Interview of Mr. G.V. Efremov, General Director to Interfax agency

May 28, 2018

Access to the uranium reserves makes the nuclear energy more attractive for newcomers, - said the CEO of IUEC

JSC International Uranium Enrichment Centre (IUEC) that has been for several years negotiating with potential shareholders, closer to the autumn hopes to announce a new party, and then to Russia, Kazakhstan, the Ukraine and Armenia may be joined another country. The details of the negotiations, the prospects for development of insurance fuel supplies, banks of fuel to support the newcomers of nuclear market in his interview to Interfax were told by Mr Gleb Efremov, General Director of IUEC in the framework of Forum Atomexpo-2018.
- It is not the first year, when IUEC is negotiating the accession of a new shareholder, its appearance was not excluded already in 2018. How is it real?
-We have it all on schedule. I think that 2018 shall be marked by accession of a new shareholder. The issue has not yet passed its political stage, we have to exchange notes between the governments of three states: accessing country and founder-states of IUEC, i.e. Kazakhstan and Russia. According to our estimates, the political process will take not more than three months. If it is completed successfully, then somewhere in the end of the summer we will declare that begins to «grow up».
- Whom are you negotiating?
-This is one of the Middle East countries. We keep closed this issue until completion of the political process. There is a very complicated geopolitical aspect, because the country is competing with its neighbours in terms of domination in the Middle East region.
- This year do you plan the accession of one or more members?
- This year it probably will the only one, as the discussion of principles can not be standardized. Each country is searching for itself certain preferences from participation in such organizations as IUEC. Accordingly, we shall build up the policy of collaboration with each specific participant despite the fact that the general principles of cooperation are standard for everyone.
The processes of convergence of potential IUEC members, and what we can offer, require a certain time in the orchestration. Each year the process becomes more and more active, we can see that interest to us is growing, not yet in geometric, but in good arithmetic progression.
- Does it mean that next year you also foresee the accession of new members?
-There is a group of countries we are negotiating to. Currently we are discussing, what we can offer, because everyone has its own specificity. In the framework of the negotiations there are some questions like, does the accession to IUEC mean for the country the mandatory renunciation of the development of domestic technologies in the field of nuclear fuel cycle? That's not it. The membership in IUEC is not entitled to prohibit the development of the technologies in these countries.
We perform some explanatory works, but the dialogue is not moving forward that fast, more and more questions arise in the course. The majority of newcomers today did not settle their domestic issues. A prime example is South Africa, with which we also attempted to build up the relationships. Now the country is radically revising its policies in the energy component, although once it seemed that South Africa exactly embarked on development of nuclear energy.
State Corporation Rosatom now comes to the market with big comprehensive offer in the field of reactor-building, creation of centres of nuclear science and technology, personnel training, centres of nuclear medicine. This comprehensive offer contains a component of our IUEC project as an option of future fuel supplies for the energy sector of the countries. Eventually, we are the mechanism of insurance supplies to the markets of these countries. Moreover, if these countries develop the technologies different from Russian design, this is the most promising work for us. We can insure the supplies of their markets, no the Russian suppliers.
- How exactly to insure?
- Some countries select as a reference model for development of the nuclear power industry the reactors of not Russian design. Frequently the NPP vendor depends on the external NP fuel supplier, or the supplier of the key nuclear fuel component, i.e. the enriched uranium. In these scenarios we offer out services.
In cases, when the reactors of non-Russian design are built and the construction contractors do not possess the technologies of enrichment in the nuclear fuel cycle, we see for us the perspectives from the point of view of rendering the guaranteed supply services. In this area we currently activate our work to offer out services and capabilities to ensure these supplies for the countries with the reactors of non-Russian design.
- Kazakhstan established a similar company to IUEC. Why two fuel banks are needed?
- The bank is a certain reserved amount of fuel to compensate the disruptions in the supplies in case of its termination due to political reasons. In his time Mr Sergey Kirienko, formerly headed Rosatom, signed the agreement with International Atomic Energy Agency (IAEA) on the establishment of the guaranteed stock in Angarsk. He said that the establishment of such tools will promote the attraction of the greater number of the embarking countries to the nuclear market, because it provides some surety for them not to fail in case of disruptions of the supplies due to political reasons.
