Global Struggle for Kazakh Uranium Resources

As global nuclear energy demand grows, countries possessing uranium reserves are poised to reap enormous economic and political dividends from production and export of this resource. Yet, the gains may come with costs as global rivalry accelerates among major powers, concurrently enhancing environmental, health, and proliferation risks of global and regional proportions. This struggle also concerns Kazakhstan, possessing some of the world’s largest uranium deposits, increasingly facing competition from Russia, Japan, and China, as it aims to become a major global supplier of nuclear fuel and reactors.

A report by Nomura International forecasts a deficit of uranium ore within five years, noting that China, India, Russia, and South Korea will drive the global uranium demand growth in the future. There are 53 nuclear power plants being built around the world, with around 500 more planned by 2030. Australia, Kazakhstan, and Canada, now supplying 60 percent of all uranium, are the world’s major sources and producers of this commodity (Azattyq, January 29, 2010). Kazakhstan in particular is viewed as a crucial supplier to help meet the surging global uranium demand.

Its estimated uranium resources, the second largest in the world, constitute 19 percent of global reserves. In 2009, Kazakhstan became the world’s largest producer of uranium, outperforming Canada and Australia. It has pushed for uranium deals with powers as diverse as Japan, India, China, US, South Korea, Canada, France, and Russia. It now aims to expand its uranium production to 30,000 metric tons by 2018 from the 18,000 tons planned to be produced in 2010 (EDM, August 2, 2010). There are 21 uranium deposits being developed in the country today. Kazakhstan wants to produce domestic nuclear power and become a major supplier of nuclear fuel and reactors (Azattyq, January 29, 2010).

Kazakhstan is interested in profiting from its energy exports to diverse suppliers and strengthening its geopolitical position vis-à-vis its two large neighbors – Russia and China. A rapidly emerging China is a prospective partner for Kazakhstan, wary of Moscow’s economic interests and strategic imperatives to retain its great power status in the post-Soviet space.

Russia is the world’s third and fourth largest source and producer of uranium, respectively. However, it confronts major production difficulties due to geographic conditions, pushing it to seek uranium deals with countries such as Australia and Kazakhstan. Russia needs to produce about 20,000 tons of uranium annually to meet its nuclear power needs by 2025. In 2007, it produced 3,413 tons of uranium. After the launch of a joint Russian-Kazakh venture in Kazakhstan, Russia’s uranium production climbed to 3,527 tons. In 2006, the two countries agreed to launch three nuclear joint ventures worth $10 billion to develop, enrich, and build nuclear reactors, including with a view to construct nuclear power stations in Kazakhstan and other countries (www.newsru.com, June 26, 2008; www.thebulletin.org, April 28, 2008).

Kazakhstan relies on Russia, which enjoys 45 percent of the global uranium enrichment capacity, for uranium enrichment. However, Mukhtar Dzhakishev, the former executive of the Kazakh nuclear state company Kazatomprom, cautions against Kazakhstan’s overall cooperation with Russia (www.inosmi.ru, February 26, 2010).

Kazakhstan has tried to avoid this by collaborating with Japan and China. Technologically-strong Japan is expected to generate 41 percent of its electricity production from nuclear energy by 2017. It runs 55 nuclear power reactors, planning to construct 11 more in the future. This offers lucrative prospects for Kazakhstan as it wants to obtain a 40 percent share of Japan’s uranium market. Companies such as Marubeni, Tokyo Electric Power, Chubu Electric Power, and Tohoku Electric Power have already contracted with Kazatomprom to develop Kharasan-1 and Kharasan-2 uranium deposits in Kazakhstan, aiming to produce 160,000 tons of uranium by 2050. Kazatomprom and Japan’s Sumitomo Shoji and Kepko also develop the Zapadny Munkuduk uranium deposit in the country. Kazatomprom also has a 10 percent share of the Japanese-owned Westinghouse Electric, one of the world’s largest suppliers of nuclear power reactors. Astana and Tokyo are currently exploring the possibility of building a nuclear power station in Kazakhstan (EDM, August 2, 2010).

Kazakh-Chinese cooperation is especially notable. China, as a leading global nuclear power developer is already the largest buyer of Kazakh uranium (www.trend.az, November 11, 2010). In 2007, Kazatomprom and China Guangdong Nuclear Power Group agreed to produce nuclear fuel (www.thebulletin.org, April 28, 2008). In April 2009, China and Kazakhstan created the Semizbay-U enterprise at Irkol, planning to produce 750 tons of uranium annually (EDM, March 23). Deputy Head of State Energy Management of China, Tian Zhiming, commented on Beijing’s appetite for nuclear energy: “The PRC will become the world’s largest consumer of uranium by 2030, overtaking the US. It is a question of time.” In 2011, the two sides agreed on the supply of 55,000 tons of uranium over the next 10 years. “Nineteen nuclear complexes will be built in China and 25 more are being planned. This is a huge potential market. In the long term, Kazakhstan can supply up to 40 percent of nuclear fuel. This is tens of billions of dollars in profit,” stated Kazakh President Nursultan Nazarbayev (www.eurasia.org.ru, March 17).  

In this light, security risks associated with a struggle by major powers over access to Kazakh uranium resources are not inconceivable, making it imperative for Kazakhstan not to overplay its external balancing strategy as it seeks to consolidate its sovereignty and maintain an economic modernization drive. Kazakhstan must address domestic risks. Its ambitions to supply nuclear power and fuel at home and abroad already raise environmental, health, and proliferation concerns given the lack of a professional cadre and environmental and safety standards. Many people still suffer from more than 450 nuclear weapons tests conducted in the country during the Soviet era. Nuclear incidents in Japan after the recent tsunami and potential Russian-Kazakh plans to build a nuclear power plant in Aktau are already generating an anti-nuclear backlash in the country (EDM, March 23; www.thebulletin.org, April 28, 2008). Many fear that widespread corruption and the country’s location in an unstable region increases the risk that Kazakhstan might possibly become a major proliferator (www.newsland.ru, October 17, 2009; www.thebulletin.org, April 28, 2008).
 
Mitigating these risks is a major challenge for Kazakhstan and others as the world confronts the surge in nuclear energy demand and the struggle over the precious uranium resources.