Kazakhstan Chamber of Commerce in the USA

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Japan Said to Consider Kazakh Uranium Imports Through East Russian Ports 0

Posted on July 28, 2010 by KazCham

Bloomberg, By Tsuyoshi Inajima and Shigeru Sato

Japan, the third-largest nuclear power producer, plans to ask Russia to allow it to ship uranium from landlocked Kazakhstan through ports along the country’s Pacific coast to cut the cost of importing the atomic fuel.

A six-month study to assess the viability of shipments from Kazakhstan, the world’s largest uranium producer, via ports near Vladivostok will begin in August and be funded by the Japanese trade ministry, said two government officials in Tokyo with direct knowledge of the plan, who declined to be named before an official announcement due this month.

The fuel is currently shipped to Japan through western Russia and the proposed eastern route could help reduce costs for companies including Marubeni Corp., Tokyo Electric Power Co. and Sumitomo Corp. that have invested in uranium ventures in Kazakhstan. Supplies from the Central Asian country will help reduce dependence on Canada and Australia, which provide more than half of Japan’s requirements.

“Russia can play a key role and make a big change to Japan’s uranium supply chain in years ahead as Japan is increasing purchases from Kazakhstan,” said Tomoko Murakami, a nuclear analyst at the Institute of Energy Economics, Japan.

Almost all Kazakh uranium destined for Japan is currently shipped through St. Petersburg in western Russia for enrichment in the U.S., Canada and France before it reaches Japan’s utilities, said Koji Furui, a spokesman for Sumitomo, which holds a stake in Kazakh producer Appak Ltd. Some ore is also enriched in Russia, he said.

Sumitomo, Kansai

Under the Japanese proposal, the Kazakh uranium would be enriched in Russia, according to the government officials.

The new shipment route would benefit Japanese buyers as ventures ramp up production, Sumitomo’s Furui said. The Appak venture, in which Kansai Electric Power Co. is also a stakeholder, is in the testing phase of production and expects to extract 1,000 tons next year, he said.

Daisaku Saito, a spokesman for Japan’s trade ministry, declined to comment on the proposed shipment route and study.

The study will assess the safety, capacity and viability of using railways, roads and storage terminals in Kazakhstan and Russia and ports in eastern Russia, one of the officials said.

The 9,300-kilometer (5,780-mile) Trans-Siberian Railway could be used to transport the ore to enrichment facilities in the Russian city of Angarsk, the Japanese official said. The enriched uranium will likely be shipped out from ports near Vladivostok, the official said.

Trans-Siberian Railway

Soviet-era rail networks linking Kazakhstan and Russia may be used to connect with the Trans-Siberian Railway and using trucks is also an option, the official said.

Kazakhstan supplied 14 percent of Japan’s uranium needs in 2008, compared with 1 percent in 2006, according to data compiled by the trade ministry and the Federation of Electric Power Companies of Japan. The country imported 9,800 tons of uranium in 2008, more than half of it from Australia and Canada, the data showed.

Sumitomo and Kansai Electric agreed with Kazakhstan’s state-run Kazatomprom in 2006 to jointly invest $100 million to develop a uranium mine in Kazakhstan. Sumitomo took a 25 percent stake in Appak, a company founded by Kazatomprom, and Kansai Electric a 10 percent share.

Japanese companies led by Marubeni and Tokyo Electric bought a Kazakhstan uranium venture in April 2007 and have the right to purchase about 2,000 tons of uranium a year.

Marubeni rose 3.4 percent to close at 460 yen in Tokyo trading. Sumitomo gained 2.5 percent to 913 yen, while Tokyo Electric fell 0.5 percent and Kansai dropped 0.1 percent. The benchmark Topix index rose 1.9 percent.

SOURCE: Kazakhstan News Bulletin No 21, released by the Embassy of the Republic of Kazakhstan to the United States of America

Kazakhstan Daily News Roundup – July 23, 2010 0

Posted on July 23, 2010 by KazCham

HEADLINES:

Bank lending lags Kazakh recovery
(bne) – Kazakhstan’s economic growth is accelerating, though bank lending is continuing to lag the recovery and the volume of loans this year will be almost half of what it was expected to be, according to a new report from VTB Capital.

In Kazakhstan’s, a gulf’s worth of oil awaits transport
(New York Times) – Even as the petroleum industry continues drilling in the Gulf of Mexico at considerable expense and risk, a single field here in Kazakhstan stands ready to produce two-thirds as much oil each day as the entire gulf does, with less danger to the environment.

