Nuclear Boom

Economic News

22 Jul 2010
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Ukraine's government has set a long-term goal to triple its uranium production. The country hopes to reduce nuclear energy costs through self-sufficiency in supplying the radioactive metal used to produce nuclear fuel. According to Ukrainian President Viktor Yushchenko, speaking in the Northeastern industrial city of Sumy last week, the country hopes to raise annual uranium production to 1000 tonnes in the near term, increasing to 3000 tonnes in the long run.

Ukraine currently produces around 800 tonnes of uranium annually, meeting only one third of the country's energy production industry needs. The remainder is purchased on foreign market at what the president called "monopoly" prices. Indeed, the price of uranium remains extremely high, increasing more than five times in the past three years to around $91 a pound. According to Yuschenko, developing the country's production capacity by an extra 200 tonnes will allow Ukraine to save $42m while an extra 2200 tonnes will save $462m.

Uranium exploration in Ukraine began in 1944. Since then, 21 deposits have been discovered, mostly located in south-central Ukraine. The president said Ukraine possesses the largest recoverable uranium ore reserves in Europe. Though secrecy laws make accurate figures difficult to ascertain, according to some estimates, Ukraine is the world's eighth-largest miner of uranium, and needs 3000 tonnes a year for its 15 nuclear reactors. Though comprising a little more than a quarter of installed capacity, with a generation capacity of 13,835 MW, these reactors produce just under half of the country's electricity. The government announced plans in 2006 to build up to 11 new reactors in the next few years, with as many as 22 by the year 2030.

The push is part of the government's efforts to curb Ukraine's heavy dependence on Russian energy imports, particularly natural gas. Quite apart from gas prices, the electricity gap is widening as consumption goes up every year and installed capacity remains the same. To reduce vulnerability, Ukraine has developed a strategy that envisages greater reliance on domestic coal and nuclear power stations. In the wake of the 2006 gas dispute with Russia, many in the country's leadership have made diversifying the energy supply an issue of national security. With the price of natural gas doubling in 2006 and increasing by another third at the beginning of 2007, the commercial impetus for diversifying into other methods of energy production is strong.

There has been significant help abroad in developing the sector. Save for two large new reactors commissioned in 2004, all of Ukraine's reactors date to the Soviet era. Ukraine has been open to international assistance in upgrading its facilities and improving safety. The US announced earlier in March that it would help Ukraine diversify its sources of nuclear fuel through the joint US-Ukraine Nuclear Fuel Qualification Project (UNFQP), administered by the US Department of Energy.

The US will invest $14m to provide 42 nuclear fuel assemblies to the Pivdenniy Nuclear Power Plant, the biggest of Ukraine's four nuclear power plants. According to the agreement, Westinghouse Electric, a major American nuclear technologies company responsible for the design and supply of nearly 50% of the world's nuclear power plants, will manufacture nuclear fuel assemblies accounting for a quarter of the fuel that powers a reactor for up to four years of operation.

Since Ukraine's independence in 1991, the US has been eager to find areas in which it can cooperate with the strategically important country. Energy is a route mutually beneficial to both countries. "To ensure a path of economic growth, we must promote policies that encourage open and transparent market principles, increase energy efficiency, and further cooperation in nuclear non-proliferation," said US Department of Energy Deputy Secretary Clay Sell in Kyiv in the middle of March.

Ukraine will provide low-enriched uranium to manufacture the fuel assemblies, as well as funding for technical services.

Though there is a degree of public distrust of nuclear energy in the wake of the 1986's infamous Chernobyl nuclear disaster, this has largely given way to the official need for energy independence from Russia - an issue perhaps even dearer to the public hearts. Though most would state a preference for alternative sources of energy, low nuclear energy prices and memories of shortages following independence in 1991 have inclined many to regard nuclear energy as the best option for Ukraine. This is remarkable given the lasting effects of Chernobyl on Western European attitudes. Indeed, the Chernobyl nuclear reactor was only closed in 2000 following enormous pressure from the West.

But Ukraine's potential for nuclear energy remains limited by its lack of infrastructure needed to enrich uranium. According to the president, only two companies in Ukraine are engaged in its production and processing, and just one involved in enrichment. Therefore even in nuclear energy, Ukraine remains largely dependent on Russia for nuclear fuel to power its reactors. Uranium concentrate and zirconium alloy from Ukraine are usually sent to Russia for fuel fabrication, and Russia is Ukraine's primary supplier of other nuclear fuel-cycle services.

There are plans that could meet with public opposition. Part of the government's energy strategy unveiled in 2006 involved the construction of facilities to recycle nuclear fuel and store nuclear waste. Waste storage could prove to be a controversial issue.

Ukraine's long-term goal of energy independence, with nuclear power generation planned to be doubled by 2030, depends on developing the full nuclear cycle in Ukraine. The recent move for self-sufficiency in production and downstream development are steps toward reduced dependence and increased nuclear energy generation.

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