Updated April 7, 2008

   Russia and the USA

have finally signed an agreement about atom for peace after they have been negotiating for several years. Now the American market is open for the Russian uranium and atomic equipment as well.

However, nuclear fuel supplies

are lim ite

d till 2020, and the Russian engineers do not consider the USA market prospective.

    Director general of Rosatom State Corporation Sergey Kirienko and the US ambassador to Russia William Burns have signed an agreement about the co-operation in the atom for peace area. The document discussion has been started in 2006 and it becomes the legal basis for the economic relations of the countries in this area and actually opens the American nuclear power market for the Russian companies.

Until now the supplies of

the Russian nuclear fuel to the USA have been restricted, and equipment and materials have been supplied in terms of specific contracts.

So, for instance, Russia could not import natural ur anium from the USA till an agreement was signed.

"Today all i have been dotted, and an agreement opens up enormous space for our possibilities. Both parties will benefit from the o

pportunity of legal co-operation", Sergey Kirienko declared.

   The Russian producers of equipment for nuclear industry have skeptically treated the new prospects. In Power Machines Company (supplies turbines for nuclear power plants (NPP) and Atomenergoprom (controls the supplier of boiler equipment) explained "they are always pleased with new contracts", however, underlined they did not even discuss the possible supplies of equipment to the US markets. Both companies unofficially consider th at

supplies of the Russian equipment to the US NPPs are improbable (though they do not eliminate a co-operation with the American companies in the Third World countries), and a new agreement is first of all important for nuclear fuel supplies.

   However, exactly in the area of uranium supplies an agreement envisages the whole range of restrictions.

In particular, Russia can independently enter the US market with its nuclear fuel only in three years and with quite small volumes. In 2011 the country can supply only 16,6 tons uranium (it is less than one fuelling for 1000 MW NPP), in 2013 the volumes up by 485 tons. On the whole, the USA consumes around 20 000 tons of uranium a year, i.e. the Russian supplies total just around 2,5% of the market. In 2014 Russia can supply the 20% needs of the American NPPs (without consideration of new reactors), and beginning from 2020 all restrictions will be removed.

   By the formal feature these restrictions will not improve, but worsen Russia's positions at the American market. So, since 1994 the Russian nuclear fuel is supplied to the USA only within the framework of HEU- LEU agreement (highly enriched uranium; low enriched uranium) – this is the processed uranium from a nuclear weapon. According to the official data, more than 44% American NPPs use it. But these are not direct supplies. Within the agreement framework all uranium is bought by the intermediary United States Enrichment Corporation (USEC) at a fixed price, which is considerably lower than a market one.

Direct supplies have been limited not only in terms of an agreement absence about atom for peace – since the 1990th in the USA have been applied high antidumping duties concerning the Russian uranium, which have not imposed on fuel only within the framework of HEU- LEU agreement. However, last autumn Russia succeeded to contest judicially the measures, and the process of their remove was started, which should complete in 2011. In 2013 the HEU- LEU agreement expires.

   As a consequence, though with restriction of market volume, beginning from 2011 Russia can supply a fuel to the USA at higher prices. Moreover, it is a uranium, not processed from a nuclear weapon, but produced at the enriching works of Atomenergoprom (amalgamated with Rosatom), that increases the supplies revenues, as said Rosatom representatives.

On the other hand, to the moment of the American market opening for Russia it is planned to launch three new works to enrich uranium in the USA. USEC has already started to construct the production which is planned to put into operation in 2012. GLE comp any h as already found a place to construct the works with laser enrichment technology. French Areva declared also it would construct an enterprise for uranium enrichment costing $2 billion in the American Idaho state.

The company plans to launch it in 2014.

   Industry analysts consent the restrictions imposed within the framework of an agreement about a tom for peace will still permit Russia

to increase earnings from the operation at the US market. So, Mikhail Stiskin from Troika Dialog marks that a considerable positive effect would give the transition to market prices.

The current discrepancy between the market and HEU- LEU is not suppressed as well, but in 2006 Techsnabexsport has estimated the profits not received because of the agreement at $1,1 billion. An analyst also considers that despite the increasing rivalry at the US market Russia's raw material "will be called-up at the market and problems with the realization will not arise".