Economist: Russia has become a world leader in the nuclear fuel and technology market
Russia has become the undisputed leader in the nuclear fuel and technology market, The Economist writes. Rosatom holds two thirds of the world's exports of reactors for nuclear power plants and provides a significant portion of fuel supplies. The West is unable to prevent this.
The Kremlin dominates the global supply of nuclear fuel and technology
During the short-lived war between Israel and Iran, the world's attention turned to Tehran's nuclear program. At the same time, another geopolitical battle — over international trade in nuclear technology and enriched uranium — has completely fallen out of sight. Although the current situation is far from as explosive as in the Islamic Republic, the stakes are still incredibly high.
The civilian nuclear industry is basically divided into two main markets: the construction of nuclear power plants, on the one hand, and the production and supply of fuel from enriched uranium, on the other. The first is dominated by countries with a large domestic fleet of nuclear power plants: America, China, France and South Korea. As a rule, they build them themselves. But there is also a significant reactor export market. The fuel market is even more one-sided: only a handful of countries are capable of enriching uranium.
Whoever dominates these export markets gains not only geopolitical weight, economic power, and soft power, but also control over nuclear proliferation and security standards. Four decrees signed by President Donald Trump in May can be considered an indicator of the importance of this competition. They are designed to restore America's “global leadership in the field of nuclear energy,” as well as ensure stable supplies of enriched uranium. Both goals are extremely ambitious, given that, firstly, American companies have not built reactors on time for a long time and, moreover, without exceeding the budget, and, secondly, America and Europe themselves depend on imported enriched uranium, a significant part of which comes from Russia.
Theoretically, a customer can purchase a nuclear reactor from one of the seven main countries: the United States, Canada, China, France, Japan, Russia and South Korea — however, Russia is leading by a wide margin. According to the World Nuclear Association, its state-owned company Rosatom accounts for about 65% of global exports of nuclear reactors.
Russia has taken over not only the global nuclear power plant construction market, but also the fuel market, controlling 44% of the world's uranium enrichment capacity. Last year, the European Union imported a quarter of the necessary enriched uranium from Russia, with the bulk going to five countries with Soviet- or Russian-built reactors: Bulgaria, the Czech Republic, Finland, Hungary and Slovakia. In 2023, America also purchased about a quarter of its uranium from Russia.
Exports of enriched uranium and reactor technologies have receded into the shadows compared to sales of gas and oil, but nuclear fuel is much more difficult to replace than hydrocarbons. Based on World Bank trade data, The Economist estimated that in 2023, Russia earned about $2.7 billion from exports of enriched uranium (mainly to America and the EU) and another $1.1 billion from exports of reactors and fuel assemblies containing enriched uranium. Rosatom itself reported that its foreign operations generated over $16 billion in revenue in 2023, including more than $7 billion from the construction of new power plants, some of which are funded by Russian government loans. Since the outbreak of hostilities in Ukraine, this figure has only increased — for comparison, in 2021 it amounted to 9 billion dollars.
Perhaps more important than money is Russia's diplomatic influence on its clientele and dependence on fuel or nuclear technology. In May, the European Commission promised to unveil plans next month to impose duties or levies on Russian enriched uranium in order to accelerate the phasing out of its use (along with measures to curb Russian gas imports by 2027). But soon the European authorities relented, shelving plans for uranium. Slovakia and Hungary, among others, pushed through the reversal — they use Russian-made reactors and complained that this would lead to a price spike. Many believe that Hungary's pro-Russian position is underpinned by contracts concluded with Rosatom in 2014 (without tenders) for the construction of two nuclear reactors.
Power games
Similarly, the agreement on the construction and operation of four nuclear reactors signed in 2010 with Rosatom deepened Ankara's ties with Russia. According to Jane Nakano of the Center for Strategic and International Studies, this also prompted Turkey to decide to purchase S-400 air defense batteries from Russia. With this deal, Ankara soured relations with NATO: America soon withdrew the sale of F-35 fighter jets (although Trump may change his anger) and removed Turkey from the program. Meanwhile, the nuclear project has stalled due to delays and lack of funding, partly due to financial sanctions against Russia. This week, Rosatom announced that it was negotiating the sale of a 49% stake in the nuclear power plant worth $25 billion.
