US to pay $1 billion for Russian nuclear fuel

A Russian firm has signed a groundbreaking one billion dollar contract to supply US nuclear power stations with uranium fuel. Russia already supplies 23 per cent of the fuel used by US plants.

The deal is set to start in 2014 and will last until 2020. During this period, Russia will supply low-enriched uranium to the United States to produce fuel for commercial power-plants in America.

In previous years, under a program called Megatons to Megawatts, uranium from around 14,000 old Soviet nuclear warheads had been turned into fuel sold to US power stations.

The new agreement consists of three deals with three different US companies. These are San Francisco’s Pacific Gas & Electric Company, Missouri-based AmerenUE, and Texas-based Luminant, Sergei Novikov said, a spokesman for Russia’s Rosatom State Corporation.

All companies representing the American side are affiliated with the US Fuelco group.

The Russian firm that has signed the contracts – Tekhsnabexport, or Tenex – is a part of Rosatom, which controls the nuclear industry in Russia.

Tenex’s marketing executive, Vadim Mikerin, told The Associated Press that state-run Tekhsnabexport would supply US markets with nuclear fuel enriched from raw uranium for the first time.

Rosatom also said that it was ready to construct a storage facility in the US, and that Americans were considering this idea too. The negotiations are set to start shortly.

Re-start in action

The agreement comes as relations between the US and Russia appear to be improving as part of the so-called re-start in bilateral ties. And the latest deal is a good example of ongoing co-operation between the two countries.

Currently, Russia supplies around 23% of the uranium imported by the United States; and the new contract may raise that to around 30%.

Back in 2007, Russia was the largest exporter of uranium to the American market, though it had some tough competition from Kazakhstan, Australia and Canada. But many experts say Russia has good potential in this market.

“The current agreement opens doors for better cooperation, though not immediately. It will be happening until 2020. And I am sure that Russia only starts exploration of the US market,” Vladimir Orlov said, a director of the Moscow-based Center for Policy Studies.

“But we should not only think of bringing low-enriched uranium to the United States, but also of storing it in the United States, to be closer to the US suppliers,” he added.

The US and Russia have been co-operating successfully in the Megatons to Megawatts project, which was signed back in 1993 and is going to last until 2013. It is aimed at converting highly-enriched uranium from old Soviet nuclear warheads to low-enriched uranium, which could be used to produce fuel, again, for commercial power-plants in the United States.

The aim of the present project is to convert 500 metric tons of uranium, which is equivalent to 20,000 nuclear warheads. And of course this is another example of how Moscow and Washington could co-operate.