Mr. Gleb Efremov, the General Director of the IUEC, told in his interview to MINEX on the perspectives of the enriched uranium supplies to the embarking countries.
- Mr. Efremov, could you please tell us how are developing the relationships between Kazakhstan and the IUEC?
— Kazakhstan was the first country that supported the initiative to establish the IUEC and we refer to our partners with respect and thankfulness for their support. When the IUEC was founded the purpose of Kazakhstan participation in the project was to receive the enriched uranium products for planned those days construction of the NPP in Aktau. It was anticipated that the plant will be commissioned for commercial operation in 2014. Now, it is 2017, but, unfortunately ...
— Everything is on the paper.
— To our great regret. Of course, we do not loose the hope and expect that Kazakhstan still will be a country with nuclear generation, and those agreements, that were achieved at the stage of Kazakhstan entry into this project for receipt of SWU for the needs of nuclear power of the country, will come true one day. The project, as far as I know, got a second wind and starting to become a reality.
— As I understand it, despite the NPP unavailability Kazakhstan purchases its SWU.
— No, it does not, it is a passive participant.
But Mr. Vladimir Shkolnik, the Ex-CEO of the Kazatomprom, back in 2013 said that the deliverable already occurred.
— It purchases from the Uranium Enrichment Center, not from the International Uranium Enrichment Center. This is a similar to the name, but absolutely opposite in the purpose joint venture between Russia and Kazakhstan, which really was started, and from there were delivered the first SWU. There is no connection between the Uranium Enrichment Center, and the International Uranium Enrichment Center. The Uranium Enrichment Center is a purely commercial project which was established on a parity basis by Russia and Kazakhstan and does not envisage any involvement of other participants in it. It was aimed at the establishment of mirror production capacities, the uranium, which is mined at the Russian-Kazakhstan joint venture in Kazakhstan, then enriched at the joint venture in Russia. And those first SWU mentioned by Mr Shkolnik were received from the company that had been formerly known as CJSC UEC and now - JSC Uranium Enrichment Center. Without addition «International».
— But why were there a need in two structures?
— The purpose of the first project (the UEC) is fabrication of the products in the purposes of its commercial sales at the market. The purpose of the second project (the IUEC) is the delivery for any country in the world provided such country is a member of the IAEA of additional guaranteed sources of enriched uranium supply, if this country is threaten by unstable situation at the commercial market or physical supplies of the enriched uranium to this country, if there is an interruption in supplies of nuclear fuel from the commercial market.
- Thanks for the explanations. But in difference from Kazakhstan, there are some practical activities in place with the Ukraine, are there?
— Yes, there are some with the Ukraine.
— How the relationships with the Ukraine are developing now?
— Any member joined the IUEC receives the right (not the obligation) to buy a certain quantity of uranium in accordance with its share of participation in the Center. This quantity is of symbolic nature, 10 % of shares give the right for receipt of 60 000 SWU annually, that is sufficient for refueling of a medium-capacity reactor (440 MW) and starting from 2012 we are supplier of this quantity of SWU for the needs of the Ukrainian plants.
— Do they exercise this right?
Yes, this year we have already had six years of continuous cooperation. Every year the Ukraine receives its secured 60 thousand SWU.
- Do the supplies of occur physically?
- Yes. There may be some variations to what Ukrainian units we deliver SWU. In previous years we participated in 50 % refueling of 1000 MW NPP unit. Another 50 % were provided by TVEL. Last year we participated in the refueling at Rovno NPP.
— Will there be any transformation in the cooperation due to the political relations between Russia and the Ukraine?
— This question is asked by everyone. Certainly, the relationships between the two states are acute and complicated and therefore some political hue was introduced into our cooperation. But we find some common ways and solutions, because a nuclear power plant is not a kind of facility to be disconnected as a tea kettle from an electrical outlet. The the quantity of fuel to be supplied to the Ukraine is supplied. Moreover, the Ukraine sees certain advantages in the supply line from the IUEC. There is a price factor that affects the feasibility of fuel purchase by the Ukraine from our source.
— And how much cheaper, if not a secret?
— I cannot say how much cheaper as compared with the TVEL, because we don't know the parameters of the contracts between the TVEL and the Ukrainian customers, but know that it is cheaper.
