Energy security is a major issue for most countries. Resource-rich nations seek stable markets, transportation routes and high prices, while importers look for secure energy supplies at affordable prices. Over the past two decades, the definition of energy security has expanded to include environmental risks and electricity poverty. The unstable geopolitical situation around major oil and gas supply markets, which led to oil shocks in the 1970s, forced developed countries, such as the United States, France, Germany and Japan, to develop nuclear plants in order to secure a stable power supply. Other nations, including Canada and the former Soviet Union, joined the club, which subsequently became a group of traditional nuclear power producers.
The proliferation of nuclear power plants in China, South Korea, Latin America, India and Eastern Europe created a nuclear ‘Renaissance’. The term is no longer used after the 2011 Fukushima Daiichi disaster, which shook the industry and triggered the closure or termination of plans for numerous nuclear power plants in Japan and Europe.
Many countries, however, particularly China, India, Russia, and South Korea, confirmed their adherence to nuclear power production after implementing tough security measures. Moreover, other new players, such as the United Arab Emirates, Turkey and Jordan, embarked on securing a nuclear power supply. And other nations, such as Bangladesh, Egypt, Jordan and many others, have announced plans to join the nuclear power club. Due to this significant expansion of nuclear power development, demand and usage, we are witnessing not a new nuclear renaissance, but rather a widespread transition of nuclear technologies from traditional nuclear powers to newcomers. This transition is clearly reflected in changes in the nuclear fuel-cycle, as well as the sale of power plants from experienced nuclear powers to new actors.
In these conditions of rapid changes in the area of nuclear power use and the potential risks associated with it, it is necessary to review the commercial side of the nuclear industry: the front-end nuclear fuel cycle, nuclear fuel supply and demand markets, and nuclear power plant exports.
Major challenges facing the industry are the security and safety issues connected to nuclear material. And only a few governments possess the enrichment facilities and know-how to properly handle the material [See story ‘NTI Report Notes Progress in Security of Global Nuclear Materials, Says Major Challenges Remain’ on Page A1].In addition, even if a country possesses the enrichment know-how, it requires a legal framework to implement enrichment.
The world faces a timely question: how recent changes, such as the rapid transfer of sophisticated nuclear processing technologies from developed countries to developing countries, might pose a threat to regional security? Taking such a threat into account, the transfer of nuclear technologies may trigger irreversible damage to global stability and, therefore, requires meticulous and critical attention due to the considerable challenge it poses for global governance.
According to the World Nuclear Association (WNA), the number of commercial nuclear reactors connected to the grid has remained almost the same since 2009. The absence of an increase is explained by the suspension of the commissioning of new reactors in the immediate aftermath of the Fukushima Daiichi accident. By contrast, the number of reactors that are under construction or will be connected to the grid during the next 15 years is expected to grow dramatically. During the last five years, construction began on 28 new reactors, which represents a substantial number. The number of reactors to be connected to grid in the coming 15 years is even greater: 312 new facilities are to be launched around the world, compared to today’s 435. In addition, non-Organization for Economic Cooperation and Development (OECD) countries represent considerably higher growth, with China, India and Russia alone accounting for 327 new reactors that are either under construction or will be constructed in the next 15 years.
The process of producing nuclear fuel is complex and impacts geopolitical affairs in numerous ways. First, each stage of the production process, generally called the front-end of the nuclear fuel cycle, is implemented by major producers whose geographical locations are often highly dispersed. Only a few fully vertically integrated companies exist in the industry. For this reason, nuclear fuel consumers generally contract several companies engaged into different stages of production. In addition, nuclear fuel may travel tens of thousands of miles from mining sites through conversion, enrichment and fabrication plants to the final destination. The expanded geography of mining and nuclear power plants only exacerbates the complexity of this process.
An important trend in the mining industry is the increasing participation of foreign actors. In Canada, a country with a long history of uranium mining, local company Cameco for a long time had shared the mining industry with Canada’s only foreign-based company AREVA. That situation changed in late 2007 when Cameco announced an agreement with the Russian company Uranium Holding ARMZ (Atomredmetzoloto) to create a joint venture to explore and mine uranium in Canada.
However, the bigger story in the growing foreign participation globally is the increased interest of new players in the mining sectors of Australia, Kazakhstan and some African countries. The Chinese companies Sinosteel and China Guangdong NPC have purchased significant shares in Australian exploration ventures. In Niger, the South Korean utility company Kepco has taken partial equity ownership of the Imouraren Mine via a partnership agreement with AREVA. Starting in 2013, the South Korean group is allowed a 10 percent share of the mine’s uranium production. The participation of the Chinese and South Korean companies in the mining industry reflects a trend of increased newcomer activity in the primary resources-rich markets.
An analysis of the conversion and enrichment states reveals a similar trend of intensive penetration by new players. The global number of conversion facilities is limited to several plants, including Cameco in Canada and UK, Atompromenergo in Russia, Areva in France, ConverDyn in the United States, CNNC in China and IPEN in Brazil.
