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future uranium czar

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    December 13, 2009
    Russia: future uranium czar?
    Publisher: U3O8.biz
    Author: Melissa Pistill

    The nuclear industry is anticipating major support from talks out of the UN Climate Change Conference in Copenhagen this month as global leaders meet to discuss measures to curtail global warming.

    Nuclear generated power is quickly becoming an acceptable alternative to fossil fuel-based sources and global uranium demand is expected to increase over the long-term as more reactors come online.

    "The move to clean energy to cut emissions, not only in Asia, but also in Europe and elsewhere is a very important positive impulse for uranium prices," says Commerzbank analyst Eugen Weinberg.

    The BNP Paribas Fortis Bank has reported it expects the uranium spot price to reach US$95 per pound in 2010 based on the growing number of nuclear construction programs worldwide.

    Major nuclear utilities companies looking to secure reliable uranium supply lines often turn to the "Big Three" producers: Canada, Australia and Kazakhstan. All three are responsible for over half of uranium production worldwide.

    But an aggressive competitor is shaking up the global market in an attempt to stake out a greater piece of the pie. As Uranium Investing News previously reported, Russia is seeking to dominate the world's nuclear and uranium industry, and is very vocal about its ambitions.

    Perhaps Russia is looking to become THE energy supplier to the world. The nation already boasts a major foothold in the oil and natural gas market, so why not broaden its energy dominance portfolio to include nuclear power as well? Already, Russia's technological mastery accounts for 15 per cent of the world's reactor construction market.

    For now, its position relative to the "Big Three" is small. Russia holds about a tenth of the global reserves and is the world's fifth-largest uranium miner with 8 per cent of global output in 2008. But, when one takes into consideration Russia's pitbull mentality and steely determination as it puts its plans for dominance into action around the globe, it's easy to see how quickly a Russian-ruled nuclear empire may become reality.

    "Russia wants to expand its nuclear presence all over the world," said Marina Alexeyenkova, Renaissance Capital analyst. So far, it has partnered with big names like Toshiba and Siemens, and is advancing into developing markets in Asia.

    "The Chinese market is booming, with plans to build over 70 new reactors by 2030," said Alexeyenkova. "For Russia, it's strategically important to fix contracts in this particular market."

    On Monday this week, Indian Prime Minister Manmohan Singh signed an agreement in Moscow to increase Russian nuclear fuel exports to India and to build new nuclear reactors.

    "It's not simply billions. It's dozens of billions of dollars," said Sergei Kiriyenko, head of the Russian state-owned nuclear corporation, Rosatom, in reference to the reactor agreement. "We're not afraid of competition. It's clear that nuclear energy is a global sector."

    Recently while addressing the nation, Prime Minister Vladimir Putin announced Moscow has plans to build over 30 new reactors at home and globally over the next decade.

    Russia already plays a major role as a nuclear fuel supplier to the US through the "Megatons to Megawatts" program. About 45 per cent of the fuel used by US nuclear power plants, which supply 20 per cent of US power consumption, comes from Russia. Close to one-tenth of the nation's energy needs are met with fuel produced from Soviet-era nuclear weapons.

    However, the program is set to expire in 2013 and Russia is not interested in renewing it. Moscow finds agreements to supply fuel directly to US utility companies much more intriguing. In this way, Russia has the opportunity to corner a big market, given the US with its 104 reactors accounts for over 25 per cent of the world's nuclear power generating capacity.

    Already this year, Rosatom has signed deals to supply nuclear fuel to Ameren Corp, Exelon Corp, PG&E Corp, and Luminant. "Six commercial contracts have already been signed with US nuclear power plant operators," said Rosatom spokesman Ivan Dybov. "Russia's potential for enriching uranium is sufficient to secure a notable share of the US market."

    Russia is also working to increase its uranium ore holdings through partnerships with resource-rich nations and miners. ARMZ Uranium Holding Co is Russia's state-owned uranium miner and it plans to produce 4,700 tonnes of uranium this year and 5,300 tonnes in 2010.

    ARMZ has joint venture projects in developing nations like Namibia and Armenia, and with majors like Canada's Cameco Corp.

    Uranium Investing News reported last week on Russia's latest strong-arming tactics in uranium hotspot Mongolia. ARMZ has made an all-cash offer in a hostile takeover bid for Canadian-based Khan Resources for total control of the Dornod uranium deposit.

    I say "total control" even though the Mongolian government has a 21 per cent stake in the joint venture, but the debt-ridden nation is basically at the financial mercy of its much more powerful neighbour, so yeah, total control.

    Speaking of uranium-rich neighbours with issues, there's also Kazakhstan on Russia's doorstep who also just happens to be the number three in the "Big Three."

    The former Soviet Union nation is home to about one-fifth of global uranium reserves and plans to produce 13,800 tonnes this year with an output of 15,000 for 2010. While nations like Japan, China and Canada are looking to mine Kazakh uranium, Russia already has its fingers in the pie with three joint-venture projects, one with Canadian miner Uranium One.

    Kazakhstan also has plans to develop fuel fabrication facilities, which, coupled with its uranium holdings, proves an interesting prospect to Russia, the world leader in nuclear fuel fabrication technology.

    As the world turns to nuclear power as an alternative to fossil fuels Russia is quickly moving to dominate the market from uranium exploration and mining to nuclear fuel fabrication to power plant construction. No doubt Canada is working to keep its top dog status by courting India. How will Australia respond?
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