— And in the comparison with the Westinghouse?
Is this information for us is also closed, it is protected by trade secret.
— The Ukrainian mass media publish the information that the Westinghouse has sold that many tonnes for certain price, so maybe it is possible to calculate?
— We cannot calculate the difference in price because the Ukrainian deal is complex: The Ukraine buys back its own uranium within the deal. We produce enriched uranium from raw materials of the Ukrainian origin. So, it is impossible to compare the prices directly.
— Do you work with the Ukraine by tolling or buying-selling?
— Buying-selling. We have a complex process at customs. If we were working by tolling, it would be necessary to return the tails, and return the tails as reprocessing products, and that would be quite difficult. It is rather complicated to identify «purely Ukrainian» raw materials in the enrichment cascade. Naturally, everything is mixed together into a common batch and accounted by the total weight.
— And did you follow-up (if it is possible) where your SWU are delivered? Maybe, to the very same fabrication plants of the Westinghouse?
— Certainly, it is impossible to track it physically in export of SWU. And in the deal with the Ukraine we do not supply the enriched uranium to the Ukrainian party but deliver it for fabrication to the TVEL, which produces the fuel assemblies. For us, this is a further guarantee that our services go exactly for the needs of nuclear generation in the Ukraine.
— Excuse me, but coming back to Kazakhstan: why the scheme of SWU supplies works with the Ukraine and with Kazakhstan it does not?
Is a matter of available operating NPP in the territory of the state. And then, with the Ukraine the scheme works exclusively with respect to the guaranteed quota. We do not replace all fuel supplies necessary for the needs of the Ukrainian nuclear power sector. We are the guarantee of supply, which indicates that the Ukraine is an active member of the company, and it will receive the uranium to all units via the IUEC, if there is a collapse at the commercial market. The IUEC is a mechanism of guarantees; it is not an alternative to replace the current commercial market. We operate as an insurance company.
— The problem is that you are working as a commercial company, which supplies SWU to the Ukraine but at a lower price. Not as an insurance company, but exactly as a supplier.
- Why, we supply to the Ukraine clearly stipulated quantity within a guaranteed quota of a shareholder. No one SWU more until there is a failure at the commercial market of supplies to this country.
— But if there were a collapse, would the Ukraine be able to ask for five times more?
— Yest, it would be, this is the essence of the IUEC mechanism operation. If tomorrow the TVEL, the general supplier to the Ukraine, because of any reason is not be able to supply the contractual SWU in the composition of the fuel, than the IUEC in the framework of the intergovernmental agreement signed by the Ukraine will be obliged to deliver these quantities.
And will you be able to provide it physically?
- Yes, we will. Because pursuant to the Constitution of the Russian Federation, the commitments undertaken to another State under the intergovernmental agreements prevail over domestic legislation, and the supplies of the TVEL by commercial contracts are governed by the national legislation of the Russian Federation.
- Good, it is understandable, thank you. And do you work with Armenia?
- Also not yet, we are waiting for the second unit of the Metsamor NPP, which will be the third unit of the plant (the first unit was shutdown in 1988 after the earthquake in Spitak, and has never been restarted after that).
- Could you please remind what is the timeline we are talking about?
— Currently, Unit No. 3 is commenced.
- Where? In paper or in concrete?
— Both in paper and concrete.
— How it that?
- There was an issue with site selection, there were two options considered. But the Armenian party, as far as I understand it, has made already the final selection. Now it is a real fact. This is, by the way, one of the questions I was going to ask the Armenian partners.
— Are they also will be able to take all 60 thousand SWU?
- Undoubtedly. Along with it, if they make their choice in favor of 440 MW unit, than, it turns out, that our enriched uranium will be enough to cover their demands in fuel supplies.
— It means that they still have not make the decision regarding the capacity?
Yes, this issue still stands open on their agenda.
Then it is still paper, not concrete.
Yes, but there is already some certainty, by my subjective feelings based on the current needs of Armenia most likely it will be a unit of 400-600 MW. Actually, these are the very perspectives we are going to negotiate with our Armenian colleagues.
— And are there expected any other shareholders of the IUEC? What about the business development?
