Japan Seeks Stakes in Uranium Mines

Japan Seeks Stakes in Uranium Mines

Apr 11 - International Herald Tribune

By Megumi Yamanaka

Japan, one of the world's biggest generators of nuclear power, is seeking supplies of uranium from Russia and Kazakhstan as surging energy demand in China pushes uranium prices to a record. "Competition from China will intensify in the coming years," Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities, said in Tokyo on Thursday. "To boost energy security, what other option does Japan have except to approach other countries such as Kazakhstan?"

Japan wants stakes in mines to secure better access to uranium as China and India turn to atomic energy to cut pollution and reliance on fossil fuels.

Uranium prices jumped 19 percent to a record $113 a pound at a U.S. auction, the industry consultant TradeTech, said Monday. Prices are up on the expectation that demand will outpace supply as accidents at mines in Australia and Canada slowed production.

Last year, Kansai Electric Power and Sumitomo became the first Japanese companies to invest in uranium mines in Kazakhstan, the world's third-biggest producer. Mitsui will team up with the Russian state-owned nuclear fuel company, Techsnabexport, to explore in Russia.

Like China and India, Japan, which buys 89 percent of its oil from the Middle East, needs new reactors to meet its commitments to cut carbon dioxide emissions from fossil fuels and curb the cost of energy imports. The country wants to increase the share of atomic energy in electricity generation to 40 percent by 2030 from 30 percent today.

"Kazakhstan is the key to how much uranium Japan can obtain," Tadao Yanase, director of nuclear energy policy at the Japanese Trade Ministry, said in February.

Government officials and executives from Kazakhstan and Russia are in Japan this week to attend an annual conference organized by the Japan Atomic Industrial Forum to discuss uranium supply and availability. The Japanese trade minister, Akira Amari, will visit Kazakhstan at the end of May accompanied by the president of Tokyo Electric Power, Tsunehisa Katsumata, and other officials from utilities that operate nuclear reactors.

"We will continue to support Japanese companies to get access to a resource that Japan needs," Harufumi Mochizuki, head of the Trade Ministry's energy agency, said in February.

Record uranium prices have prompted some utilities to consider recycling spent nuclear fuel from their atomic power plants. Tokyo Electric and Japan Atomic Power are seeking Russian help in enriching recovered uranium stored in Europe by the companies, officials have said.

In February, the prime ministers, Shinzo Abe of Japan and Mikhail Fradkov of Russia, agreed to start talks on nuclear cooperation. Japan and Russia must sign an agreement to ensure that the uranium will not be used in nuclear weapons, as part of a rule under the nonproliferation treaty.

"With natural uranium prices at a record, there is more and more demand to recycle spent nuclear fuels from power plants," Kawachi of Mizuho said.

Russia's government is accelerating a program to build gas-fired centrifuges and increase production of enriched uranium. The country's nuclear industry gets a third of its revenue from exporting nuclear fuel services, which includes enrichment of uranium and construction of power plants.

Japan imports about 60 percent of its uranium from Canada and Australia, the world's largest producers, according to the Power Federation in Japan.

Investments in Russia may not improve Japanese energy security, said Masanori Maruo, a senior energy analyst at Deutsche Securities in Tokyo.

Russia has increased government control over energy reserves. In December, the state-owned Gazprom said it would take a majority stake in the Sakhalin-2 crude oil and natural gas project from Royal Dutch Shell and its partners after the government threatened to cancel permits, citing violation of environmental laws.

Australia and China signed agreements last year allowing China, the biggest energy user in Asia, to import uranium.