ENERGY:

Tengizchevroil slapped with $1.4 million environmental fine (SRI)

Japan said to consider Kazakh uranium imports through East Russian ports (Bloomberg)

Kazakhstan revokes license from U.S. firm on exploration of large gas field (RIA Novosti)

Construction of Beyney-Bozoy-Shymkent pipeline to begin in October 2010 (Oil and Gas Eurasia)

BUSINESS AND ECONOMY:

Kazakhstan’s lenders won’t sell bonds overseas this year – Finance Ministry (Bloomberg)

Kazakhstan incubating high-tech businesses at former nuclear weapons site (Scientific American)

Kazakhstan’s industrial output to grow more than 10% in 2010 – Industry Ministry (Interfax)

Kazakh government to help agricultural producers in drought-stricken regions (Interfax)

METALS AND MINING:

Kazakh antitrust watchdog puts hold on Polyus gold plans (Bloomberg – Moscow Times)

REGIONAL:

Kyrgyz police detain ex-president’s brother (AP)

OSCE to send police monitors to Kyrgyzstan (Reuters)

Dragon Oil says H1 production below expectations (Reuters)

SOURCE: http://silkroadintelligencer.com/2010/07/23/kazakhstan-daily-news-roundup-july-23-2010/

Forging partnerships 0

Posted on April 18, 2010 by KazCham

HE ARREST IN May 2009 of Mukhtar Dzhakishev,  the highly regarded president of Kazakhstan’s  uranium mining and nuclear engineering group  Kazatomprom, together with most of his senior  managers, on alleged theft and corruption charges,  sent shock waves through the Kazakh business world and among dozens of foreign business partners from China to the United States.

Dzhakishev was charged with mishandling  billions of dollars of state property in a controversial  manoeuvre that has removed one of the most highly  qualified and competent state enterprise managers.  Dzhakishev, aged 47, is one of a small group of  highly-educated younger-generation officials who  masterminded the rapid expansion of uranium  mining using in situ leaching methods. He also  negotiated several high-tech co-operation agreements  with foreign, state-owned nuclear corporations and  private mining and engineering groups.

Dzhakishev frequently accompanied President  Nazarbayev and senior government officials on  foreign visits where uranium and linked nuclear  engineering contracts were signed. He has been  replaced by Vladimir Shkolnik, who is considered  a ‘safe pair of hands’ without personal political  ambitions, as one of few high-ranking government  officials who is not an ethnic Kazakh.

Kazatomprom recently announced a 11 per cent  rise in profits to $260 million before ownership was  transferred from the state to Samruk/Kazyna, the state  holding company. The company’s growing importance  as a source of uranium, and Kazakhstan’s record  as a strong supporter of nuclear non-proliferation,  allowed President Nazarbayev to propose Kazakhstan  as the potential site for a long-mooted international  nuclear fuel bank to be set up under the control of the  International Atomic Energy Agency (IAEA).

Establishment of such a site would further raise  Kazakhstan’s global profile, although the proposal  met criticism from civil rights groups who question  whether security, transparency and other issues  connected to such a plant could be guaranteed.

The proposal for such an internationally regulated  fuel bank was first launched by the IAEA in 2005 but enthusiastically taken up by US President Barack  Obama. Significantly, President Nazarbayev made  his proposal during a recent state visit to Astana by  Iranian President Mahmoud Ahmadinejad, whose  nuclear development plans have raised suspicion that  Teheran harbours nuclear weapon ambitions.

Kazatomprom is already working with Russia’s  Rosatom to build the world’s largest internationally  monitored nuclear fuel reprocessing facility at  Angarsk in Siberia. Supporters of a greater role for  the IAEA argue that facilities such as Angarsk and  the proposed ‘fuel bank’ could allow Iran and other  countries to develop peaceful nuclear plants without  raising fears of nuclear weapons proliferation.

Uranium output from Kazatomprom’s conventional  mines and in situ leaching ‘uranium wells’ rose to  8,521 tonnes last year from 6,600 tonnes in 2007. They  are on course to leap a further 40 per cent to 12,000  tonnes this year. With several new mines due to start  production and more in the pipeline, Kazakhstan is  poised to become the world’s biggest uranium miner,  overtaking both former front-runners, Australia  and Canada.

In April, Prime Minister Karim Massimov opened  the latest in situ mining operation at Khorassan in the  Kyzlorda region. It is the first of two new mines being  built in this southern region not far from the Uzbek  border. The new mine is operated by the Kyzylkum  consortium of Kazatomprom, Uranium One and a  group of Japanese power companies who will be the  main customers of the 3,000 tonnes per year of uranium -which the mine is expected to produce when fully on  stream in 2014. This year the new Khorassan-1 mine,  which has taken three years to build at a cost of $432 million, is expected to deliver an initial 160 tonnes.

The sulphuric acid shortages, which limited in situ  uranium leach mining capacity in 2007, are a thing  of the past now that output from the new Kazakhmys  sulphuric acid plant at Balkhash is building up to its  1.2 million tonne a year capacity and work proceeds on h Kazatomprom’s own 500,000-tonne acid facility.

Sulphuric acid, mixed with hydrogen peroxide,  is the main ingredient of the powerful solvent that  miners inject into the extensive sandstone deposits to  leach out tiny uranium particles scattered through the porous rock. These particles are brought to the surface  as slurry for processing, using techniques pioneered by h the oil and gas industry.

But higher profits and fast-growing uranium mine  output are only part of the story. Another key element  in Kazatomprom’s development is the steady extension of international linkages with some of the world’s  leading nuclear engineering and power companies.

