Tenex Might be Stuck With Tonnes of Uranium it Produces for US Consumption

Publish date: November 11, 2002

As of 2003, Russia may be stuck with tonnes of highly enriched and natural uranium that it produces annually because of — oddly enough — an expiring anti-dumping investigation that, since 1992, has prevented Russia from selling natural and enriched uranium on the American market without a matching sale.

Few, if any, moves have been made in Russia’s favour to remove a so-called "Suspension Agreement" under which Russia is allowed to sell uranium in the US — provided there is a matching sale from an American company — frustrating Moscow’s Tekhsnabexport, or Tenex, which had hoped to broaden what it sees as its shrinking market share.

The uranium in question — which has nothing to do with Russia’s 1993 HEU-LEU non-proliferation agreement, under which Russia dilutes highly enriched uranium (HEU) from warheads for use in American commercial reactors — may now have few if any market outlets, according to Sergei Grishin, assistant director at Tenex, which is the Russian nuclear fuel exporter with close ties to the Ministry of Atomic Energy, or Minatom.

"Exports of HEU from current production to the United States may stop as soon as next year because of the expiration in 2002 of the contracts that were approved in 1992 while reaching the Suspension Agreement to cease an anti-dumping investigation," said Grishin to Interfax news agency, at a recent conference in Moscow.

"The hopes for cancelling or requesting indulgence on the US anti-dumping measure are, in the medium-range perspective, quite undefined, as witness the large contracts on HEU-LEU in the past few years," he said to Interfax in remarks confirmed by Tenex spokeswoman Nadezhda Yavdolyuk.

According to Minatom figures, deliveries under the Suspension Agreement to the United States consisted, in 2002 alone, of 4.2 metric tonnes of uranium. Neither Yavdolyuk nor Grishin nor Minatom would indicate how many tonnes have been delivered on a yearly basis, however. Grishin, speaking to Interfax, defined the quantity as a "commercial secret," and Minatom sources refused to say if 2002 was indicative of standard annual shipments.

At issue is an investigation started in the early 1990s by the US Department of Commerce —referred to simply as Commerce — and the International Trade Commission, or ITC, into Russian uranium "dumping" practices on the American market, where dumping refers to the export and sale by a country of a product at a price lower than it charges in its own home country, a spokesman for the World Trade Organization told Bellona Web.

The Commerce and ITC investigation was prompted by allegations that Russia was selling natural uranium to American utilities for dumping prices, US nuclear industry sources, who requested anonymity, told Bellona Web.

As a result of the investigation against it, Russia agreed in 1992 to sign a ten-year Suspension Agreement, meaning Moscow accepted to refrain from selling HEU or natural uranium in the United States — unless it pursues so-called matching sales to make sure a sale from another, American, company was on the market. Signing the Suspension Agreement ended Commerce’s and the ITC’s investigation, the US industry sources said. But judging from the 4.2-tonne figure supplied by Minatom, even the Suspension Agreement wasn’t denting Tenex’s US business much.

Now that the Suspension Agreement has ended, Tenex apparently wants — in fact, says it needs — the American market. But it cannot continue to operate on it without a continuance of the Suspension Agreement. Additionally, according to US industry sources, a full-throttle fight with Commerce and the ITC for an industry share in the United States means the dumping investigation from the 1990s would be reopened.

"The Russians came up for reconsideration in Commerce and they sent a communiqué saying they would not seek a change in the status. This was generally regarded to mean that they were going to fight the Suspension Agreement," said a US industry source.

But Tenex cannot have it both ways under American law — lifting the Suspension Agreement means it cannot do business in America, but continuing it means they will have to do so under the condition that they always seek a matching sale.
"The Suspension Agreement has ended, which means that the investigation would proceed again if they want to sell on this market. It’s a cumbersome process either way," said the source.
Tenex’s Yavdolyuk agreed.

"It is all vague at this point," she said.

Whatever the outcome, this leaves Tenex with lots of uranium to move, but few markets to move it to. At the Moscow conference, Grishin spoke hopefully of opening trade with Japan or Taiwan.

But there are formidable diplomatic obstacles to doing so.

In the case of Japan, American fuel sellers would be upset by Japan opening its doors to competing sales. As for Taiwan, Moscow does even not recognize it as a sovereign and separate nation from mainland China.

Nonetheless, Taiwan has been aggressively seeking storage for its low-level nuclear waste in the Russia far-eastern Kuril Islands for some years now, apparently ready to disregard diplomacy when faced with a nuclear waste hazard that could endanger its own population.

Grishin said many of Russia’s current uranium woes are due to the fall of the Soviet Union, which, he noted to Interfax, meant that "Russia was cut off from the richest bases of natural uranium in Central Asia."

"We are unable, like our competitors France and England to bring Canadian and Australian uranium into our country for enrichment, given the unacceptable conditions imposed by the governments of Canada and Australia," he told Interfax.

This, Grishin noted to Interfax, is bound to get worse: Referring to information contained in the "Pink Book," recently published by International Atomic Energy Agency (IAEA), some 56 percent of the world’s investigated uranium deposits — worth $40 per kilogram — are located in Canada and Australia.

But for Russia’s import and export market to get anywhere, noted Grishin in his Interfax interview, vast and far-reaching improvements have to be made to Russia’s nuclear infrastructure.

"Our industry has lagged behind the process of restructuring of the nuclear industries of other states of the nuclear club, which were able to transform the huge potential originally intended for military programmes into powerful corporate structures intended for the civilian market," said Grishin, according to Interfax.

"Our industry has even lagged behind the development of Russian legislation, oriented to the principles of market economy."