weapons left on its territory. If Kazakhstan had decided to prevent their withdrawal, it would have become the fourth largest nuclear power in the world. Thankfully, the country decided to disarm--a choice it reached due to a combination of international pressure, a desire to integrate into the international community, and assured Western assistance with dismantling its nuclear weapons and facilities. Ultimately, the Soviet weapons were either destroyed or moved to Russia; the Semipalatinsk nuclear testing site in western Kazakhstan was closed; and all intercontinental ballistic missile silos were destroyed.
At the time, the country had other things to worry about--namely establishing a government and reviving its economy. Nuclear weapons and nuclear energy were not its top priority. But that was 15 years ago, and times have changed. Today, the world is re-examining nuclear power as a carbon-free energy source, and Kazakhstan, which possesses the world's second largest uranium reserves, harbors a bevy of nuclear ambitions.
Currently, Kazakhstan is the world's third largest uranium exporter--after Australia and Canada. At 1.5 million metric tons, it holds roughly 19 percent of the world's uranium reserves. More than 50 percent of Kazakh reserves are suitable for extraction by in-situ leaching, a cheap and environmentally friendly method compared to extracting uranium from open pits or deep shaft mines. In 2007, the country produced 6,637 metric tons and is projected to produce 9,445 metric tons this year. The country is gearing up to produce 18,700 metric tons of uranium annually by 2015 and 27,000 metric tons by 2025. (See "Uranium Production in Kazakhstan in 2007.")
Although Goldman Sachs JBWere projects that the country will become the world's second largest uranium producer by 2011, Kazatomprom, Kazakhstan's state-run energy company that oversees all uranium production, plans to become the world's largest a year earlier. Kazatomprom bases this forecast on the increased production capability that 16 new mines in southern Kazakhstan will provide.1 With world uranium consumption projected to be 117,193 metric tons by 2030, Kazakhstan is expecting quite a financial windfall (in Russian).
Kazakhstan plans to maintain its integrated full fuel cycle with Russia, but also does not want to depend exclusively on its northern neighbor for nuclear fuel production.
As of now, all initial stages of uranium mining and milling into yellowcake are carried out in Kazakhstan; the yellowcake is then transported to Russia for gasification and enrichment. The next stage of producing fuel pellets is carried out in Kazakhstan, while the final production of fuel rods takes place in Russia. Joint projects between the two countries include construction of a gas centrifuge enrichment plant (with the first phase to be completed by 2011) next to existing Russian facilities in Angarsk, Siberia. The new enrichment facility, which Kazatomprom has a 50 percent stake in, will produce 5 million separative work units (SWU) annually by 2013 or about 757,863 kilograms of low-enriched uranium.2 It will be a technological "black box" for Kazatomprom's specialists, meaning they won't have access to enrichment technology per se but will be able to enrich uranium, adding to the value of the country's exports.3 Kazatomprom President Moukhtar Dzhakishev has said his company would continue to contract the sensitive stage of enrichment to Russia to alleviate proliferation concerns. Kazakhstan will have priority for buying SWU from the Angarsk plant, while Russia will have priority access to 6,000 metric tons of raw Kazakh uranium--enough to cover Russia's current nuclear power plants plus two new planned reactors.
The International Uranium Enrichment Center (IUEC), also at Angarsk, is another important Russian-Kazakh collaboration that will provide countries without fuel-cycle capacity access to nuclear fuel. It began operating in September 2007 and currently pairs Russia's Techsnabexport, the export arm of Moscow's nuclear complex, with Kazatomprom--although Techsnabexport possesses a much larger stake (90 percent total) in IUEC. The distribution of ownership will change as new IUEC members acquire some of Russia's share. A memorandum of understanding has been signed with Ukraine; Armenia is in the process of joining; and Mongolia and South Korea have expressed strong interest, according to a statement by Rosatom, Russia's atomic energy agency. Fuel production is planned to start by late 2008.
