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INTERNATIONAL URANIUM ENRICHMENT CENTER IN ANGARSK: A WAY TO ENSURE THE SECURITY OF NUCLEAR FUEL SUPPLY AND NON-PROLIFERATION

Sergey V. Ruchkin,

World Nuclear Association140

INTRODUCTION

On 11 June 2007, the International Atomic Energy Agency (IAEA) Director General (DG), Dr. Mohamed ElBaradei, in his Introductory Statement to the IAEA Board of Governors (BOG) pointed out that the increase in global energy demand is driving an expected expansion in the use of nuclear energy.141 This means an increase in the demand for fuel cycle services. It also means an increase in the potential proliferation risks created by a consequential spread of sensitive nuclear technologies (uranium enrichment and spent nuclear fuel reprocessing), which demonstrates a clear need for the development of a new, multilateral framework for the international nuclear fuel cycle (NFC).

The IAEA DG believes that such a framework could be best achieved through establishing mechanisms that would assure the supply of fuel for nuclear power plants (NPP) and over time by converting enrichment and reprocessing facilities from national to multilateral operations, as well as by limiting future enrichment and reprocessing to multilateral operations. He called for an incremental approach, with multiple assurances as the way to move forward.

This paper gives a brief overview of recent proposals for fuel assurance mechanisms put forward by various governments and other stake holders in this regard, with a focus on the initiative of the President of the Russian Federation of January 25, 2006, to establish a network of international nuclear fuel cycle centers as a means to ensure the secure supply of NFC products and services and the non-proliferation of sensitive nuclear technologies.142

140

Sergei Ruchkin is currently a Russian representative at the World Nuclear Association in London and is also affiliated with the Federal Agency on Atomic Energy of the Russian Federation (Rosatom), TENEX (Tekhsnabexport, Joint Stock Company), and the World Nuclear University in London.

141

Introductory Statement to the Board of Governors by the International Atomic Energy Agency (IAEA) Director General, Dr. Mohamed ElBaradei, June 11, 2007, Vienna Austria, available at http://www.iaea.org/NewsCenter/Statements/2007/ebsp2007n007.html; accessed April 6, 2008.

142

IAEA, “Creation of a System of International Centers Providing Nuclear Fuel Cycle Services, Including Enrichment,” IAEA INFCIRC/667, February 8, 2006, available at http://www.iaea.org/Publications/Documents/Infcircs/2006/infcirc667.pdf; accessed July 13, 2008.



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INTERNATIONAL URANIUM ENRICHMENT CENTER IN ANGARSK: A WAY TO ENSURE THE SECURITY OF NUCLEAR FUEL SUPPLY AND NON-PROLIFERATION Sergey V. Ruchkin, World Nuclear Association140 INTRODUCTION On 11 June 2007, the International Atomic Energy Agency (IAEA) Director General (DG), Dr. Mohamed ElBaradei, in his Introductory Statement to the IAEA Board of Governors (BOG) pointed out that the increase in global energy demand is driving an expected expansion in the use of nuclear energy.141 This means an increase in the demand for fuel cycle services. It also means an increase in the potential proliferation risks created by a consequential spread of sensitive nuclear technologies (uranium enrichment and spent nuclear fuel reprocessing), which demonstrates a clear need for the development of a new, multilateral framework for the international nuclear fuel cycle (NFC). The IAEA DG believes that such a framework could be best achieved through establishing mechanisms that would assure the supply of fuel for nuclear power plants (NPP) and over time by converting enrichment and reprocessing facilities from national to multilateral operations, as well as by limiting future enrichment and reprocessing to multilateral operations. He called for an incremental approach, with multiple assurances as the way to move forward. This paper gives a brief overview of recent proposals for fuel assurance mechanisms put forward by various governments and other stake holders in this regard, with a focus on the initiative of the President of the Russian Federation of January 25, 2006, to establish a network of international nuclear fuel cycle centers as a means to ensure the secure supply of NFC products and services and the non-proliferation of sensitive nuclear technologies.142 140 Sergei Ruchkin is currently a Russian representative at the World Nuclear Association in London and is also affiliated with the Federal Agency on Atomic Energy of the Russian Federation (Rosatom), TENEX (Tekhsnabexport, Joint Stock Company), and the World Nuclear University in London. 141 Introductory Statement to the Board of Governors by the International Atomic Energy Agency (IAEA) Director General, Dr. Mohamed ElBaradei, June 11, 2007, Vienna Austria, available at http://www.iaea.org/NewsCenter/Statements/2007/ebsp2007n007.html; accessed April 6, 2008. 142 IAEA, “Creation of a System of International Centers Providing Nuclear Fuel Cycle Services, Including Enrichment,” IAEA INFCIRC/667, February 8, 2006, available at http://www.iaea.org/Publications/Documents/Infcircs/2006/infcirc667.pdf; accessed July 13, 2008. 113

