Cutting power: How creative measures can end the EU’s dependence on Russian nuclear fuel

In the past year, Ukrainian President Volodymyr Zelensky has repeatedly called for sanctions on Russia’s nuclear industry and nuclear fuel exports. Ahead of the European Union’s 10th sanctions package, Zelensky tweeted a call to specifically designate Rosatom—Russia's state-controlled nuclear energy company—and its subsidiaries. EU parliament members also adopted a resolution calling “for the sanctioning of companies such as Lukoil and Rosatom, which are still present on the EU market” and “an immediate and full embargo on EU imports of fossil fuels and uranium from Russia.” Despite a strong push by several EU countries, the package did not include Rosatom on the list of sanctioned Russian organizations.

Rosatom has had a terrible record in Ukraine, including the annexation and illegal occupation of the Zaporizhzhia nuclear power plant in southeastern Ukraine. The United Kingdom and the United States have applied some sanctions on Rosatom-connected entities, targeting members of company leadership, the sham Zaporizhzhia joint-stock company, and some Russian nuclear research centers. But several European countries are dependent—some entirely—on Rosatom’s products to support their nuclear power plants and energy security profiles. Some European utilities have demonstrated great urgency to develop alternative suppliers to Rosatom, the Russian global company that has largely maintained its dealings in nuclear fuel and construction of new reactors across the European market.

As the 11^th sanctions package is underway in Brussels, prospects for a wholesale sanction of Rosatom remain dim due to numerous interconnections as well as the technical and financial aspects of substitution of Russian products. The experience of five EU countries (Bulgaria, Czech Republic, Finland, Hungary, and Slovakia) can provide key insights on options—and vulnerabilities—of sanctions and ongoing efforts to diversify away from the Russian nuclear industry.

Russian nuclear fuel industry. The stages of nuclear fuel production (roughly, uranium mining, conversion, enrichment, and fuel fabrication) provide their own set of vulnerabilities in the prospects of sanctioning Rosatom and its subsidiaries.

According to the World Nuclear Association, in 2019, the total global enrichment requirements (excluding Russia’s domestic reactor fleet) are about 48 million separative work units (SWU, the unit for measuring enrichment work) each year, against a total non-Russian enrichment capacity (including China, France, and British-German-Dutch Urenco group) sits at about 33 million SWU per year. Cutting off Russia’s enrichment exports would therefore leave nearly 30 percent of the global demand unsatisfied, although it would not directly affect electricity production as utilities typically keep some buffer stocks worth about three years of uranium requirements.

In 2020, three countries produced over two thirds of the world’s uranium ore: Kazakhstan (41 percent), Australia (13 percent), and Canada (eight percent), with Russia being only a marginal producer. For its part, Cameco—the Canadian world’s second-largest uranium supplier—announced before Russia’s invasion that its mines will return to two-thirds of their production capacity starting 2024—corresponding to about 11,000 tons per year, more than EU imports of uranium from Russia. This development could replace Russia’s current output.

Russia’s more critical involvement in uranium ore is as a key transportation country for Kazakhstan’s uranium ore. Since Russia’s invasion of Ukraine, Kazakhstan has been further developing an alternative corridor through the trans-Caspian international transport route. Kazakhstan’s national uranium operator, Kazatomprom, has used this route to deliver its products since 2018. In April, Kazatomprom announced the delivery of uranium concentrates to Romania via the route. The company is currently working to resolve some regulatory aspects in order to expand trans-Caspian route operations. Once accomplished, this route could serve as an alternative delivery mechanism for EU utilities.

In the current global market, uranium conversion is, along with uranium enrichment, one of the tightest stages in nuclear fuel production. Russia’s Tenex—a subsidiary of Rosatom—controls over one third of the world’s uranium conversion, the other producers being Canada, China, and France. A large US plant in Illinois, ConverDyn, which has been shut down since 2017—is scheduled to incrementally reopen this year, possibly at its design capacity of 15,000 tons per year. Together, Canadian, French, and US conversion capacity could reach about 34,500 tons per year in 2023—more than current US and EU requirements combined.

Russia’s Tenex also controls nearly half of the world’s uranium enrichment capacity. This happened because, as Princeton researchers Dory Castillo-Peters and Frank von Hippel explain, the European companies Urenco and Orano let their enrichment capacities gradually decline by not replacing broken centrifuges. But, under proper investment incentives, Urenco and Orano may restart centrifuge production and increase their enrichment capacity.

As for nuclear fuel fabrication, the industry’s tradition has been to match producers to reactor designs. Logically, TVEL—Rosatom’s subsidiary for nuclear fuel—has been the preferred fuel fabricator for Soviet-era and Russian reactors. Even though technical and regulatory adaptations make substitution possible, European utilities have so far encountered many challenges to implement such adaptations. Moreover, both US and French utilities— Westinghouse and Framatome, respectively—rely partly on Tenex products for their own fuel fabrication. Thus, even as Westinghouse and Framatome sprint to fulfill fuel fabrication demand for Russian-designed VVER reactors in Europe, the fuel assemblies include converted and enriched uranium with a history in Russia.

Quest for alternative fuel suppliers. In the past year, Bulgaria, the Czech Republic, and Slovakia have pivoted to sign agreements with new suppliers for fuel fabrication. TVEL reported global export revenue in 2022 at $1.18 billion. This figure pales in comparison to Russia’s revenue from oil exports in the month of December 2022 alone, which sat at $13.3 billion. Still, Russian nuclear fuel fabrication services have stood out as an area where US and French alternative supplies exist but require unique technical adaptations, testing, and licensing for each reactor.

Westinghouse and Framatome were building up their ability to compete with TVEL in supplying fabricated fuel for Russian-designed reactors prior to the invasion. But some countries saw little urgency to make a switch; TVEL was a reliable and economic option. Because TVEL is a state-owned company, it can undercut competitors to achieve market share, making Westinghouse and Framatome fuels almost always the more expensive options. Last year, Slovakia’s Economy Minister Richard Sulík said that Westinghouse’s latest offer was 20 percent higher than TVEL’s. It is unclear what the price differences may be for future deals. Another challenge concerns the costs associated with adapting reactors for the authorization of new fuel suppliers. But these costs would not necessarily be prohibitive, especially if utilities view diversity of supply as a vital interest to sustaining the continuous operation of their assets.

At the G7 Nuclear Energy Forum in April, Canada, France, Japan, the United Kingdom, and the United States announced their shared goals of supporting the stable supply of nuclear fuels for currently operating reactors and reduce the dependence on Russian supply chains. By this, the G7 countries seek to develop a favorable financial environment, harmonize regulatory practices to enable standardized fuel designs across countries, and increase nuclear supply chain capacity. Despite the political will, however, this strategy still lacks concrete instruments and timelines.