But Kazakhstan isn't relying solely on its partnership with Russia. It is actively pursuing deals with other countries. Cameco, a Canadian company, is studying the feasibility of building a uranium oxide to uranium hexafluoride conversion facility at Ust-Kamenogorsk in northeastern Kazakhstan, which, if completed, will allow one more stage of fuel fabrication (conversion into gas) to occur inside Kazakhstan.
Japan's entrance into the Kazakh uranium market was solidified in October 2007 when Kazatomprom acquired 10 percent of Westinghouse Electric Corporation from Toshiba for $540 million. As a result, Westinghouse gained access to Kazakh uranium and potentially more fuel fabrication capacity; in return, Kazatomprom gained access to the world nuclear fuel market. Toshiba-Westinghouse Electric will become Kazatomprom's technical partner in the production of fuel assemblies. Construction of a fuel assembly production facility at Ust-Kamenogorsk will be completed in 2011 or 2012 and will allow Kazakhstan to produce the final product (fuel assemblies). (See April 2007 Kazatomprom press release.) It is expected to increase Kazakhstan's 1 percent share of Japan's uranium market to 30 or 40 percent by 2010, making it one of Japan's largest suppliers. According to Kazatomprom's Dzhakishev, annual uranium sales to Japan will rise to 4,000 metric tons by 2010. In April 2007, 150 Japanese government and private sector representatives visited Astana, the Kazakh capital, and signed 24 bilateral trade deals, including the purchase of a stake in a Kazatomprom uranium mine by Marubeni Corporation. In addition, Toshiba pledged to help Kazakhstan build nuclear power plants, and the Japanese delegation agreed to provide Kazakhstan with technological assistance for processing uranium fuel and building reactors.4
Kazakhstan's cooperation with China also grew last year. In May 2007, Kazatomprom and China Guangdong Nuclear Power Group (CGNPG) concluded a deal to produce nuclear fuel for China's developing nuclear power sector. Four months later, Kazatomprom, CGNPG, and the China National Nuclear Corporation agreed to establish a joint mining venture to exploit Kazakh uranium deposits. All natural uranium mined by the venture will be delivered to China in the form of nuclear fuel. According to Dzhakishev, Kazatomprom will start supplying fuel pellets and yellowcake to Beijing in two years and start selling nuclear fuel by 2013, bypassing China's traditional fuel suppliers such as Areva, a French company. Kazatomprom and China are discussing plans to work together on fuel assembly production in the future.5
But despite these attempts to expand its nuclear partners, Kazakhstan will remain dependent on Russian enrichment facilities for the foreseeable future, even after two more stages of the fuel cycle--processing uranium oxide into uranium hexafluoride and production of fuel assemblies--become possible domestically.
More than 450 nuclear weapon tests at Semipalatinsk during the Soviet era scarred both the country's environment and its population's health, fostering a strong domestic antinuclear sentiment. For a long time, the public's antipathy toward all things nuclear prevented Kazakhstan from developing indigenous nuclear power. The country's only fast breeder reactor operated at Aktau from 1972 to 1999, and plans to build a new nuclear power plant were always met with vehement opposition from the population and various political groups.
But in recent years, the government has made firm plans to build nuclear power plants in response to increased electricity demand, which is projected to grow to 19,350 megawatts by 2015. Plans exist to start building a new plant at Aktau in 2011. The plant will host two, first-of-their-kind VBER-300 reactor units, based on Russian Navy vessel reactors that will be built in partnership with Russia (See "Nuclear Power Plans for Kazakhstan Firm Up.") Total projected capacity of the plant is 600 megawatts. Aktau was chosen as the site because it already had the infrastructure associated with the earlier reactor and because the region currently relies on neighboring Uzbekistan for electricity.