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SUMMARY OF PROPOSALS ON ASSURANCES OF NUCLEAR FUEL SUPPLY Following publication of an IAEA report on multilateral nuclear approaches in February 2005, there have been more than a dozen (13) proposals made so far, which are largely complementary.143 Existing Proposals and Initiatives on Assurances of Supply of Nuclear Fuel144 Title Country/Organization Date 1. Reserve of Nuclear Fuel (low-enriched US September 2005 uranium [LEU] downblended from 17.4t highly enriched uranium [HEU]) Russian Federation January 2006 2. Creation of a System of International Centers Providing Nuclear Fuel Cycle Services, Including Enrichment 3. Global Nuclear Energy Partnership US February 2006 (GNEP) 4. Ensuring Security of Supply in the World Nuclear May 2006 International Nuclear Fuel Cycle Association (WNA) (Assurance-in-Depth Concept) 5. Concept for a Multilateral Mechanism France, Germany, June 2006 for Reliable Access to Nuclear Fuel Netherlands, Russian (RANF) – the Six Nation Proposal Federation, UK, U.S. 6. IAEA Nuclear Fuel Bank Nuclear Threat September 2006 Initiative (NTI) 7. IAEA Standby Arrangements System Japan September 2006 for the Assurance of Nuclear Fuel Supply Germany May 2007 8. Multilateralizing the NFC - (Extraterritorial) International Uranium Enrichment Centre (Sanctuary) 9. Multilateralizing the NFC Austria May 2007 10. International Uranium Enrichment Russian Federation June 2007 Centre in Angarsk (IUEC) 11. Governmental LEU Stock in Angarsk Russian Federation June 2007 12. Enrichment Bonds (government UK June 2007 commitments) 13. European Union (EU) Non-paper on EU June 2007 the NFC 143 “Multilateral Approaches to the Nuclear Fuel Cycle: Expert Group Report submitted to the Director General of the IAEA,” available at http://www.iaea.org/Publications/Documents/Infcircs/2005/infcirc640.pdf; accessed April 6, 2008. 144 For additional information, see IAEA, “12 Proposals on the Table,” available at http://www.iaea.org/Publications/Magazines/Bulletin/Bull492/art13-subart1.pdf; accessed July 13, 2008. 114

