Disarmament Diplomacy

Issue No. 63, March - April 2002

News Review

US-Russia Uranium Plan on Track

On February 22, a breakthrough was announced in talks to revitalise a troubled US-Russia non-proliferation arrangement under which Moscow is to ship uranium to the United States for sale to US commercial nuclear facilities. The 1993 'megatons to megawatts' programme had been foundering on the issue of the price to be paid to Russia by USEC, formerly the government-owned United States Enrichment Corporation controversially privatised in 1998.

Under the terms of the original agreement, Russia is to convert 500 tons of highly-enriched uranium (HEU), taken from dismantled nuclear weapons, into low-enriched uranium (LEU) for export to USEC over a 20-year period. USEC - which operates the nation's only uranium enrichment facility, in Paducah, Kentucky, and is thus heavily dependent on a domestic market for LEU - is then charged with selling the "enrichment component" of the uranium as fuel for electricity generation. USEC is also obligated to transfer natural uranium to Russia equal to the "non-enrichment" component" of the LEU. Under the terms of a 1999 agreement, Russia is to sell this natural uranium to three US companies.

Shipments to USEC began in 1995. According to a contract amendment in 1996, the total value of the deal for Russia is expected to reach $12 billion ($8 billion from the sale of the enrichment component, $4 billion from the sale of the natural uranium). Currently, Russia is reported to receive around $500 million per annum from the transfers.

In negotiating a further amendment to the contract, USEC had sought a lower price reflecting the steep fall in the value of uranium on world markets since 1996. The Russian company charged with implementing the deal, Techsnabexport (TENEX), argued that USEC was effectively seeking to renege on its commitment because of commercial difficulties.

On January 24, it was reported that Alexander Rumyantsev, the Russian Minister of Atomic Energy, had written to US Energy Secretary Spencer Abraham complaining that "USEC's proposals aim to create a price-setting mechanism which would help the company solve its financial difficulties at the expense of the Russian party". Abraham reportedly turned down Rumyantsev's request for direct US-Russia government talks on the issue. On January 8, however, US Undersecretary of Energy Robert Card wrote to USEC President William Timbers to state: "I am concerned that if the outstanding issues in the negotiation are not resolved expeditiously, the United States could find itself with a nuclear fuel shortage. I am also concerned that US strategic interests may be at risk if the USEC cannot ensure continuity of shipments of Russian down-blended [uranium] to the United States." Timbers replied (January 10): "I am saddened by the...distortions and efforts to misrepresent USEC's positions and capabilities as underscored by your letter to me".

Details of the new terms reached in February were scanty. According to Massachusetts Institute of Technology (MIT) physicist Thomas Neff, a key architect of the 1993 agreement who has closely charted its troubled history, the revised contract would allow prices to be set more flexibly, on the basis of a three-year average of market costs. A USEC statement (February 26) noted simply:

"Terms have been agreed to in Moscow by the US and Russian executive agents [USEC and TENEX] responsible for implementing the HEU Agreement. A signed contract amendment has been referred to the US and Russian governments for approval. As soon as the two executive agents receive approval from their respective governments, USEC will provide further information. Shipments to USEC by TENEX of LEU derived from Russian nuclear warheads will commence in March, as scheduled."

Note: on January 30, Secretary Abraham announced a programme to assist Kazakhstan to process "uranium concentrates" - by-products from nuclear fuel production - into LEU for sale on the commercial power generation market. According to a DOE statement: "Under the project, a former nuclear weapons plant in Kazakhstan [the Ulba Metallurgical Plant] will develop its capability to separate low-enriched uranium from uranium concentrates with assistance from two private US companies and Brookhaven National Laboratory. The uranium will then be made available as a power source to civilian power reactors throughout the world. The Department of Energy's National Nuclear Security Administration (NNSA) brought the parties together and will continue to assist with the project. The endeavour will immediately create 50 new civilian jobs for former nuclear weapons scientists in Kazakhstan and will create hundreds of additional jobs for former nuclear weapons workers in the coming years. ... Global Nuclear Fuel-Americas (GNF) of Wilmington, N.C., and RWE Nukem of Danbury, Conn, will assist the Ulba plant in Oskemen...to use its advanced solvent extraction technology to recover low-enriched uranium... DOE/NNSA has committed $1.2 million in Initiatives for Proliferation prevention (IPP) funds over three years for joint work between Ulba and Brookhaven National Laboratory to design and install this technology for commercial use. The recovered uranium will be available to GNF and other commercial fuel manufacturers for use in Boiling Water Reactors. The US industry partners have already matched the NNSA's contribution."

Reports: US-Russia uranium pact stalls, Los Angeles Times, January 16; Price clash stalls renewal of US-Russia uranium pact, Washington Post, January 21; Stalled talks prompt security concern, Associated Press, January 25; HEU negotiators fail to agree, Global Security Newswire, January 28; Energy Secretary Abraham announces nuclear non-proliferation effort with Kazakhstan for former Soviet nuclear weapons facility, US Energy Department News Release, PR-02-012, January 30; US, Kazakhstan to turn uranium into power fuel, Reuters, January 30; Deal reached on key security program that brings Russian nuclear fuel into US, Associated Press, February 22; Status of the Russian HEU Purchase contract - terms reached for future implementation of the Megatons to Megawatts program, USEC News Release (http;//www.usec.com), February 26.