This is the first of many plants. The country's National Nuclear Center, which conducts research on the peaceful uses of nuclear energy, has proposed building 20 low-capacity nuclear plants (50-100 megawatts each) to provide energy to small Kazakh towns.6 Currently, about 70 percent of Kazakhstan's electricity is produced from coal, 14 percent by hydroelectric, 10 percent from gas, and 5 percent from oil. Nuclear energy is expected to free up natural gas resources for export.7
Kazatomprom's goal is to collaborate with Russia to export nuclear reactors to third-party countries. It has already established Atomnye Stantsii, a joint venture with Russia that will design, build, and sell small- and medium-sized reactors. International Atomic Energy Agency (IAEA) Director General Mohamed ElBaradei has noted that most major vendors have failed to offer such reactors, which are believed to be more appropriate for countries new to nuclear energy. ElBaradei has mentioned Jordan, Thailand, and Ghana as interested in reactors at 100-400 megawatt capacities.8 Kazakhstan also believes that other Central Asian countries will also be interested in buying such new reactor technologies.9
First and foremost, Kazakhstan responsibly defends nonproliferation and export controls. It is a member of the Nuclear Non-Proliferation Treaty and the Nuclear Suppliers Group. And in addition to its general IAEA membership, Kazakhstan has signed the IAEA Safeguards Protocol and signed and ratified the IAEA's Additional Protocol. Adherence to the Additional Protocol subjects all of Kazakhstan's nuclear facilities to stringent IAEA oversight, including comprehensive declarations, reporting, and site-access obligations.
Together with Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, Kazakhstan established a nuclear-weapon-free zone in Central Asia in September 2006, which prohibits it from possessing or attempting to possess nuclear weapons and from assisting or encouraging other nations to acquire them. Its enthusiasm for the nuclear-weapon-free zone makes it extremely unlikely Kazakhstan will use its nuclear know-how to pursue nuclear weapons or to help another country develop them.
Other reasons to support the country's nuclear plans:
Bearing in mind the positive impact of Kazakhstan's assertive nuclear plans, caution must also be voiced. Some challenges and risks associated with the country's quick move into the nuclear energy field:
In conclusion, Kazakhstan's nuclear ambitions are likely to be realized if uranium prices stay high and Kazatomprom is successful in further expanding its international partners. Kazatomprom's most immediate task is to secure customers for its final nuclear fuel product--fuel assemblies, an extra fuel fabrication stage Kazatomprom plans to start carrying out domestically. Having a nearly complete nuclear fuel cycle--save for enrichment--will ensure a stable cash flow for Kazatomprom and limit its dependence on the fluctuating market price of raw uranium.
In the meantime, though, increased uranium sales will help alleviate the country's overdependence on oil exports and help modernize its nuclear sector. If Kazakhstan does become the world's leading uranium and nuclear fuel supplier, the ramifications for the country both in terms of increased gross domestic product and status on the world stage will be profound. Nonetheless, Kazakhstan will remain heavily dependent on the export of its natural resources and on the vagaries of the commodities markets.
1Ann MacLachlan, "Kazatomprom Sets Goals Higher for U Production, Pursues Nuclear Cycle," Nuclear Fuel, September 10, 2007.
2Interview with Masha Katsva, Ux Consulting analyst, April 24, 2008.
3"Kazatomprom Sets Goals Higher for U Production, Pursues Nuclear Cycle."
4"Japan Set to Raise Kazakh Share in Uranium Imports to 30-40 Per Cent," BBC World Monitoring, April 30, 2007.
5"Kazakhstan, China Sign Nuclear Fuel Cooperation Accord," Interfax-Kazakhstan News Agency, May 24, 2007; "Kazakh, Chinese Nuclear Companies to Set Up Joint Ventures," Interfax-Kazakhstan News Agency, October 13, 2007; "Kazatomprom to Form JC With Chinese Companies for Uranium Mining," Interfax, October 2007; "Kazatomprom Will Export Uranium to China, Beginning in May," Nuclear Fuel, October 22, 2007; Judith Perera, "Kazakh Ambition," Nuclear Engineering International, September 4, 2007.
7Expert-Kazakhstan, July 9-15, 2007 (in Russian).
8"Kazatomprom Poised to Close Westinghouse Deal," Nucleonics Week, September 11, 2007.
10David Horner, "Fuel-Bank Moving in Congress as IAEA Board Meeting Nears," Nuclear Fuel, May 21, 2007.
11"Program on Development of Kazakhstan's Uranium Industry for 2004-2015," Ministry of Energy and Mineral Resources of the Republic of Kazakhstan, 2004.