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Among these are two proposals on establishing physical low-enriched uranium (LEU) reserves as a last resort assurance of supply.145 The United States announced in Vienna in September 2006, that it would commit up to 17 tons of highly enriched uranium to be down- blended to LEU to support assurance of reliable fuel supplies for states that forego enrichment and reprocessing.146 A non-governmental organization, the Nuclear Threat Initiative, has offered the IAEA a $50 million 2-to-1 matching grant for a last-resort reserve of LEU, if the following conditions are met: • the IAEA raises an additional $100 million • the IAEA takes the necessary actions to approve the establishment of this reserve within two years from September 2006 customer states do not engage in domestic enrichment147 • The World Nuclear Association (WNA) set up an ad-hoc working group, which in May 2006, issued a report suggesting a tiered assurance-in-depth approach with three levels of assurance: • Level I is the existing world LEU/SWU (separative work unit) market • Level II provides for commitments among the enrichment supplier companies (supported by the supplier states) to collectively back each other if one is politically forbidden from honoring a commercial contract, and if the IAEA triggers the assurance mechanism Level III is a final last-resort backup LEU reserve(s)148 • The 2006 WNA proposal also has a no-enrichment requirement. In June 2006, the six enrichment supplier states (France, Germany, Netherlands, Russia, UK, and the United States) put forward a six-nation proposal (Reliable Access to Nuclear Fuel [RANF]), which was based on the WNA approach reinforced with governmental commitments, and had a no-enrichment requirement for consumer states as well.149 The UK Enrichment Bonds (a virtual fuel reserve) were first suggested later in 2006, to guarantee that national enrichment providers would not be prevented by the states from supplying LEU/SWUs, and to provide prior consent for export assurances (programmatic licenses). There are two proposals that focus on augmenting the existing enrichment business by establishing new multilateral enrichment companies. The Russian initiative of January 25, 2006, 145 For further information regarding these and all 13 proposals, see http://www.iaea.org/NewsCenter/Focus/FuelCycle/index.shtml; accessed April 6, 2008. 146 For the U.S. statement presented at the IAEA Special Event on assurances of supply, see http://www.energy.gov/news/4173.htm; accessed April 6, 2008. 147 For further information on this proposal, see http://www.nti.org/c_press/fuel_bank_122707.pdf; accessed on April 6, 2008. 148 “Ensuring Security of Supply in the International Nuclear Fuel Cycle,” World Nuclear Association, May 2006, available at http://www.world-nuclear.org/reference/pdf/security.pdf; accessed July 13, 2008. 149 For further information on the “six-party” proposal, see http://www- pub.iaea.org/MTCD/Meetings/PDFplus/2006/cn147_ConceptRA_NF.pdf; accessed April 6, 2008. 115

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on International Nuclear Fuel Cycle Centers (INFCC)150 aimed at establishing an INFCC network to ensure a reliable and non-discriminatory supply of NFC products and services without transferring sensitive technologies to the consumer countries. The second is a German proposal of 2006, which calls for a new IAEA-operated international enrichment facility on an extraterritorial site.151 A Japanese proposal of 2006 focuses on gathering and sharing information about capacities and production plans for all the front end stages of the fuel cycle152 to prevent market disruptions.153 It recognizes that countries are at different stages in their front end capabilities, and envisages countries with a small current enrichment capacity (like Japan) later expanding their capacity for an export market. An Austrian proposal of 2007, in a way reinforces the Japanese proposal, calling for optimized international transparency going beyond current IAEA safeguards obligations.154 It also suggests equal access to and control of the most sensitive technologies by placing all transactions regarding nuclear fuel under international control. The U.S. proposal, the Global Nuclear Energy Partnership (GNEP) of February 2006,155 is a long-term project intending, in particular, to jointly develop technologies for closing the fuel cycle. One of the key GNEP elements is a fuel services program to enable consumer nations to acquire nuclear energy economically while limiting proliferation risks. Under GNEP, a consortium of nations with advanced nuclear technologies would ensure that countries which agree to forgo their own investment in enrichment and reprocessing technologies, would have reliable access to nuclear fuel products and services. The European Union non-paper on the NFC of 2007, suggests a set of criteria against which such proposals could be assessed: proliferation resistance, assurance of supply, consistency with equal rights and obligations, and market neutrality.156 Important commonalities among the above proposals include the following: • all proposals originate in supplier states and assume that a global spread of sensitive nuclear technologies increases the nuclear proliferation risk • proposals focus on enrichment as the first phase of a possible holistic nuclear fuel cycle assurance infrastructure (a step-by-step approach) 150 The text of this proposal can be found at http://www.iaea.org/Publications/Documents/Infcircs/2007/infcirc708.pdf; accessed April 6, 2008. 151 For further information regarding the German proposal, “Multilateral Enrichment Sanctuary Project,” see http://www.iaea.org/Publications/Documents/Infcircs/2007/infcirc704.pdf, accessed April 6, 2008. 152 The Nuclear Energy Agency defines the stages of the fuel cycle as follows: “a) the so-called front-end which extends from the mining of uranium ore until the delivery of fabricated fuel elements to the reactor site; b) fuel use in the reactor, where fission energy is employed to produce electricity, and temporary storage at the reactor site; c) the so-called back-end, which starts with the shipping of spent fuel to away-from-reactor storage or to a reprocessing plant and ends with the final disposal of reprocessing Vitrified High-Level Waste or the encapsulated spent fuel itself.” For further information, see http://www.nea.fr/html/ndd/reports/efc/efc02.pdf; accessed April 6, 2008. 153 The text of this proposal can be found at http://www.iaea.org/Publications/Documents/Infcircs/2006/infcirc683.pdf; accessed April 6, 2008. 154 The text of this proposal can be found at http://www.iaea.org/Publications/Documents/Infcircs/2007/infcirc706.pdf; accessed April 6, 2008. 155 For further information regarding the U.S. Global Nuclear Energy Partnership, see http://nuclear.inl.gov/gnep/index.shtml; accessed April 6, 2008. 156 International Atomic Energy Agency, “EU Non-paper on the Nuclear Fuel Cycle,” IAEA GOV/INF/2007, June 11, 2007. 116

