We could say many bad things about Russia, but they have one very good thing that must
be recognized. If the golden rule of any casino is "the dealer always wins",
in the energy game it is Russia that always wins.
It is by far the largest country in the world and, what’s more,
its territory is full of natural resources, which gives it a huge competitive advantage.
Just think of the world's fourth largest economy, Germany. A lot of Volkswagens and a lot of
Siemens, but for decades Germany has depended on Russian gas for abundant and cheap energy.
As you know, all this blew up with the Russian invasion of Ukraine. And not surprisingly,
it has been very difficult to find alternatives. One of
the biggest problems is Germany's reluctance to use nuclear power.
Last April they shut down their last three nuclear power plants. And of course,
there are many experts who stress that this was a mistake, that nuclear energy could be
an alternative to natural gas and a way to completely avoid dependence on Russia.
But wait a minute because we are talking about energy. And in this game,
you know what we said, Russia always wins.
With 37 reactors, Russia is not only the country in the world fourth on the
list for the most nuclear reactors. It also dominates the nuclear fuel market.
You see, although its uranium mines account for barely 5% of the planet's production,
Rosatom's global share in the uranium conversion process rises to 27% and soars to 46% in terms
of uranium enrichment capacity. This explains, as we told you here
on VisualPolitik last February, why the West does not impose sanctions on
Russia's state-owned atomic energy corporation. Now, just as LNG has offered the major alternative
to Russian gas, with nuclear fuel there is another alternative, which is France: a country that has
a long nuclear tradition and could be an important option for the West to consider
if it seeks to reduce dependence on Russia. In Paris, they are clear about their strategy.
They want to proceed. But they have some stumbling blocks to get past. The main one is that the
French nuclear sector has been in a permanent crisis for 15 years. When it puts out one fire, it
immediately starts another. And the latest one has been in a place as far away as it was unexpected.
(Niger coup sparks concerns about French, EU uranium dependency – Politico)
Niger was the last democracy in the Sahel. President Bazoum was considered by France
as an important ally in combating the rise of jihadism in the region.
Now all indications are that things could change completely with the new military junta in Niger.
The military constantly reproaches France for its abuses as a former colonial power and accuses
France of meddling in its internal affairs. So the question is: what does what is happening
in Niger have to do with the French strategy to dominate the nuclear fuel market? What
does this strategy consist of? Is the West going to continue buying enriched uranium
from Russia? Today on VisualPolitik we are going to answer these questions.
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(URANIUM FROM THE COLONIES)
Fifty years ago, the famous oil crisis occurred. The price of dinosaur juice multiplied by four
after the Arab countries decided to reduce their production. At that time,
most of the electricity in France, a country with no oil fields of its own, was generated by
oil-fired power plants compared to 5% provided by the first generation of nuclear reactors.
VisualPolitik viewers, this crisis was key to the activation of the Messmer plan. In 1974,
Pierre Messmer, President Pompidou's prime minister,
presented the plan by which France would end its total energy dependence on foreign oil.
His goal was nothing less than to build dozens of nuclear reactors. All it needed was uranium
for its nuclear fuel. And the French Atomic Energy Commission already knew where to find it:
Somair and Cominak have for decades been two of the largest uranium mines in the world. France
discovered uranium in Niger in 1957. So when this African country gained its independence in 1960,
Paris ensured that it maintained priority access to Niger's natural resources by means of a treaty.
And so, the large-scale exploitation of these
uranium mines started between the end of the 1960s and the 1970s. There,
some French leaders were able to deploy all the bad practices they had already used in Gabon.
You see, France began operating the Mounana uranium mine in Gabon in 1960. In the late 1960s,
measurements recorded high levels of gamma and alpha radiation among
mine workers. Adopting the radiation protection protocols used in France
required costly investments and the French were not in the mood.
The solution adopted was much more cost-effective:
tripling the thresholds above which radiation exposure was considered dangerous to human health.
This is one of the advantages that the mines in the former colonies had for France. Their
costs were much lower because neither the safety nor the wages of the miners were the
same as in other countries. And at this point I am sure that someone will be thinking: well,
if uranium mining has polluted a lot, at least it will have left Niger with an economic benefit.
Well, no. The exploitation agreements were abusively advantageous for France.
For many decades, French mining companies paid only 5.5% of their revenues in taxes
to Niger. In Canada and Kazakhstan, where Orano has been producing uranium since the late 1990s,
royalty rates are 13% and 18.5% respectively. This has led to disparities as you can see in
this graph between the amount of uranium produced and the revenue each country receives in return.
In 2014, a new agreement was negotiated between Niger and Orano,
then called Areva. The royalty rate was raised from 5.5% to a figure around 12%,
provided certain conditions of profitability and uranium price were met.
Conditions have improved slightly, but France has continued to operate
in Niger with a certain advantage over the international market.
If we add to this the fact that Niger is one of the poorest countries in the world,
we can surely speak of yet another case of the resource curse. This is what economists
call it when they refer to a State that does not benefit financially from the sale of its
resources. Even so, there is no greater curse than the corruption of its leaders.
