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GUSTAFSON: Russian nuclear power – unsanctioned – is prospering worldwide

INTELLINEWS, By Professor Thane Gustafson in Washington January 8, 2023

As the Western nuclear industry flounders, Russia’s Rosatom is building nuclear power plants (NPPs) on time and under budget around the world, while selling uranium to the US……………….

Russia’s nuclear industry is thriving, thanks mainly to its international business. According to Aleksey Likhachev, CEO of Rosatom, Russia’s nuclear monopoly, Russia is currently at work on 23 nuclear power units in a dozen different countries, including China, India, Belarus, Turkey, Hungary and Egypt. It sold $10bn worth of products abroad in 2022, a 15% increase on the year before, and its current foreign order book stands at over $200bn. Rosatom is actively courting new customers, mostly in the developing world; it offers a “full service” package that covers construction and operation, as well as the supply and reprocessing of nuclear fuel. The Russian government actively supports Rosatom with low-interest financing. In short, Russian nuclear power is on a roll.

But that is not all. In addition to building and operating new NPPs, Rosatom exports enriched uranium to numerous countries around the world, including the US and Europe. (In addition, Rosatom provides services to five EU counties that operate Russian-built NPPs.)  Even though the revenues are not comparable (only about $1bn per year), the fuel exports are key politically. Because of this dependence, Russia’s nuclear industry is not under Western sanctions (as discussed further below), and it is not likely to be so any time soon. At this moment, Rosatom is able to operate without impediment, both at home and abroad; one of the few sectors in the Russian economy to be able to do so.

For both the US and Europe the implications are serious. First, they will continue to depend on Russian enriched uranium for several years more, potentially weakening their common front on sanctions. (Indeed, there have already been substantial disagreements among EU members over their policy toward Russian nuclear power.)

…… . Russia should continue to hold a commanding position in nuclear power for some time to come. …..

…. Putin named a politician, Sergei Kiriyenko, (above)to head the nuclear programme. Kiriyenko had had a mixed career up to that time – including a disastrous five-month stint as prime minister that coincided with Russia’s 1998 financial meltdown – but he turned out to be a talented manager. He regathered Rosatom’s wandering assets under one roof and after seeing off the oligarchs, he brought the industry’s unruly suppliers and contractors to heel. During the next eleven years he built Rosatom into a powerhouse. In 2016, Putin rewarded him with a secret medal and a top job, as Number 2 in the Kremlin’s Presidential Administration, where he is today.

The secrecy was no accident. When Rosatom was created in 2007, it inherited both the civilian NPPs and the military weapons assets. Kiriyenko made vigorous efforts to disentangle the military wing from the civilian, but the separation proved easier to achieve on paper than in reality. Today, the civilian and the military parts of Rosatom remain connected at the hip, as many parts of the nuclear supply chain, beginning with the mining of uranium, serve both military and civilian customers inside Russia.

But the military part was (and is) funded directly by the government, while the civilian part was supposed to be self-supporting. For Kiriyenko, this was a crucial difference. He had begun with ambitious plans for expanding nuclear power inside Russia, but he soon realised that there was little domestic demand for new NPPs in an electricity sector dominated by gas, and so Kiriyenko turned his sights on the foreign market. For this he needed to persuade the international community that Rosatom had become essentially a civilian business, in other words to fashion a new “commercial” image for the company. By and large he was successful, and Rosatom owes its present prosperity largely to the international business he built.

The impact of Western sanctions

Because of its important role as a supplier of uranium and nuclear fuels to NPPs around the world, including the US, Rosatom is not under Western sanctions. The US, in particular, relies on Russia for low-enrichment uranium for its own NPPs. Although efforts are under way to develop substitutes, for the present Rosatom is simply too valuable to sanction.

But even if sanctions were to be imposed, Rosatom’s operations would be largely unaffected by them. Internally, its supply chain, which as mentioned runs from uranium mining to power plant construction and operation, depends very little on the outside. ………….

Rosatom’s international business might be somewhat more vulnerable to sanctions, but so far there is little sign of it. Only one country, Finland, has pulled out of an ongoing project with Rosatom. ………………………….

Multiple challenges ahead

Yet quite apart from sanctions, Rosatom and Russian nuclear power may face multiple challenges ahead. One of them is technological progress. …………

 Russia is the only country in the world to operate nuclear-powered icebreakers and floating NPPs, both of which are powered by small reactors. The Russian experience in designing and building small reactors goes back decades to the Soviet era, and there have been multiple generations of successively improved designs. Rosatom is working on deploying them not only on nuclear icebreakers and floating platforms, but also on land.

…………………….. The key to the future of SMRs, in the longer term, will likely be so-called “Generation IV” reactors, based on revolutionary designs that break entirely from the traditional light-water-reactor technology. But Generation IV is still an immature technology, and the race for leadership in G-IV is only now getting under way.

The more proximate threat to Rosatom’s leading position is Beijing. China has a vigorous nuclear programme, which is entirely independent of Russia…………………………………………

Finally, the ultimate challenges for Rosatom may be safety and reputational risk. Ever since the Chernobyl disaster in 1986, the Russian nuclear industry has had an excellent safety record. But the Russian invasion of Ukraine raises a serious new threat. There are four NPPs operating in Ukraine – ironically, all of them of Soviet manufacture. Russian [?] missiles have already landed close to one of them, the Zaporizhzhia plant, which is located close to the current battle line between Russian and Ukrainian forces. Just who is responsible for the safety of the plant is in dispute……………for Rosatom this plan is full of risks. If the plant were damaged and there were radioactive contamination, quite apart from the further suffering this would inflict on the Ukrainian people, for Rosatom the reputational damage would be extreme.

……. The challenges ahead are real, but they will come more from technological changes and rising competition from China, than from sanctions, from which Rosatom in any case remains so far exempt.


January 8, 2023 - Posted by | business and costs, politics international, Reference, Russia

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