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• most of the proposals have a precondition for consumer states to forego enrichment and/or reprocessing • the proposals recognize that existing nuclear markets (a) have been functioning well, (b) provide the base-line assurance of a reliable fuel supply, and (c) any additional assurances may be just measures of last resort (a safety net) to use only in case of disrupted commercial supplies when pre-defined material release conditions are met • the proposals underline the special role and commitments of the supplier states (and the IAEA) in the provision of additional assurances (export licenses, associated costs) IAEA SPECIAL EVENT ON ASSURANCES OF SUPPLY AND NON-PROLIFERATION The importance of this subject was underscored by the IAEA decision to hold a dedicated Special Event in Vienna in September 2006, in conjunction with the 50th IAEA General Conference. The Chairman’s Summary of the Special Event pointed out that consumer states would choose different fuel supply policies and solutions.157 It is of utmost importance to retain flexibility in this area, and not try and suggest solutions perceived to be imposed, particularly on consumer states. Recent proposals for assuring supplies of nuclear fuel can be seen as one stage of the broader, longer-term development of a multilateral framework that could encompass both natural and low-enriched uranium, as well as nuclear fuel and spent fuel management. An assurance of fuel supply mechanism would: • address possible consequences of interruptions of supply due to political considerations unrelated to non-proliferation, commercial or other contractual obligations • reduce incentives for consumer countries to acquire (build new) indigenous enrichment or reprocessing capabilities • be solely a back-up mechanism to the current normally-functioning market • not ask or expect from any country to give up or abridge any of their rights provided under the Treaty on the Non-Proliferation on Nuclear Weapons (NPT)158 PRELIMINARY FEEDBACK FROM POTENTIAL CONSUMER COUNTRIES Following the IAEA Special Event, the Agency secretariat and the countries originating the proposals have been actively seeking feedback from potential users (consumer states) on such a mechanism. Perhaps the most important responses thus far are: 157 The Chairman’s Report may be found at http://www.iaea.org/About/Policy/GC/GC50/SideEvent/report220906.pdf; accessed April 6, 2008. 158 To read the text of the Treaty on the Non-Proliferation of Nuclear Weapons, see http://www.iaea.org/Publications/Documents/Infcircs/Others/infcirc140.pdf; accessed April 6, 2008. 117

