Canada dances with wolves

International nuclear agreements end nation's silence
on deals with GNEP and Russia.

GNEP nations need Canada's uranium
Russia needs AECL nuclear reactors

Last summer when more than a dozen nations held a ministerial level diplomatic meeting in Vienna, Austria, on the Global Nuclear Energy Partnership (GNEP), Canada sat out the meeting sending an observer instead of the foreign minister or other cabinet rank member of the government. Gary Lunn, Canada's minister got way out in front of the headlights of Canadian Prime Minister Stephen Harper on whether that nation could commit to the GNEP program. Canada's government wasn't ready and also somewhat wary as a result of negative feedback from anti-nuclear groups who said Australia went too far at an Asian summit meeting the week of September 4th signing up for GNEP during simultaneous visits by U.S. President George Bush and Chinese leader Hu Jintao.

That all changed this week with Canada not only signing up for GNEP but also for a significant deal with the Russian nuclear industry. The first part will be an addition to the international nuclear fuel regime. The second part raises questions about the reasons why Russian needs Canada's uranium and reactors.

The ever energetic Mr. Lunns said that this week Canada has joined GNEP, "as the world's largest producer of uranium." Lunn said the reason for the belated change of heart is the nation's "responsibility to help shape the safe secure development of nuclear energy." Translation - with all that uranium in the ground, there is no way Canada could not join GNEP.

The program envisions an international consortium of reliable fuel suppliers to countries who forgo the development of uranium enrichment plants. Also, GNEP proposes to reprocess and recycle spent nuclear fuel as a way to deterring proliferation of plutonium for building nuclear weapons.

This world straddling view of nuclear fuel did not go down easy with opposition groups in Canada. Lunn denied charges from opposition leaders that said Canada had made arrangements, when they joined GENP, that meant they would have to store and reprocess the spent nuclear fuel of other nations. "We have absolutely, explicitly stated that under no uncertain circumstances will Canada ever be taking back spent nuclear fuel at any time from any country," Lunn said. Australia has also joined GNEP with the understanding that it would not be responsible for waste from exports.

AECL is in play

While top levels of the Canadian government were touting one nuclear deal, another part was signing up to sell off parts of Atomic Energy Canada Limited (AECL), a crown corporation. The federal government launched a formal review of Atomic Energy of Canada Ltd., the country's 60-year-old nuclear flagship, a process that could lead to its sale to private competitors.

After months of speculation about AECL's fate, Natural Resources Minister Gary Lunn announced the government will hire financial experts to advise it on what to do with AECL. "It is time to consider whether the existing structure of AECL is appropriate in a changing marketplace," Mr. Lunn said. "This review will give us the information we need to make the right decisions for AECL and the right decisions for Canadians."

Reuters reported that Gary Lunn did not explicitly state that he was ready to sell off part of AECL but he came close. The Toronto Star reported that the government is in advanced negotiations on selling a stake in AECL to Areva rival General Electric Co. That isn't good news for competitors.

In an interview with Reuters, Areva Canada President Armand Laferrere made it clear that Areva wants in on the action if foreign companies are being offered a role. "If this is what it is, we are definitely interested in partnership with all highly skilled nuclear companies in the world," Laferrere said, adding this could mean an equity stake or it could mean an agreement to work together. "We're a global player engaged in global competition. Each time we can find partners we'll be happy." Laferrere said Lunn met him and Areva chief executive Anne Lauvergeon on June 19th.

AECL is developing the Advanced CANDU Reactor to meet customer requirements for the emerging nuclear market over the next 20 years of sales. The ACR-1000 is an evolutionary, Generation III+, 1200 MWe class heavy water reactor. It is AECL's newest flagship product designed to project the firm's presence into international markets for decades to come.

Russia needs AECL's technologies & Canada's uranium

One of the early and interested investors in AECL, and its newest technologies, is Russia. This week a high level delegation from Russia's nuclear industry, including Sergei Kiriyenko, head of the Russian Atomic Energy Agency (Rosatom) signed an agreement with AECL on cooperative development of nuclear technologies. The Russians also signed a deal with Cameco, Canada's top producer of uranium to create joint ventures and prospects for and mine uranium in both countries.

The Russians have powerful motivations for showing up in Ottawa to sign these two deals. According to an analysis published this week in Fuel Cycle Week (subscription required) by Sovietologist Peter Zimmerman, Russian's plans for major improvements to their nuclear infrastructure are in deep trouble. Zimmerman writes that the Russians have problems everywhere they turn including a lack of machinery, money, and technical know how. Here are some examples.

• Russia wants to build 10 new reactors doubling its generating capacity in the next eight years, but the current level of uranium mining won't cover even half of the needs of these new plants. The likelihood that the Russians will build 10 reactors in the next eight years is about the same as Disneyland opening a new theme park on the planet Jupiter. In the past 50 years the Soviets have built at a much slower rate.
  
• Russia is blending down its nuclear weapons materials to make reactor fuel, but that's as finite source. Actual uranium mining is said to be about 3,500 tonnes/year while the Russians need about five times that amount. According to source documents in Russian reviewed by Zimmerman, "production capacities are clearly insufficient."
  
• The Russians are trying to put all of their state-owned nuclear energy activities under a single government roof, but published reports translated by Zimmerman indicate the massive bureaucracy may not be up to the task. According to a Russian assessment reviewed and translated by Zimmerman, the Russians think there are "serious reasons to oppose massive atomic construction at this time." The most important reason is that the Russians can't do it. The assessment says the scale and timeframe of the proposed construction of [10 reactors in eight years] pose "alarming scientific and technological risks." Translation - if you want it bad, you'll get it bad.
  
• The Russians have excluded foreign investment from their nuclear build out, including uranium mines, fuel fabrication plants, and a national grid of electric transmission lines, despite having an estimated need for 13 trillion rubles in funding over the next few decades, a currency that until last August wasn't fully convertible to western money. Oh yes, the 13 trillion rubles, which sounds like an incomprehensible amount of money, works out to US$520 billion. Over two decades that works out to about $26 billion a year. It's still a lot of money.
  
• The Russians know they can't meet their needs for electricity solely from coal. Zimmerman's translations include a statement by First Vice-Premier Sergei Ivanov who gave a blunt assessment of the nation's short term needs for nuclear energy. He said, "there is no alternative [to nuclear energy]. Either we significantly increase it or in the very near future we will be facing an energy deficit." He said the share of nuclear energy in the national grid must grow from 18% in 2015 to 30% by 2030.

And that's why the Russians are in Canada this week. They are building the biggest nuclear company in the the world, which will research, design, build, operate, and maintain nuclear power plants. At the same time the same organization will mine, mill, and enrich uranium, make nuclear fuel, and sell the reactors and the fuel at home and abroad. The Russians need all the help they can get because it's clear they can't go it alone.

For their part the Canadians have signed up for GNEP and have put AECL in play offering to sell off at least a piece of it to investors. It was a damn interesting week up north.

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