(New Eastern Outlook) – The Republic of Kazakhstan (the RK) has the largest uranium resources, and the country has been the world’s major producer and supplier of this material for several years. The sale of uranium is one of the major export items in the Republic. This business is becoming more profitable owing to the neighbourhood of Kazakhstan and China. The People’s Republic of China is now constructing many new atomic power stations in its territory, and the most favourable supplier of fuel for them is the RK.
According to some sources, about 40% of the world’s uranium production account for Kazakhstan. The RK uranium stocks are large and easy to reach as they lie close to the surface. Owing to the simplicity of production, Kazakhstani uranium is relatively cheap, which promotes its popularity throughout the world.
For several years, China has been the major Kazakhstani uranium importer, while Kazakhstan has been the major supplier of uranium for China. The two thirds of the imported uranium in China is from Kazakhstan, while more than 50% of uranium extracted in Kazakhstan is sold to China. The record volume of purchases (about 15 thousand tons) was reached in 2013. Since that time, this index has been stable – about 14 thousand tons a year, which brings about $250 million to Kazakhstan annually.
China is buying uranium in such quantities because of its large-scale program for the development of nuclear power engineering (NP) launched several years ago. The PRC decided to increase the share of NP in its electricity production in a short time.
This fact is related to the environmental problems that the country has faced in recent years. The basis of China’s power industry is coal-fired thermal power plants. Coal is a relatively cheap type of fuel, but when it is burned, a huge amount of harmful substances is emitted into the atmosphere. Air pollution in China has reached a level that is already a serious threat to public health. It is believed that nuclear power plants harm the environment much less.
Another reason for building new nuclear power plants in China is the concern for its energy security. In addition to coal, it actively uses oil and liquefied natural gas in its power industry. Most of these energy carriers are delivered to China by sea from the Middle East countries. The path runs along the southern coast of Eurasia, and it has several sections, which, if desired, can be blocked by small forces of the Navy. These are places like the Suez Canal, the Mandeb Strait, and the Strait of Malacca. The blockade of any of these areas will significantly complicate China’s maritime communication with the Middle East and will lead to tangible consequences for the Chinese energy sector. In recent years, China has a special reason to fear such a scenario given its difficult relations with India, the USA and some other countries of the Asia-Pacific Region. At the same time, a significantly less quantity of uranium is required for the nuclear power plants as compared to the hydrocarbon fuel for fuel power plants. It is possible to create a large uranium reserve in the short term for years to come. Thus, China is now doing it by buying from Kazakhstan much larger amounts of uranium than required for its operating nuclear power plants. It is worth mentioning that the proper use of nuclear technologies allows using the nuclear fuel several times. In addition, given the close location and friendly relations of China and Kazakhstan, the blockade of their common land border can hardly be feared.
Thus, the desire to obtain independence from the Middle East hydrocarbons and the maritime traffic in the Asia Pacific Region also promotes the development of China’s nuclear power industry.
The implementation of the nuclear plan is in progress. Thus, in summer 2017, China was exploiting 37 nuclear reactors, 20 reactors were under construction, and another 40 reactors were planned for the construction. Therefore, the need of the PRC in the Kazakhstani uranium will be increasing steadily.
Nonetheless, the uranium business of the RK does not always bring a stable profit. Not all the countries are as enthusiastic about the nuclear industry as China. After the disaster at the Japanese nuclear power plant Fukushima-1, many operating nuclear power plants were closed, as well as the construction of new stations in Japan, EU countries, etc. Demand for uranium began to decline amid the increasing production, and prices began to fall. In 2016, the cost of natural uranium decreased by 40% at the international market.
In this respect, the RK took a number of measures. In January 2017, Kazakhstan decided to reduce uranium production by 10%. As a result, the prices began to rise again. However, the RK decided to increase the quality and the price of the supplied products in order to be less dependent on the prices fluctuations at the market in the future. Kazakhstan intends to produce finished nuclear fuel, which is more expensive than the natural uranium and has a more limited supply, as not all uranium mining countries have the technology for its production.
In May 2017, the RK Minister of Energy Kanat Bozumbayev announced that Kazakhstan intended to master the full nuclear fuel cycle (NFC) – the variety of processes, including the mining of radioactive raw materials, the production of nuclear fuel, and treatment of its waste with partial recycle. He reported that the establishment of a vertically integrated company with the NFC by 2020 was the strategic aim of Kazakhstan’s power industry.
In October 2017, K. Bozumbayev announced that the Republic of Kazakhstan would build a plant producing fuel assembly (products, in which the nuclear fuel is placed in the reactor) in 2019. The enterprise will have the guaranteed marketing in China. According to the Minister, the plant will start supplying its products to the first five nuclear power plants in China in 2019-2020.
In November 2017, K. Bozumbayev reported new details of this project. According to him, the enterprise will be established by the Kazakhstani uranium company Kazatomprom together with the China General Nuclear Power Group (CGNPC). As a first step, the Chinese party will buy fuel assembly in the volume of 200 tons a year.
It should be noted that China has its own advanced technologies, and it could produce nuclear fuel from the Kazakhstani raw materials in its territory. This would be much more advantageous for China, but disadvantageous for the Republic of Kazakhstan. The fact that China has agreed to buy fuel assemblies produced in Kazakhstan, and participates in the construction of the plant in the territory of the RK, demonstrates the importance of Kazakhstan as a strategic partner of China.
It is worth recalling that Kazakhstan plays the key role in one more strategically important projects for the PRC – One Belt, One Road (OBOR). The great importance of the RK in the implementation of two essential Chinese projects, such as the program of mass construction of the nuclear power plants and OBOR, make Kazakhstan a unique partner for the PRC and opens huge opportunities for its development with China’s aid.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.