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• Few, if any, countries might be prepared to compromise, dilute or give up any rights to develop peaceful nuclear technologies; even if they do not need enrichment technology today, they may need it in the future. • The NPT has provided a very fragile balance between the rights and obligations of all members, and it would rather not be tipped by attempts to place additional commitments on those countries which do not have nuclear weapons, (so-called “have-nots”) • Export controls (Nuclear Suppliers Group) and IAEA safeguards are the best multilateral approaches to controlling the spread and use of sensitive technologies; proposals on assurances of supply may question their credibility. G8 STATEMENT ON NON-PROLIFERATION On June 8, 2007, at their last summit in Germany, the G8 leaders made a special statement on non-proliferation,159 where they stressed the importance of developing and implementing mechanisms of multilateral approaches to the nuclear fuel cycle as a possible alternative to pursuing national enrichment and reprocessing activities. They appreciate the initiatives put forward on multilateral approaches to the nuclear fuel cycle (including the INFCC, GNEP, the six-nation proposal, and others). In considering these initiatives, the G8 will be guided by the criteria of added value to the non-proliferation regime, confidence in the reliability of supply assurances, compatibility with Article IV of the NPT, and the need to avoid any unnecessary interference with disturbance of the existing commercial markets. The G8 leaders reiterated that participation in any mechanism dealing with multilateral approaches should be carried out on a voluntary basis and should not preclude any state from purchasing nuclear fuel cycle services on the existing market beyond the frameworks of multilateral mechanisms. The G8 also noted that they were looking forward to the suggestions that the IAEA DG would present to the IAEA BOG in June 2007. IAEA DG REPORT ON ASSURANCES OF SUPPLY At the June 2007 IAEA BOG meeting, the IAEA DG provided to the Board a report developed by the IAEA Secretariat on a “Possible New Framework for the Utilization of Nuclear Energy: Options for Assurance of Supply of Nuclear Fuel.”160 The report had the status of a restricted distribution document and was not discussed by the Board at that meeting in order to give the Governors more time to reflect on it. It was not a formal proposal of the Secretariat but an attempt to structure a possible framework within which the existing and future proposals can be placed for consideration. 159 To read the text of the G8 Statement on Non-proliferation from Heiligendamm, Germany of June 8, 2007, see Appendix D. 160 For further information, see http://www.iaea.org/NewsCenter/News/2007/nuclenframework.html; accessed April 6, 2008. 118

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Following the recommendations of some potential consumer states, the report assumes that even at this early stage the assurances of supply should cover not only LEU, but manufactured fuel assemblies as well. The suggested framework for the assured LEU supply is as follows: • Level 1: Existing global nuclear fuel market arrangements • Level 2: Back-up commitments provided by fuel suppliers, if pre-determined criteria are met following a political disruption, underpinned by commitments from their respective governments to allow such a supply (and not to retaliate on other suppliers) • Level 3: A physical or virtual LEU reserve(s) (commitments by governments) under IAEA control, which could be used if Level 2 commitments can not be fulfilled, and the same pre-determined and agreed upon criteria are met The suggested framework for fuel fabrication is based on the same LEU logic. The report concludes that all assurance of supply frameworks under the Agency’s auspices should be open to participation by all member states and suggests possible material release and decision-making principles: • The release criteria should be the same for all states regardless of a state’s future fuel cycle options. This may best be achieved through a procedure whereby the BOG establishes the criteria in advance, thereby ensuring that they are consistent for all states wishing to make use of the framework. • Once a request for supply is received by the Agency, the DG will decide if the criteria defined by the Board are met, allowing the supply framework to be triggered. INTERNATIONAL URANIUM ENRICHMENT CENTER IN ANGARSK The IUEC in Angarsk is seen as the first step to implementing the initiative of the Russian President Vladimir V. Putin of January 25, 2006, on INFCC. The establishment of the Center is considered to be a logical development of the IAEA multilateral fuel assurance approaches, and correlates well with other related initiatives (RANF, GNEP). The IUEC has three primary objectives: • to promote the wider use of nuclear energy worldwide, particularly in emerging nuclear energy countries • to reduce the nuclear proliferation risk by encouraging consumer countries to use the benefits of nuclear energy by relying on international routes for the supply of NFC products and services rather than by acquiring sensitive indigenous NFC capabilities • to provide additional assurances of nuclear fuel supply to the IUEC member states, which may voluntarily choose to rely on international routes of nuclear fuel supply In the last year, some important milestones have been achieved in the realization of the IUEC initiative. The IUEC objectives and conceptual approaches on how to achieve them have been widely discussed with the relevant parties in the Russian Federation, potential candidate 119

