Publication: Eurasia Daily Monitor Volume: 3 Issue: 207

The most productive part of Kazakh Prime Minister Daniyal Akhmetov’s October 26 journey to Moscow appears to be his talks with Sergei Kiriyenko, head of the Russian Federal Atomic Energy Agency (Rosatom). Beaming for the cameras, Akhmetov said the sides had reached “fundamental agreements” on uranium ore processing and joint use of nuclear material. Kiriyenko was no less euphoric when he added, “It took us no longer than two or three months to realize our plans to set up joint ventures” (Yegemen Qazaqstan, October 27).

Akhmetov went to Moscow after technical difficulties interfered with implementing the Kazakh government’s ambitious plans to harness nuclear energy, as officially announced at a 2004 cabinet meeting. Since the fall of the Soviet Union, Kazakhstan, listed among the eight leading uranium producers of the world, has unsuccessfully sought to enter the nuclear fuel markets of China, South Korea, and Japan. When former Japanese prime minister Junichiro Koizumi made his first visit to Astana last August, an agreement was reached to set up a joint venture at the Zapadny Munkuduk uranium deposits in Kazakhstan. Last year the government launched an ambitious project to construct a nuclear power plant at Lake Balkhash, near the Chinese border. However, even the most optimistic government forecasts indicate that the project will be implemented no earlier than 2015. The main sticking points are the lack of trained specialists and technical expertise.

This predicament offers Russia a good opportunity to make inroads into Kazakhstan’s uranium industry. At the August 25 summit of the heads of Commonwealth of Independent States members in St. Petersburg, Kiriyenko proposed a program of nuclear energy cooperation between Kazakhstan and Russia that included three joint ventures for extraction and enrichment of uranium using Russian technology. Uranium extracted at the Yuzhnoye Zarechnoye and Budenovskoye mines are to be delivered by rail to an international uranium enrichment center in the Russian town of Angarsk. Prime Minister Akhmetov expressed confidence that the first ton of uranium would be extracted from Zarechnoye in December (Express-K, October 28).

The agreement reached in Moscow benefits Russia and Kazakhstan equally. Russia has irreparably exhausted its deposits of uranium suitable for the full production cycle, from ore treatment to nuclear waste utilization. Thus the Russian uranium industry heavily relies on stocks dating from the Cold War era. Kazakhstan, in contrast, has known deposits of 1.690 million tons of untapped uranium reserves and is seeking to become a global nuclear fuel producer. The national nuclear company Kazatomprom announced plans to put 12 additional uranium mines into operation by the year 2008. Kazatomprom has created a number of joint ventures with leading uranium companies such as Cameco, AREVA, and UrAsia Energy to develop its rich uranium deposits in the Balkhash, Caspian, North Kazakhstan, Syrdarya, and Shu-Sarysu areas. But given current financial and technological constraints, Kazatomprom has had to drastically reduce the costs of uranium production. In most areas mining methods are limited to low-cost and environmentally friendly underground alkaline leaching. Even so, in the first half of this year Kazakhstan increased its uranium output by 11.7%, according to Minister of Energy and Mineral Resources Baktykozha Izmukhambetov (Kazakhstan Today, August 29).

Kiriyenko offered to build five fast neutron reactors for Kazakhstan with low and medium power generating capacity. But behind what looks like the usual give-and-take in nuclear energy cooperation lurks Moscow’s attempt to regain its lost foothold in the energy sectors of Ukraine and Kazakhstan. Kiriyenko used every occasion to reiterate that it was high time to set up a vertically integrated nuclear energy holding company (modeled after Gazprom) among Russia, Ukraine, and Kazakhstan (RIA-Novosti, July 25).

Taking into consideration the weakening position of President Viktor Yushchenko in Ukraine, the Kremlin could use this potential CIS nuclear energy triad to pressure Western Europe in energy policy issues. In recent years Moscow has effectively blocked potential U.S. energy-sector cooperation with Kazakhstan. Although the agreement on partnership between the energy ministries of the United States and Kazakhstan was signed as far back as in December 1999, very little has been achieved in real terms. With the financial and technical assistance of the United States, Kazakhstan started construction of nuclear waste storage facilities in Aktau. Washington officially announced it would not object to Astana’s plans to build a nuclear power station on Lake Balkhash and even offered assistance in the construction. But whatever Washington does within the framework of the agreement, it places nuclear safety and non-proliferation above Kazakhstan’s energy policy concerns. With little Western help on this issue, it is not surprising that Astana is increasingly tilting toward Moscow and Tehran.