In September 2024
Russian dictator Vladimir Putin told his government to explore restrictions on
important raw materials and metals:
"Many goods shipments to us will be limited, and
perhaps we should also consider some restrictions, such as regarding uranium,
titanium, and nickel."
Enriched Uranium
Over the past
two and a half years since Russia invaded Ukraine, Western countries and some
allies have resourced oil, gas, petroleum distillates, coal, and minerals in
order to reduce their dependence on Russia for these materials. However, some
needs remain, especially where it is expensive, technically challenging, and
time-consuming to develop new sources. This is especially the case with
enriched uranium. Russia’s Rosatom still supplies 40% of the global market for
high-quality low-enriched uranium for nuclear power plants, including 20% of
the U.S. needs and 30% of the E.U. needs. Rosatom generated $4 billion in revenue
from the U.S. and E.U. in 2023, about 25% of its revenue. That is down from before,
but it is still clear that there is considerable global dependence on Rosatom
as a supplier. Of course, limiting that supply would be painful for both seller
and buyers but it is probably the biggest materials leverage Putin still
retains. Two European companies, Urenco and Orano, also enrich uranium and are
expanding their operations. The U.S. restarted uranium enrichment through the
American company Centrus Energy late in 2023, but that operation is still very
small. Estimates are that the U.S. could go without Russian-enriched uranium
for about five years and the E.U. a little bit longer. Recently, the U.S. imported more enriched uranium from China, but it is thought to be Russian
uranium resold.
In 2023 there
were 30 countries generating nuclear energy in some 440 plants importing
uranium and other radioactive materials from Rosatom. Rosatom also provides
nuclear services to those plants. They noted in 2023 that they are currently building 33
new reactors in 10 countries. Dependence on Russia for enriched uranium allows
them to fund the maintenance of their own nuclear arsenal as well as their
military buildup and the Ukraine war machine that has become the driver of
their economy. According to a 2023 AP article:
“Rosatom CEO Alexei Likhachyov told the Russian
newspaper Izvestia the company's foreign business should total $200 billion
over the next decade. That lucrative civilian business provides critical funds
for Rosatom's other major responsibility: designing and producing Russia's
atomic arsenal, experts say.”
Ukraine has
urged the West to sanction Rosatom. Either way, sanctions or limiting supply
would be financially painful for both sides.
The U.S. purchases
the bulk of its enriched uranium, 35%, from Kazakhstan, a Russian ally but also
friendly to the U.S. Kazakhstan is the world's largest producer of enriched uranium.
Russian-designed reactors are most dependent on Rosatom’s enriched uranium. There
are 19 such reactors in Europe. Before the war, France had recently tripled its
purchase of Russian-enriched uranium. Sweden dropped Russian-supplied enriched
uranium and Finland scrapped plans to build a nuclear power plant with Rosatom.
“Based on
apparent prospects [of diversification of fuel supplies], it would be fair to
say that Rosatom has lost the European market,” said Vladimir Slivyak, co-chair
of the Russian environmental group Ecodefense.
In May 2024
the Biden-Harris administration with bipartisan support banned uranium imported
from Russia with some exceptions – if a company can show that there is no other
source available it can be exempted. The law went into effect in August. By the
end of 2027, the exceptions will expire. The U.S. is partnering with Canada,
France, the U.K., and Japan to develop a global non-Russian supply of enriched
uranium but that will take time.
The ban “prohibits
any imported unirradiated low-enriched uranium (LEU) produced in the Russian
Federation or by a Russian entity.” The DOE noted:
“Under the HALEU Availability Program, we’re working
on various activities to secure a domestic supply of HALEU — an important
material needed to develop and deploy advanced reactors.”
“Our Piketon demonstration project already produced
the nation’s first amounts of HALEU for next-generation reactors, with plans to
increase production to 900 kilograms in the near future. We’re also looking to
award contracts this year for HALEU enrichment and deconversion services.”
“Internationally, we’re collaborating with our Sapporo
5 — a strategic partnership between the United States, United Kingdom, Canada,
France, and Japan — to support the stable supply of fuels for existing,
operating reactors and to enable the development and deployment of fuels for
future advanced reactors.”
Titanium
Russia also
exports titanium sponge through its company VSMPO-Avisma to American, Canadian,
and European companies. The E.U. imports around $350 million of Russian
titanium, dropping by about 10% over 2022. The U.S. has companies that process
titanium sponge but the E.U. does not. Thus, the U.S. is less dependent on
Russian titanium than the E.U. The E.U. is becoming more dependent on the U.S.
for titanium.
Nickel
Russian company
Norilsk Nickel is one of the world’s largest nickel producers. Just a month ago
in August 2024, the U.S. imposed sanctions on Russian nickel but the E.U. has
yet to do so. Before the war the E.U. was the source of 50% of Norilsk Nickel
revenue and that no has dropped to about 24%. The North and South American
share of the revenue has dropped from 16% to 10%. Nickel demand has increased
in recent years due to its use in lithium-ion batteries for EVs. Luckily, a new
large source of nickel from Indonesia is in operation and is keeping prices
down for the in-demand metal. China is heavily invested in Indonesian nickel. Indonesian
nickel is reducing Russia’s nickel leverage.
Putin has
leveraged gas, oil, and other minerals and commodities in the past and may do
so now with enriched uranium, titanium, and nickel. Enriched uranium is the
main potential problem in terms of value. However, any limitations will hurt
Russia as well. He may want to cause the price to rise through his threats. It
is unclear what will happen, but one thing is clear: Putin does not hold nearly
as much leverage to threaten as he did before the Ukraine invasion. We will not
go back to dependence on a totalitarian Russian government for materials.
Efforts to wean off that dependence will continue and hopefully succeed
quickly.
References:
Putin
threatens raw material supply amid Western sanctions. Katarzyna Bogdańska.
Conflict Watcher. October 4, 2024. Putin
threatens raw material supply amid Western sanctions (msn.com)
Putin
Profits Off US, European Reliance on Russian Nuclear Fuel. Associated Press.
August 13, 2023. Putin
Profits Off US, European Reliance on Russian Nuclear Fuel (voanews.com)
Biden-Harris
Administration Enacts Law Banning Importation of Russian Uranium. U.S. Dept. of
Energy. May 14, 2024. Biden-Harris
Administration Enacts Law Banning Importation of Russian Uranium | Department
of Energy
Russian
Uranium Ban Will Speed up Development of U.S. Nuclear Fuel Supply Chain. U.S.
Dept. of Energy. May 14, 2024. Russian
Uranium Ban Will Speed up Development of U.S. Nuclear Fuel Supply Chain |
Department of Energy
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