In this case we cannot speak of the competition, we establish more comfortable conditions for the newcomers entering the market. These projects are costly, for those who organizes them. For example, our fuel bank is solely the costs of the Russian state, which allocated the money to create it and annually spends huge amounts of money for maintenance and storage of the material.
In the case of the bank in Kazakhstan the same was made by IAEA. But the Agency did not use its own funds but the contributions of the states-donors, which collected the money and helped IAEA to create this bank. The bank will not be used for any commercial purpose, it will insure the world commercial market.
Who makes the decision on what bank to be used to cover the demand or this or that country?
- Such a decision is to be made by IAEA Director General, it is stipulated in the agreements for both our bank and the bank in Kazakhstan. Any country in need shall substantiate the disruption of the supplies on commercial market and request IAEA to assists in replenishment of the shortage from such institutes as the fuel banks.
- is the creation of the fuel bank in Kazakhstan associated with overstocks of the uranium?
This is not quite true. Kazakhstan simply allocated the site, rather than its nuclear material. It provided the site at Ulbin metallurgy plant, which was transferred under the governance of IAEA, there will be stored the material in the exclusive property of IAEA. By the way, this territory is ex-territorial with respect to Kazakhstan, this is the territory of the United Nations. Regarding the physical fuel availability in the bank, IAEA last spring performed a tender with invitation of all possible world suppliers. The tender was officially published on the UN site, everyone willing to supply made their bids to the Agency.
- What funds are used for the supplies?
- To create the bank IAEA received the funds from the donors-countries. Upon accumulation of the certain monetary amount at its accounts IAEA calculated in current price what amount of the material could purchased for it. In addition, IAEA envisaged the contingency fund, because the bank is to serviced, and, surely, not at the expense of Kazakhstan. After establishment of the bank IAEA will, in fact, spend its own budget received from the donors for maintaining and storage of the materials, compliance with the requirements of nuclear and radiation safety, physical protection and everything associated with it.
Why is this necessary for these countries?
- Many countries in such a way show their contribution in the development of the world nuclear power industry, support to global safety. Any safety costs money. Initially such centres, including ours and international fuel banks, were created to deliberate the the embarking countries that wish to develop their nuclear power industry, from the necessity to develop their own technologies of enrichment, which could automatically to lead to creation of nuclear weapons resulting in the threat in elaboration and proliferation of these weapons. To make this economically unprofitable and senseless it is necessary to offer for the newcomers such conditions of the works that terminate the interest.
The guarantees of IUEC are not only the Russian guarantees. These are the guarantees of the acting members of our Centre: Russia, Kazakhstan, the Ukraine and Armenia. The contracting countries guarantee the right of any newcomer that comes to receive the products and services of the nuclear fuel cycle via IUEC.
In our bank we store the fuel for two complete loading of the standard VVER-type reactor. The bank in Kazakhstan would allow, in case of political force-majeure circumstances, provide fuel for more reactors. Together we will be capable to provide the fuel for three and a half units. The more opportunities to obtain enriched uranium from the reserves of banks, the greater attractiveness will have the nuclear power industry for newcomers to this market.
- In 2017 IUEC signed a new agreement with the Ukraine for supplies of uranium raw material to Russia, what are the parameters?
- We keep up the scope of the quota designated for the Ukraine, these are 60 thousand SWU (separative work unit). This amount of SWU is sufficient to produce the fuel for one refuelling of VVER-440 reactor.
The agreement stipulates the parameters of cooperation in terms of scopes and prices for 3-years period. The document was signed with the same price parameters, the discount that is provided to the Ukrainian party preserved, despite the fact that prices for the period from the date of signature of the first agreement, which was in 2012, fell down sharply.
Last year in the framework of new agreement we performed the contract of 2017, now it would be the contract for 2018. Its signature and execution will take place in the nearest future. We have included the scope envisaged for the supplies to the Ukraine in the current production program. Now we expect from the Ukraine its signature, the contract for the current year signed by our party has been already sent to the Ukrainian party.