Last October, Kazatomprom and China’s leading  nuclear power corporations, China National Nuclear  Corporation (CNNC) and China Guangdong Nuclear  Power Co (CGNPC), signed strategic partnership  agreements in Astana. Under the new deal,  Kazatomprom will participate in the construction  of nuclear power plants in China in return for minority stakes for the Chinese companies in three  new mines.

Beijing plans to build no fewer than 56 nuclear  power plants over the next decade or so. This opens  up a huge new potential outlet for the engineering  skills, which many of Kazatomprom’s 25,000-strong  workforce first developed in Soviet times, but have  since built up through a series of high-level technical  co-operation agreements with Russian, Japanese,  US, Canadian and European nuclear engineering  companies.

The core of this downstream engineering strategy  is Kazatomprom’s 10 per cent stake in Westinghouse,  bought for $540 million in 2007. Japan’s Toshiba  controls the nuclear power plant manufacturer  through its 67 per cent stake, while a further 20 per  cent is held by the US Shaw group and 3 per cent  by IHI, the Japanese heavy engineering corporation.  Access to Kazatomprom’s uranium gives Westinghouse  the ability to guarantee power plant customers fuel  supplies for the entire life of their reactors.

Access to Kazakh uranium is also a crucial part of  Japanese plans to build 13 more nuclear power plants  over the next decade. Earlier this year a group of  Japanese companies, led by Tokyo Electric power and  Toshiba, added indirectly to their existing Kazakh  involvement by buying 19.5 per cent of Canada’s  Uranium One, which has a 70 per cent interest in the  joint venture that owns the Akdala mine and stakes in  the South Inkai and Khorassan projects – in addition  to assets in the US, South Africa and Australia. With  scant domestic energy resources, Japan has built up  stakes in several Kazakh mines as competition mounts  for access to uranium from other potentially large  consumers, such as China and India.

Last November, Japan’s Nippon Export and  Investment Insurance agency (NEXI) more than  doubled its credit coverage insurance for joint  uranium projects from $48 million to $114 million.

The deal underlined how Kazatomprom remains  practically immune from the credit problems affecting other clients of over-borrowed Kazakh banks.

For Kazatomprom, the Japanese links are an  important element in a series of technical co- operation agreements with Canada’s Cameco and  Uranium One, Cogema of France, Nukem from the  US, and others. The policy of leveraging access to  uranium mines in return for technical co-operation  is also reflected in the recent China deal. By opening  up its nuclear construction market and offering co- operation in nuclear fuel processing, China gained  sought-after equity stakes in three new uranium  mines and secured a long-term source of nuclear fuel  for its ambitious nuclear power plans.

Kazatomprom retains a controlling 51 per cent stake h in the three mines, with Guangdong taking a 49 per  cent share in both the 750-tonne-a-year Irkol mine in  Kyzlorda region, and the 500-tonne-a-year Semizbay  mine in Akmola region. CNNC will get a similar stake  in the Zhalpak mine in South Kazakhstan.

“One of the key terms of the agreement is not  just participation in Chinese nuclear power plant  construction, but also the fuel supplying these NPPs  [nuclear power plants]. Kazatomprom is the first  company to gain access to the closed nuclear fuel  market of China,” Mukhtar Dzhakishev commented  after signature of the deal.

Three months after concluding the strategic deal  with China, Dzhakishev accompanied President  Nazarbayev on his state visit to India and signed  a memorandum of understanding to broaden the  budding nuclear partnership with the Nuclear  Power Corporation of India. Under the agreement,  Kazatomprom will supply both natural uranium  and uranium fuel pellets for India’s nuclear energy programme, which envisages 24 nuclear plants by  2020. In return, Kazatomprom will gain access to  India’s PHWR technology.

The nuclear co-operation agreements with China  and India both took place in the context of state visits  by President Nazarbayev, for whom Kazatomprom is a  powerful symbol of Kazakhstan’s growing industrial  and financial status. This is a pattern first established  three years ago at a summit meeting between President Nazarbayev and then Russian President Putin.

Kazakhstan’s legacy as a former Soviet state means  that establishing Kazatomprom’s independence  and broadening its international connections has  required considerable diplomatic subtlety. Many of the company’s Russian-speaking technical and managerial staff retain close, personal and professional relations  with counterparts in Russia. Although a substantial  uranium producer itself, Russia needs secure supplies  of Kazakh uranium to guarantee future fuel needs. Rosatom, Russia’s nuclear energy corporation, plans  to build 26 new nuclear plants in Russia alone by 2030 -and others in Bulgaria, China, India and Iran.

Moscow sees Kazakhstan as an indispensable source  of uranium, and a close partner in key technologies,  such as uranium enrichment. Nuclear co-operation  is a good example of how the overall Russo-Kazakh  relationship has moved from domination to  partnership since independence. But it has not been  easy and there is still reluctance to share technology in some cases. Two years ago, Rosatom and Kazatomprom agreed to build a 65mw nuclear power plant based  on technology initially developed to power nuclear  submarines. But plans to build a power station based on this technology at the Caspian port city of Aktau  have been delayed, pending agreement on the transfer of intellectual property.

Invest in Kazakhstan An official publication of the Government of the Republic of Kazakhstan, 2009. Pages: 60-62.



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