In 1974, Lieutenant Colonel Seyni Kountché staged a coup d'état. President until 1987,
Kountché claimed to receive directly part of the production of uranium oxide in a
percentage equal to the participation of the State of Niger in the Nigerien subsidiaries
of the French mining companies. A percentage of more than 30%.
In this way, Kountché wanted to sell the uranium on his own account on the
international market. The atomic intentions of his customers were not exactly peaceful:
Saddam Hussein's Iraq, Gaddafi's Libya, Pakistan... Kountché is credited with
the phrase: "We will sell uranium even to the devil if necessary".
Now I know what you are thinking. Since the military junta that has seized power
in Niger is out for revenge against France, they will surely break the agreements for the
exploitation of their mines, expel Orano from the country and France will lose all
the uranium in Niger. And of course, considering that nuclear power plants generate about 70% of
France's electricity, if Niger's military suddenly cut off the supply of uranium,
France's energy production would surely tremble. Right? Well, no. Unlike Germany with Russian gas,
this time France has done its homework and done it very well.
France has been able to diversify its uranium supply. According to data from the last 10 years,
the 88,200 tons of natural uranium imported by France came mainly from three countries:
Kazakhstan (27%), Niger (20%) and Uzbekistan (19%). Imports from
Australia and Namibia also stand out, with 14% in each case. In terms of annual data,
uranium from Niger never accounted for more than 35% of French imports in a single fiscal year.
These data are similar to those of Orano. In 2010, Niger's mines provided two-thirds of its global
production. However, Niger now provides less than one-third after the Cominak mine closed
in 2021. All this means that Niger's uranium, once decisive, is now of relative importance
to the French energy system, accounting for barely 20% of the uranium they import.
Compare that to the 60% that Russian gas meant for Germany or even the 90% that
it meant for Eastern European countries like the Czech Republic. In other words, if Niger
cuts off the uranium tap, France could easily replace it with imports from other countries.
Now, that is not to say that the disruption would have no effect. It would be a setback
for its strategy of being an alternative to Russia in the nuclear fuel market. What
am I talking about? Stay tuned. (A MARKET DOMINATED BY RUSSIA)
Just as combined cycle power plants use natural gas as fuel to generate electricity,
nuclear power plants need their own fuel. The process most commonly used in atomic power
plants to generate energy is nuclear fission. For this they need an element that is fissile
or easily split. This is where uranium comes into play. Now, just as you have to refine petroleum to
obtain fuels such as gasoline or diesel, you have to enrich uranium to be able to use it as fuel in
nuclear power plants. The process is the same as the one used to develop atomic bombs. What changes
is the level of enrichment needed. Take a look. Natural uranium, as extracted from the mines,
is composed of 99.3% non-fissile uranium 238 isotopes. The fissile part,
uranium-235 isotopes, accounts for only 0.7%. Enriched to between 3% and 5%,
this uranium serves as nuclear fuel for power plants that generate electricity. Up to 20%,
enriched uranium is used to produce medical isotopes, which are used in particular in the
diagnosis of certain cancers. Finally, to make a bomb, enrichment must be brought up to 90%.
And guess what, right here is the key that has led to the international nuclear fuel market
being dominated by Russia. Traditionally, uranium has been enriched by two methods.
The West opted for the simpler one: gaseous diffusion. Nevertheless,
this simpler method was very expensive, since it requires a lot of energy to
enrich the uranium. How much energy are we talking about? Well, to give you an idea,
the enrichment plant that France opened at the end of the 1970s consumed 15 terawatt hours per year,
the same amount of electricity that would be used today for public lighting in Paris for a century.
During the three decades it was in operation,
the Georges Bessee uranium enrichment plant was France's largest consumer of electricity;
it devoured about 4% of France's entire electricity production. In fact, at the height
of the Cold War, about 7% of total US electricity generation was devoted to uranium enrichment,
for both military and civilian purposes. Gaseous diffusion was the method used by the West.
Now, what were they doing on the other side of the iron curtain?
Well, the Soviet nuclear program is known to all. Both in terms of armament and atomic energy. The
USSR started up some thirty reactors. As for uranium enrichment, the Soviet Union opted for a
more complex technique: centrifugation. However, this method consumes 50 times less energy than
gaseous diffusion. This explains how today, in the middle of 2023, we find news stories like this:
(Putin Still Selling U.S. Nearly $1 Billion in Nuclear Fuel – Newsweek)
When the Soviet Union fell in 1991, the United States and the new Russia
agreed to what is popularly known as the "megaton-to-megawatt program."
Highly enriched uranium from former Soviet nuclear warheads was converted into low-enriched uranium
and shipped to the United States for use in civilian plants. Also, given the cost
differential, Western electric utilities rushed to acquire Russian enriched uranium.
In doing so they benefited from the more cost-competitive technology of the Soviet era,
the problem is that at the same time they contributed to the ruin
of those facilities in the West that were still using gaseous diffusion.