The actual supply of the material is expected in the III-IV quarters of this year. This is an aligned scheme of our cooperation, it does not change. In the same way we worked in 2012, 2013 and all years up to now. We cope with the schedule with the Ukraine also in the current year.
Insofar, the Ukraine is our only customer due to the existing circumstances of undersupplies to our Kazakhstan and Armenian partners, where we are still looking for the possible ways of alignment and organization of supplies.
- When do you plan the contracts with Kazakhstan and Armenia?
- With Kazakhstan we always compare our positions in terms of search for possible areas of cooperation. When IUEC was established is production was designated top the nuclear power plant, planned by Kazakhstan those time, i.e. Aktau NPP. Its first criticality was planned for 2014. This NPP up to now exists in plans only.
Anyway, I think that in such state as Kazakhstan the NPP one day will appear. The level of industrial production, economy and demand in energy supplies in Kazakhstan indicate that the NPP will be. Than we, surely, implement the agreements with the Kazakhstan party in the framework of IUEC project.
As for Armenia, this issue is even more complicated. The current general supplier for them is TVEL and it is not quite correct for us to intervene in this processes and violate the existing links.
Simultaneously, Armenia is also considering the development of nuclear option. The issue of new units construction is also pending. We have an arrangement with the Armenian party and Rosatom, that if there will be new NPP units, IUEC will be a potential supplier for them. Armenia joined IUEC intentionally to have a perspective of such guaranteed source of supplies.
- It is known that the Ukraine used the fuel of Westinghouse it its reactors, can you take it for reprocessing?
- IUEC does not engage in nuclear fuel reprocessing fuel. We work in the framework of our interaction on the fuel contract with TVEL. The uranium received from the Ukraine and enriched in IUEC is submitted for fabrication to TVEL. We have a stable model of interactions that has been built up since 2012 and we are not going to change it. Our cycle of reprocessing and model of interactions is linked to the chain of the contracts and supplies to be performed by TVEL on direct interaction with the Ukrainian NAEK Energoatom. We work at those units, where the fuel supplies are performed by TVEL.
Westinghouse is engaged exclusively in the fabrication of fuel, produces fuel from the already enriched uranium. There is no own enrichment services in Westinghouse. Westinghouse products, which is now available for the units on the territory of the Ukraine, are produced from the enriched uranium taken them from a third supplier. One of such suppliers is Tenex, i.e. the fuel of Westinghouse contains the enriched uranium produced by Tenex, therefore, Russian SWU is present there anyway to some extent.
-Was the amount of raw materials that you receive from the Ukraine decreased in connection with the partial downloading of teh NPPs with American fuel?
- Of course not. Today the entire scope of the Ukrainian natural uranium, which is further transferred to the Ukraine for operation in the nuclear reactors, come to Russia in full extent.
We do not follow the scopes of the nuclear materials supplied by TVEL, ii is outside our sphere of competences. The amount of raw materials we receive annually is not decreased, but remains the same, i.e stable. The amount of SWU we supply to the Ukraine also remains stable. Starting with 2012 we have not changed the scopes of deliveries, services and obtaining raw materials even per kilogram.
- Are there any problems to date with the payment on the part of the Ukraine?
-No, not yet. A difficult situation was in 2016, but last year it improved. The Ukrainian party coped with the payment schedule. I hope that the situation of 2016 will never repeat. We monitor the situation with TVEL, the coming information is quiet. The work is proceeding in normal mode, the Ukrainian payment schedules for the supplied fuel conforms to the planned contractual obligations.
When we have agreed with the Ukraine the contract for the current year, there was no comment from TVEL, it means that the Ukraine follows the schedule of payments.
- A traditional question regarding the uranium prices, when it is to recover?
- To make predictions is the most ungrateful thing. However, if you look at the dynamics of price changes on natural uranium, then the lower the values, which broke the price of natural uranium in December 2016, was $18 per pound, today the price per pound is $21.70 (May 14), that means the growth of somewhere around 20%. There is a trend for growth.
The definitive factor for the market price change is the availability of trend to growth of the reactor capacities, and it persists. The number of the reactors in the world increases, the total global installed capacity too, respectively, the uranium demand will also increase, thus the price will rise, because the stocks will decline.
As for SWU prices, there is negative trend. Unfortunately, the prognosis did not come true. Today we see the cheapest price for SWU - the price is $ 36 per separative work unit. This is the lowest price has ever been.

 


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