The St. Petersburg Times - Business - Uranium to be Unified


By Yuriy Humber
Staff Writer
MOSCOW — Russia’s uranium exploration and mining assets at home and in the CIS will be combined into a single, purely state-owned enterprise, nuclear energy chief Sergei Kiriyenko said Wednesday, scotching hopes that private investors would be allowed to retain minority stakes in uranium enterprises.
The announcement follows President Vladimir Putin’s approval on June 9 of a plan to gather all civilian nuclear sector enterprises into a single, market-driven corporation along the lines of France’s Areva or Germany’s Urenco.
The corporation, named Atomprom, similarly to its gas industry counterpart Gazprom, will absorb all state atomic energy assets. Rather than dividing Atomprom into six sub-holdings in which private investors could retain shares, the state will acquire all of the assets, Kiriyenko said Wednesday on the sidelines of an industry conference.
“The unity of the sector cannot be under any doubt,” Kiriyenko said. “We have to compete with large multinational companies. ... If we enter [the civilian nuclear energy] market as separate companies, we’ll be torn to pieces.”
The uranium mining division of Atomprom will include Russian miners Priargunsk, Khiagda and Dalur, and two joint ventures abroad — one in Kazakhstan and another in Uzbekistan — and possibly fuel monopoly TVEL.
Uranium processing and enrichment facilities will not be included in the mining enterprise, Kiriyenko said.
A spokesman for TVEL declined to comment on the plans.
Priargunsk, which accounts for 95 percent of the country’s uranium-ore output, currently has a 16 percent free float, with several major banks, including Citigroup, UBS and Alfa Bank among its minority shareholders.
How the minority shares would come under state control was not immediately clear Wednesday.
Priargunsk will issue new shares on June 30, a move that could be used to dilute the minority shareholders’ stakes, said Erik DePoy, an equity analyst with Alfa Bank.
“If they want to do it openly, they could announce a buyback or buy up shares on the market,” he said.
Having a single uranium miner would not exclude partnerships with foreign companies, Kiriyenko said, adding that he had talked over possible projects with officials from Australian miner BHP Billiton in St. Petersburg earlier this month.
Russia, in turn, would like to “develop uranium deposits anywhere in the world where it is profitable to do so,” Kiriyenko said.
One plan being discussed would be for BHP Billiton to increase uranium mining at its Olympic Dam mine in South Australia, the world’s largest uranium deposit, in return for agreeing to sales contracts of at least 30 years. Russia would then process the uranium ore and sell nuclear fuel abroad, in particular to the United States, a source familiar with the Atomprom plans said Wednesday on condition of anonymity.
Russia hopes to build 60 nuclear reactors abroad in the next 30 years, with nuclear fuel supply forming part of construction contracts. Analysts say Russia could compete for up to 50 percent of the U.S. nuclear-fuel market if Washington allows Russia access.
Similar talks have been held with Canada’s Cameco Corporation, the world’s second-largest uranium miner after BHP, the source said.
One stumbling block to such deals may be laws in Australia and Canada that specify companies must check that all uranium supplies go toward civilian use. At present, many Russian nuclear facilities cater for both civilian and military orders.
A decree to split such facilities into those supplying civilian nuclear energy and those working for the military should be passed by the end of the year, the source said.
The nuclear industry has no plans to acquire a controlling stake in the country’s largest machine-building corporation, Power Machines, as it prefers to see competition in the sector, Kiriyenko said Wednesday.
“We have a problem only when there are monopoly situations on the market. Power Machines is not an absolute monopoly now as we can also buy from [Ukraine’s] TurboAtom and a few other foreign producers,” Kiriyenko said. “Also, we are interested in there being more than one turbine maker on the Russian market,” Kiriyenko said.