But of course, in those happy 1990s, the only thing in danger of running out under
Boris Yeltsin was our alcohol reserves. So Russia achieved a position of market
dominance that has greatly benefited Rosatom, the State corporation created
in 2007 by Vladimir Putin to be the Russian giant in the global nuclear energy market.
A giant that is absolutely untouchable even under the most adverse conditions.
(Pressure mounts on EU to sanction Rosatom in next Russia sanctions package – Euroactiv)
Neither Brussels nor Washington has dared to sanction Rosatom's nuclear fuel.
The United States stopped enriching uranium years ago and about a third
of the nuclear fuel it currently uses is imported from Russia, the world's largest
and also the cheapest producer. And yet the bill rises each year to nearly $1 billion.
So, in the midst of the war in Ukraine, with sanctions on oil, on natural gas and
on thousands of Russian companies and products, it would be ideal not to depend on the Kremlin
for nuclear fuel. Right? Well, this is where France's strategy comes into play.
(THE NUCLEAR ÉPOQUE)
VisualPolitik community, if you are watching this video from Germany or Spain,
you may be surprised. But nuclear is all the rage. Currently, 59 nuclear reactors are being built in
the world. These numbers are scheduled to increase by another 111 in the next few years. In addition,
there are plans for another 321. Forty percent of these reactors are or will
be located in China. But other powers such as Russia and India are also investing heavily in
nuclear power. Even in the United States there are serious plans to relaunch this industry.
And hold on a moment, because in Europe there are countries that do not want to
be left behind. France already announced before the war in Ukraine that it would
build six new reactors. But besides those, the United Kingdom, Poland,
the Netherlands, Slovenia, Slovakia, the Czech Republic, Hungary, Bulgaria, Romania,
Estonia and Lithuania also have nuclear power among their plans. And it is possible that more
countries will join after the backing given by the European Union to this technology.
(EU parliament backs labelling gas and nuclear investments as green – Reuters)
The energy transition and the fight against climate change will require
investment in new technologies. Also in everything that involves maintaining our
quality of life while reducing greenhouse gas emissions. It is
in this area that Brussels has decided that renewables and nuclear must go hand in hand.
What’s more, the new modular reactors are completely changing the reality
of this industry: they require much less investment and can be built much faster.
For these reasons, European countries are ready to give atomic energy another chance. They plan to
build new power plants and, of course, the most important thing will be needed: nuclear fuel.
It will be necessary to increase uranium production in the mines,
yes, but also to increase the capacity to process that uranium,
convert it and enrich it. And this is exactly where France wants to play a
leading role. It is already working on it, as reflected in news headlines such as this:
(France Mulls New Uranium Plant to Cut West's Reliance on Russia – Bloomberg)
According to an Orano spokesman, the French state-owned company is considering two options: on
the one hand, building a uranium enrichment plant in the United States; on the other, an option that
would be the quickest and most likely: expanding by 50% the capacity of its modern Georges Besse
Two plant, operational since 2011 and already enriching uranium using the centrifuge technique.
Enriched uranium is measured in SWU, separative work units. At its Georges Besse Two plant,
France enriches 7.5 million SWU per year. Increasing it by 50% would raise its capacity
to 11 million, whereas French nuclear power plants currently need about 6.5 million SWU.
This corresponds to the approximately 8,000 tons of natural uranium that France needs for
its nuclear power plants. If it plans to produce 11 million SWU, it will need to import more than
13,000 tons of uranium each year. And this is where Niger could create a problem for France.
As I was telling you earlier, its own energy system can afford to do without the nearly
2,000 tons it imports every year from Niger. It would find other suppliers.
But France does need this uranium for its strategy of becoming a major exporter of
nuclear fuel and a real alternative to Russian domination. In any case,
there is no doubt that Macron is working in this direction. And that explains news items like this:
(Uranium from Mongolia interests France - LeMonde)
Macron and his foreign minister have visited Mongolia in recent months.
There they have shown interest in making investments worth about one billion euros
to get hold of Mongolia's uranium as well as other metals such as lithium. Of course, in
Ulaanbaatar they have jumped at the opportunity and have welcomed Macron with open arms. They
even say that France is the third neighbor of Mongolia, that giant country wedged like
a sandwich between Russia and China. Along these lines, a major agreement is expected very soon.
Of course, this does not detract from the fact that, for the moment, France has a major headache
with Niger. Don't forget that the power that is becoming strong in the Sahel is Russia, which
could suddenly find itself in Niger with a new uranium supplier. Something that would undoubtedly
contribute to further consolidate its position of dominance over the nuclear fuel market.
And this means that if the world continues to bet on atomic energy,
we will all, including the West, increase our dependence on Russia,
thus increasing the power of Putin and the Kremlin. That at least seems to be Moscow's idea.
But, now the questions are over to you:
Do you think France will succeed in its strategy, or will Russia always win in the energy game? You
can leave me your answer in the comments. In the meantime, don't forget that we release new videos
every week so subscribe to VisualPolitik so you don't miss any of our updates. If
you liked this video, LIKE it and see you in the next one. All the best and see you soon.