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countries, and with international organizations (at the IAEA and other forums). A decision was made by the Russian government to set up a commercial joint stock company “IUEC” on the site of the Russian uranium enrichment plant in Angarsk; the plant has been added to the list of Russian nuclear facilities to be put under IAEA safeguards. The Russian nuclear legislation has been amended to allow possession of nuclear materials by legal entities, as well as to acknowledge the right of foreign states (legal entities) to possess nuclear materials (and their processing products) imported to and/or procured in Russia. A model intergovernmental agreement, to be concluded between the IUEC and member states to provide the necessary international legal framework, has been drafted; the first IUEC agreement between the Russian Federation and the Republic of Kazakhstan was signed on May 10, 2007. The IUEC implementation status (July-September 2007) was as follows: • establishment of IUEC organization and management infrastructure • meeting of IUEC shareholders (TENEX and Kazatomprom) • signing of IUEC founding documents (Charter and Agreement) • election of the Board of Directors (chaired by V. Polysaev, Director, Atomenergoprom International Department) • nomination of the IUEC Director General (TENEX Director General, A. Grigoriev) • IUEC registration, development of economic and corporate models (in process) • consultations with potential IUEC customer countries (Armenia, Ukraine, and others), on-going The Russian-Kazakhstan IUEC Agreement, which may be considered a template for similar agreements with other countries, does not impose any specific non-proliferation limitations on would-be IUEC members, but notes that Kazakhstan did not possess uranium enrichment capacities when the agreement was signed. It provides guaranteed access for IUEC members (“…predominantly from countries not developing domestic uranium enrichment capabilities…”)161 to the Center’s enrichment products and services. The U.S.-Russia Agreement on Nuclear Cooperation (123 Agreement), signed by Ambassador William Burns and Rosatom Director Sergei Kirienko on May 6, 2008, in Moscow, may become an important milestone, providing the legal basis for cooperation between Russia and the United States on the peaceful use of nuclear energy.162 This Agreement is required by the U.S. Atomic Energy Act of 1954, which governs the transfer of U.S. nuclear technology, equipment and materials to a foreign country. It must be signed and brought into force, for instance, if spent fuel of U.S. origin is to be deposited into a international spent nuclear fuel centre should one be established in Russia. But for the purposes of the IUEC in Angarsk, the 123 Agreement is not necessary as long as a U.S. company joins the IUEC and would like to enrich uranium of U.S. origin in it, which is highly improbable. LEU produced at the IUEC and exported from Russia is to be used for fabrication of fuel (powders, pellets, fuel elements and assemblies) for nuclear power plants. And last but not the least, on consent of the IAEA, the Parties may establish a governmental stock of natural and low- enriched uranium, which may be used as collateral for IUEC commitments, and as a last resort LEU reserve in the future international security of supply mechanism (see Figure 1). 161 Agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on the Establishment of the International Uranium Enrichment Center, May 10, 2007. 162 See the papers by Alexander A. Pikaev and Orde Kittrie in this volume. 120

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IUEC Organizational and Legal Structure Government of t he Government of the Russia -Kazakhstan Republic of Gov- to - Gov Agreement Russian Fede rat ion Kazakhstan Rosat om Gov -to- Gov Ag reemen t wit h a new member -coun try Go vernment of a new memb er - co unt ry JSC TENEX Aut horized Co mpan y JSC NA C Kazato mp ro m (fou nder of IUEC ) of a new memb er - co unt ry (fo under of IUEC) JSC IUEC Saf eguards Servic e AEC C contract* IAEA LEU stockp ile for * JSC IUEC (Guarantee by the Rus sian Government ) Figure 1 IUEC Organizational and Legal Structure The IUEC was founded and will be operated on Russian soil according to Russian law as a commercial company co-owned and co-managed by the shareholders (commercial companies authorized by their governments). At present 90 percent of the shares are owned by TENEX, and 10 percent by Kazatomprom. Regardless of the number of IUEC members, the Russian member will always own no less than 51 percent of the shares. The IUEC shareholders would have a claim to the company’s product (LEU/SWU) and the profits. Since transformation of the existing enrichment plant in Angarsk from a state federal unitary enterprise into a joint stock company will take some time, initially the IUEC will not have enrichment capacities of its own, but will have to place orders for enrichment services at the existing plant. When the Angarsk plant transformation into a stock company is complete (in early 2008), the plant could acquire some shares of the IUEC in exchange for its enrichment capacities. At the next stage, the IUEC shareholders may want to expand the Center’s production capacities by investing in the construction of new enrichment cascades. In any case, the Russian enrichment technology know-how shall not be transferred to other IUEC shareholders. The IUEC is believed to meet the above-mentioned EU/G8 acceptance criteria for the following reasons: • the Center aims to provide additional assurances of supply to its shareholders through: 121

