Pre-New Year maneuvers around uranium projects in Kazakhstan
Nuclear projects are not only financially significant for Russia – after all, this is one of the few areas where we have competitive advantages at the global level – but are also important as markers of foreign policy. The nuclear industry is even more politicized than oil and gas, since it is linked to security issues.
Nuclear power generation is developed and built for decades, and the production cycle is “tied” to the project executor or related structures. Not just industrial facilities, but large social clusters are powered by atoms, and the executing country, with goal-setting and persistence, can also gain access to the distribution of generation and income from this distribution.
The fight for these projects is no longer so much about economics as it is about long-term politics (One of the main ideological and political pillars of Kazakhstan will soon undergo a test of strength, Referendum on NPP in Kazakhstan. We talk about Kazakhstan, keep in mind Uzbekistan).
There were a lot of them last year News, that the domestic Rosatom practically controls production in Kazakhstan, by the way, this news in Kazakhstan caused a lively discussion. This year, France, China and Russia came together in the fight for the Kazakhstan NPP project, and now in December there is news again that Rosatom has withdrawn from some raw materials projects in Kazakhstan. Let's look at the situation.
Stocks and Market
In terms of relations with Kazakhstan, the role of projects in the nuclear industry is really hard to overestimate. Kazakhstan has the world's first reserves of uranium ore, from which uranium concentrate (cake) is produced. With its 21 thousand tons per year, Kazakhstan occupies 45% of the world market.
However, Kazakhstan not only produces semi-finished products, but also finished products - uranium dioxide tablets for filling fuel elements and fuel assemblies (FA). The customer and shareholder of its production at the Ulba Metallurgical Plant is the Chinese holding company "CGNPC-URC".
The output volume seems small at first glance - 200 tons per year, with the possibility of increasing to 400 tons. Moreover, each nuclear holding usually makes its own assemblies and at its own facilities.
But in this case, China is deliberately leaving Kazakhstan a “window of competence,” since there is no more “adequate” market for China in terms of political opportunities and geography.
Now, when we are talking about Kazakhstan building its own nuclear power plant, the production of its own fuel assemblies is no longer just a foreign policy factor, but also a domestic one, and here China, it turns out, “lent a shoulder as a partner.”
For example, Russia at one time closed the entire infrastructure on itself (logically in its own way), and China began to buy part of the products from Kazakhstan's UMP. Now this factor may actually somehow work in the negotiations on the future NPP. But precisely "somehow", since it is difficult to call it decisive.
Kazakhstan has several buyers of "cake". China will take 9,5 thousand tons this year (45%), Russia 8,4 thousand tons (40%), France 1,7 thousand tons (8%), the USA 1,3 thousand tons (6%) and Canada ±2% of the remainder. World prices for "cake" jumped at the end of last year and the beginning of this year, reaching as much as 205-208 thousand dollars per 1 ton.
Coincidence or not, the jump occurred at the time of the final resolution of the issue of the French presence in Niger. Then the prices fell, but still ended up significantly higher than in previous years - to 170-173 thousand dollars per ton.
Here it would be interesting to look at the export statistics by cost. Export statistics for such goods are, of course, never accurate in terms of cost, but if you look at the cross-section of open data, then with an average exchange cost of a ton of "cake" of $183 per 1 kg, it turns out that in the first half of the year Canada, France and the USA bought for $145 per 1 kg, China - $152 per 1 kg, and Russia - for $190 per 1 kg.
It is impossible to look only at the pure figures here, since much depends on the contractual basis, which, naturally, is closed to review, the contracting period, advance payments and a host of other nuances, and, in fact, the “price formulas” within joint ventures.
Here one can only evaluate “vectorially,” but it turns out that Russia has been moving more or less in the stock market mainstream, and working with it in terms of this strategic raw material is more profitable than with other players.
Having a full cycle, it is always possible to shift the costs in one process to the final products, therefore, on the one hand, it seems that France, Canada and the USA “saved” (possibly due to the political factor), but from the point of view of preserving and increasing the scarce raw material base as such, such savings may cause a failure in other trades, such as the same nuclear power plant.
