Russians to gain US uranium foothold

A Russian state-owned company is set to control up to half of US uranium output by the middle of the decade, after American authorities gave the go-ahead to the partial takeover of Uranium One of Canada by ARMZ.

The deal is the latest sign of how, after a three-decade hiatus in new reactor projects, the US has lost control of key parts of the nuclear supply chain.

It also comes amid a sharp rise in the price of uranium on hopes that reactor construction will accelerate, led by China and other emerging economies.

ARMZ, the uranium mining division of Russia’s state-owned Rosatom nuclear power group, has taken a 51 per cent stake in Toronto-listed Uranium One which owns mines in Wyoming.

The two companies aim to bring the mines into production next year, and plan to increase output to 2m-4m pounds of uranium oxide per year by 2015. Total US uranium output will be about 4m pounds this year.

Vadim Zhivov, ARMZ’s director-general, said he understood concern about the deal. But he added: “It is 20 years since the Cold War, and no single country will be able to solve the energy challenges of the world.”

The tie-up was approved in October by the Committee on Foreign Investment in the US (CFIUS), the government agency that vets foreign takeovers of US companies for possible national security implications.

In November, the US Nuclear Regulatory Commission, which controls the ownership and operation of nuclear power facilities, also gave the go-ahead.

More than 80 per cent of US uranium consumption is imported, and Russia is one of its largest suppliers.

Nevertheless, Mr Zhivov acknowledged the company had a “hard road ahead” to prove to Uranium One shareholders that “a Russian state-owned company can . . . play by the rules of the modern developed world.”

Although China’s nuclear investment programme will make it the largest source of growth in the world uranium market, ARMZ plans to serve the US market from its Wyoming mines.

Once the deal closes, ARMZ expects to be the world’s fourth-largest uranium producer, and plans to ramp up production in Kazakhstan and the US to become the second-largest by 2015, behind only Kazatomprom of Kazakhstan.

The price of uranium has risen from about $40 per pound in the summer to about $60. Mr Zhivov estimated the long-term equilibrium price was about $70-$80 per pound.

Uranium One’s share price has increased from about C$2.20 when the ARMZ deal was first announced in June, to close at C$5.57 last Friday.