- The IUEC is not a purely «business», this is still a project of political nature. And here shall be made some clarifications. Everyone, who builds an NPP today, shall be sure that when the plant is completed, it will be supplied with the fuel, this is the key objective. This is a nonsense to build a unit at the price of $8 billion and end up in a situation of having nothing to fuel it.
— But in the context of the current uranium market and construction schedules, it seems that this problem does not exist at all.
— You know, let us not boggle. Today we know a lot of examples, when large companies are beginning to experience problems of an exactly financial nature. We are carefully monitoring the problems of the Areva and the sales in the reactor segment of the company, we are closely following up the causes and proceedings of the Westinghouse bankruptcy.
— But the reactor and fuel divisions are the ones that will not remain without work and continue its operations.
-You see, the companies selected by nuclear embarking countries used to rely on perfectness and ultimate reliability of the suppliers. In fact, they are faced with the situation, when the selection of supposedly reliable commercial suppliers may not be entirely reliable. Therefore, the project of the IUEC is intended not to replace the commercial market and to insure it. We are saying: «Please, come to the IUEC, if you don't have an absolute certainty that you get the fuel from the commercial market. And if interruptions take place, you will receive the fuel from us».
— And who are you talking to?
— To the entire world.
— And what is the response from the world?
- It is considering our offers and ...
- Today we have a large number of practices. I can tell, it is the African continent, this is South-East Asia, and the Middle East, that means the dialog is going everywhere. Many countries, in anticipation of instability in the supplies from the market are starting to develop its own uranium enrichment capacities. What is the hazard of this process? The countries that had embarked on the establishment of its own uranium enrichment technologies, after all, created the nuclear weapons. And there are many examples of it: North Korea, Iran, Pakistan, Brazil. That is the danger. Our initiative is aimed at preventing the establishment of such technologies in the embarking countries, which doubt the reliability of supplies from the commercial market. Thus, our main goal is to work on the non-proliferation of nuclear weapons. This is the main political idea of our Center.
- But if a country gets the nuclear technology, it, probably, will not be against continuing its progression?
— Where does it get the technology from? Does it produce it independently? The challenge is in the development of the mechanisms, which make unfeasible the process of development of its own sensitive technologies by providing the absolute guarantees of supplies.
— Where did Iran receive the nuclear technologies?
— The history keeps silence of it, but everyone guesses where Iran could receive initially those technologies, which it finally started to develop. Iran does not deny that it performed research and development activities in the area of enrichment, but it strongly rejected that the purpose of those activities was the development of nuclear weapons.
— Nevertheless, they did not want to participate in the IUEC.
— That is the question, what was the purpose of Iran in development of the uranium enrichment technologies. Because the IUEC was founded as an opposition to the Iranian nuclear program!
— In opposition?
- Of course. That was one of the mechanisms, offered, in particular, to Iran to motivate it to stop further development of the enrichment technologies. Then we showed, that Iran was not worth doing it, that there were some other available sources of the uranium enrichment. But Iran proceed to move this way, that resulted in so called «Iranian nuclear program» and everything undertaken with respect to Iran by the world community: sanctions, strict measures to counteract the further development of the program development.
- Could you say that some of embarking countries, where the NPPs will be constructed, are ready to sign with you the participation agreement?
— You know, specifically now I cannot. Those countries that come to the market and considering Russian offers on development of nuclear generation at its territories receive a full scope of service offers including personnel training, establishment of research reactors, research centers and the offer regarding the IUEC. We go as a part of the integrated package.
— Are you taken as an attached party?
— It is considered everywhere, as the Rosatom is present. And in this regard we do not accidentally present at the Atomexpo. The coverage of our work with potential participants carries a number of subtleties of political nature. That is why we try to disclose the information on our negotiations very accurately, not to make any damage to our partners for them to be able quietly, without a pressure from the third country (or countries) to make assessment of the Russian offer and a substantiated decision.
— But, insofar, they did not make it somehow. Probably, your organization is not needed to anyone?
— No, that is not so. Let time will tell us. In addition to the above, our perspective markets are the countries that will select a non-Russian design for the NPP construction. In such a case we will be a diversified source of supplies for them, if something happens to its traditional source of supplies. And this is another evidence that we can be very demanded.