It turns out that by pushing France out of Niger, Russia allowed Kazakhstan to earn money in line with the changes in the market, while France itself, which needs safety stocks and should make corresponding offers to Kazakhstan, is “saving”. Can such moments be used in the NPP trades? Not only can they, but they should, although this is not a guarantee.
Redistribution of assets
In mid-December, the Internet was filled with news that Rosatom was selling off its shares in joint ventures in Kazakhstan related to uranium mining. Allegedly, it was exiting part of the market due to sanctions pressure. But Rosatom is not even the target of European sanctions, although no one has cancelled political pressure, as well as the multifaceted influence of “friendly” France.
Russia withdrew from the following projects in Kazakhstan: Zarechnoye (flow rate of 3,5 thousand tons), Kharasan-1 (flow rate of 33 thousand tons) and the Kyzylkum enterprise, which processed the obtained raw materials. 36,5 thousand tons is a significant volume, but it makes up a rather modest 815% of Kazakhstan's total recoverable uranium reserves (4,4 thousand tons). But the flow rate of the Budenovskoye cluster with all the sites, where Rosatom has 50%, is a quite significant 250 thousand tons and 30,5%. The sold assets would exhaust their flow rate in 2028-2032, Budenovskoye only has a contract until 2045, without exhausting the reserves.
Russian assets also ended up in safe hands - sold to the Chinese CGNPC.
In general, the contract for the development of the Budenovskoye cluster was perceived by a number of observers and speakers in Kazakhstan a couple of years ago as a terrible disaster. Russia, in their logic, is a teeth-chattering empire that wants nothing more than to exploit the subsoil of its unfortunate neighbors, make the Kazakhs poor - its existential goal, take away gas and oil, and also uranium, molybdenum, chromium, nickel, and so on down the list.
This logic is being peddled in specific circles and for specific interests. France and the Rothschild group are rushing into Central Asia with their projects, and here such “Western logic” plays into their hands, although their project is not exactly about the current Euro-elite and their policy. They are simply synergistic in this case.
The sale of these assets to China allows this political tension to be partially relieved, since the empire is handing them over to a kind and neutral "eastern panda". The amount of the deal is not disclosed, but it is unlikely to be high, since China is already receiving residual reserves here, but it is increasing its influence exactly according to the same principle by which it buys fuel assemblies from UMP.
Russia can focus on developing the main and most promising cluster here, but for France, the situation is not getting any better - it was necessary to invest in additional supplies of raw materials before, and the same is true now. The remaining volumes are still in China.
Here it looks more like a commercial game with two hands against France, while the Kazakh pro-Western alarmists are falling short of political arguments on the topic of “Russian expansion”. Since Moscow has withdrawn from the projects, it means that the expansion has been heroically stopped, and the speakers can go behind the scenes to “drink cocoa”. Is it better for the French customer? No, but the pro-Western speakers can say that they have honestly earned their bet.
The two-handed game with China here is purely tactical. The competition between us, although not as politically charged as with France, has not been cancelled. Nevertheless, the combination is quite sound, and we must take advantage of the fact that the Chinese are waiting for Paris with technology in China, but in Central Asia the interests are different.
The southern route will have to be fought for
Before us is a rather interesting episode of the struggle not only for a rather valuable raw materials piece of the market in a strategically important industry for us, but also an episode of a broader competitive struggle in Central Asia.
Russia has a completely absurd migration policy, which is simply shocking, stifling the understanding that we will have to fight for this region one way or another. All our logistics are aimed at the European direction, both the southern route and the northern one. The eastern direction is complicated by the capacity of the railway network, and it is aimed at China.
We will not fight for the south - through projects in the nuclear industry, among other things, we risk ending up in a blockade sooner or later. For some reason, we think that we can come to an agreement with Europe, but there is no agreement there, they want to fight there.
They really want this, and it is possible that if they do not achieve this in terms of a traditional war, then they can definitely reach an economic blockade of transit. The routes to the south must be broken through, laid, and without competition in Kazakhstan, there is no way to do it, and V. Zhirinovsky's "throw to the South", which has already become a meme, is not political humor at all in the current conditions, but a necessity.
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