In terms of nuclear enrichment facilities, they are even more limited in number due to the risk of proliferation and limited access to advanced technologies.
The enrichment sector is dominated by Tenex (a subsidiary of Atomenergoprom), U.S.-based U.S. Enrichment Corporation and Urenco, and French AREVA. The WNA’s projection to 2020 predicts significant enrichment growth in Russia with the introduction of new, more efficient centrifuges. In China, CNNC is developing an enrichment plant in cooperation with Russia’s Atomenergoprom and is expected to increase its capacity to meet domestic demand.
As to the last stage of nuclear fuel preparation, unlike the previous three stages, the nuclear fuel assemblies are specifically designed to the requirements of particular types of reactors. This includes the basic shape and size of the assemblies, as well as the level of enrichment. Individual specifications are also determined by national, or even regional, licensing requirements. However, the market for ready nuclear fuel has become increasingly competitive, and global nuclear fuel fabrication capacity will not be in deficit in the foreseeable future.
Light water reactor fuel fabrication capacity worldwide is represented by such companies as France’s Areva, China’s CNNC, Kazakhstan’s Ulba, Russian’s TVEL, the USA’s Westinghouse and a few others.
In Kazakhstan, AREVA provides engineering assistance to build fuel fabrication lines in KazAtomProm’s Ulba Metallurgy Plant in Ust-Kamenogorsk under an agreement signed between Areva and KazAtomProm in October 2010. KazAtomProm owns 51% of the new company, while Areva owns the remaining 49%. At the time of its creation, the partners said that the new company would build a manufacturing line for nuclear fuel assemblies at KazAtomProm’s Ulba plant with a total capacity of 400 tons per year starting from 2014.
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In China, AREVA has been working with the Yibin fuel plant for several years. The collaboration began with an initial technology transfer of fuel assemblies in 1991. AREVA and CNNC began in 2010 to manufacture zirconium tubes for fuel rod assemblies. In India in the summer of 2009, uranium, after fabrication into fuel at the nuclear fuel-cycle plant in Hyderabad, was loaded into the reactor and began contributing to the country’s electricity supply.
Nuclear power plant construction represents another major part of the nuclear power industry. The current stage of industry development is characterized by an increasing number of plants being constructed in developing countries. These include China, India and Russia, which have experience with nuclear material either through military possession or research and development. However, there is a growing number of countries that do not have substantial experience in dealing with nuclear technologies.
According to a 2009 OECD report, the governments of Cambodia, Malaysia, the Philippines, Thailand and Vietnam are considering introducing nuclear power in the coming years to meet their domestic electricity demand. In 2009, Thailand declared its plans to build two nuclear power plants, beginning in 2020 and 2021, in order to reduce exposure to fluctuating natural gas prices.
In addition, several countries in Africa, including Algeria, Egypt, Ghana, Kenya, Morocco, Namibia, Niger, Nigeria, Tunisia and Uganda, have expressed interest in generating electricity and desalination utilities through nuclear power.
Although WNA indicates that Iran has one operating and three planned and proposed plants, according to Iranian authorities, nine more power plants are approved for construction. Saudi Arabia, Jordan and the United Arab Emirates also plan to construct new nuclear power plants to generate electricity and desalinate water.
Given the sensitivity of nuclear material, combined with the weak legal frameworks, unstable economies, tenuous political regimes and underdeveloped human skills of many developing nations entering the sector, the global expansion of nuclear power plants raises profound geopolitical stability and security concerns.
The International Atomic Energy Agency (IAEA) has established rules for countries that seek to embrace nuclear power, but have no experience in that area. The document titled “Considerations to launch a nuclear power programme” states that “it is essential that it [the country] develops a comprehensive strategy to assess energy needs, and understand the potential role, appropriateness, viability and commitments associated with nuclear energy in the context of plans for national and socioeconomic development.”The requirements include developing legal frameworks, becoming skilled in safety and control, establishing adequate infrastructure and ensuring the financial resources to maintain the safe operation of nuclear power plants and radioactive waste management.
The nuclear industry has become extensively globalized, featuring complex transactions and technology transfers. The growing number of countries turning to nuclear power is a major trend that significantly impacts global governance. In particular, the world has witnessed a rapid transfer of nuclear technology to developing countries. In addition, there is a thin line between nuclear commercial use and dangerous weapon creation. During the last several decades, uranium enrichment know-how and related equipment proliferated from Europe to Pakistan and from there to Iran, Libya, and North Korea.
The transition of some nuclear technologies to developing countries may trigger their claims towards further nuclear sovereignty. The world community respects nations’ attempts to develop the nuclear energy to meet their electricity demand and seeks to restrain from any infringement on nations’ rights to the peaceful use of nuclear energy. The concern, however, is that the growth in the number of countries wishing to embrace nuclear power exceeds progress in the development of an effective regulatory framework within those countries and on a global level. This situation creates an urgent need to create strict global guidelines and effective control systems for commercial nuclear power production and use worldwide.