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o diversification of fuel (LEU/SWU) suppliers o commitments of the governments involved, particularly that of the Russian government, to provide necessary support to its operations (regulatory oversight, export/import licenses, etc.) o better transparency of operations due to the involvement of shareholders in IUEC management and application of IAEA safeguards o robustness and competitiveness of Russian enrichment technology o plentiful resources of natural uranium in the member countries • IUEC market neutrality. It is to become a new commercial fuel supplier at market prices. Should the IUEC enrichment potential exceed the needs of its shareholders it may also play a role in the emerging international assurances of nuclear fuel supply widely discussed now by the world nuclear community. For instance, in case of disrupted market deliveries, in terms of the six-nation (RANF) proposal of June 2006, of which the Russian government is a part, the IUEC may serve as a physical or virtual back-up LEU supplier at level II (collective assurances of commercial suppliers), and/or level III (governmental IAEA-administered LEU reserves). • the IUEC is consistent with the criterion of equal rights and obligations: o the Russia-Kazakhstan IUEC Agreement of May 10, 2007, does not impose any additional non-proliferation requirements on the IUEC members o IUEC is open to any company from third countries that meet their obligations under the NPT of July 1, 1968, and share the intent and objectives of the Center o the IUEC membership and material release terms are to be the same for all members • bringing the IUEC into operation is believed to reduce the risk of proliferation by: o denying other IUEC members access to Russian centrifuge technology (a black box approach) o producing at the IUEC and exporting from Russia LEU is only for fuel fabrication for NPPs o providing incentives together with last resort LEU fuel reserves, to participating countries to rely on international routes of LEU fuel supply rather than on developing domestic capabilities Since non-proliferation is one of the main objectives of the IUEC, it will not be able to operate effectively without IAEA support and involvement, which may materialize in various ways, including: • implementation of IAEA safeguards over IUEC nuclear materials and/or facilities • assistance in gaining international recognition and involvement of new countries • certification of participating countries’ non-proliferation records against predefined criteria • provision of a framework and trigger mechanism for back-up supplies (should the IUEC have this role) 122

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In mid-March 2007, the Russian Atomic Energy Agency (Rosatom) and the IAEA conducted a workshop in Angarsk, where the issues above were discussed and follow-on action plans for both sides were coordinated. They agreed to establish a joint working group, which has already convened several times. The working group is tasked with developing common approaches for IAEA participation in the IUEC and/or LEU reserve operations, and for IUEC involvement in IAEA assurances of supply mechanisms. CONCLUSION Global perspectives on the expanded use of nuclear energy raise concerns about the security of the nuclear fuel supply and increased risks of the proliferation of sensitive nuclear technologies. In recent years, there have been various initiatives put forward by governments and other stakeholders to address this issue. They are largely complementary and may provide valuable input to the development of a new framework for utilization of nuclear energy. Assurance of supply may become a rare type of insurance, where the insurer (supplier states) pays the premium in the expectation of receiving something from the insured in return (refraining from sensitive activities). It is becoming increasingly clear that no foregoing of rights to develop/use civil nuclear technologies (mandatory and forever) can be acceptable for potential consumer states. Only voluntary options are viable, and only for as long as the consumer states wish to be members of an assured supply mechanism. The mechanism shall guarantee that there are no retaliations (penalties) on those countries, which may choose to refrain from joining the mechanism. Assured supply and non-proliferation objectives can be achieved by a clear demonstration of the benefits (economic, political and others) of being a part of the international assurances of supply mechanism and by peer pressure from the member countries. The International Uranium Enrichment Centre in Angarsk is the first step in implementing the Russian President’s initiative of January 2006, and is believed to be a promising approach to addressing concerns related to the globalization of nuclear power, assurances of supply of NFC products and services, and the risks of nuclear proliferation. 123

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