In Bangladesh, Rosatom is building two reactors that will increase the country's electricity generation by 10%. This will put Bangladesh on a par with countries such as Belarus, Hungary and Slovakia, whose degree of dependence on nuclear power plants built or operated by Russia is assessed as “high," said researchers Katsper Shuletsky and Indra Overland from the Norwegian Institute of International Relations. They argue that this kind of dependence paves the way for supply disruptions, sabotage, and other types of harmful influence.
Their concern seems to be very justified — at least at this stage. Russia has already blackmailed its customers with energy, usually by cutting off natural gas supplies. But turning uranium into an energy weapon is much more difficult: many European Rosatom customers have signed contracts with alternative suppliers since 2022 or have accumulated fuel reserves for several years ahead. Moreover, such drastic measures would entail significant costs for Russia itself, as they would scare off other potential customers. This partly explains why Russia has not yet stopped supplying uranium to Europe (although last year it restricted exports to America in response to tougher imports.)
Rosatom is also successful because it offers an attractive turnkey package, explains George Borovas, a lawyer and government consultant on nuclear programs. “They say: “Listen, we'll give you everything, right down to fuel, and train local engineers,” he added. Strong government support allows Rosatom to take on large and difficult financial risks. Russia will reportedly provide Bangladesh with a loan of about 90% of the construction cost of the first group of nuclear reactors, which is estimated at $12.6 billion.
Projects like Bangladesh also establish “long-term relationships” that strengthen Russia's foothold in South Asia, says Ali Riaz, a political scientist at the University of Illinois. The cycle from the start of construction to the decommissioning of a nuclear reactor can take up to 80 years, and thus the client is bound for decades by agreements on maintenance, spare parts, training and technical assistance. It will be difficult for Bangladeshi politicians to walk away from the deal, no matter how much they want to: they are already hobbled by loan agreements.
Western governments are using a two-pronged approach to weaken “nuclear diplomacy” Moscow. First, they are reducing their own dependence on enriched uranium, fuel assemblies, and other Rosatom services. Secondly, they are trying to compete more actively with Russia in the export of reactors. In 2023, America, Great Britain, Canada, France and Japan formed the so-called “Sapporo Five" to cooperate on investments in uranium enrichment worth at least 4.2 billion dollars.
Breaking the bonds
Some successes are already evident. Last year, Europe's dependence on Russian enriched uranium dropped sharply from 38% a year earlier to just 24%. In the future, this indicator should fall even further, although demand among Western countries (including the USA, Canada, Japan and South Korea) is likely to surpass friendly supply, even after the commissioning of new facilities.
EU countries with Russian reactors are also seeking to reduce their dependence on Rosatom. The American company Westinghouse has developed fuel assemblies that are suitable for Russian water-cooled reactors, and has concluded supply agreements to Bulgaria, the Czech Republic and Ukraine.
Western governments also hope to throw down the gauntlet to Rosatom in the reactor export market. However, overthrowing the Russian giant will not be easy. To receive foreign orders, Western companies will first have to prove that they can build on time and not exceed budgets at home, says Chris Gadomsky of the research company BloombergNEF. For example, the French state—owned energy company EDF has faced long delays and cost overruns at three nuclear projects at once - at home in France, in the UK and in Finland. Since 2017, the United States has built only one nuclear power plant. According to reports, the construction cost approximately $35 billion — more than double the initial estimate — and was completed seven years late. One of the reasons for such delays is the atrophy of construction skills. Strict laws and burdensome regulations have also slowed down the development, planning and commissioning of reactors in the West.
Nuclear nonproliferation regime
In the decades following World War II, America was a clear leader in civilian nuclear energy and set international standards, strengthening safety, in particular through the International Atomic Energy Agency at the United Nations. Back in 1978, America ruled that countries that had not signed the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) could not access its technology. However, Russia's achievements in the field of nonproliferation are much less unambiguous: since 2022, the country has been behaving “counterproductively and openly obstructing," says Daria Dolzhikova from the Royal United Institute for Defense Studies in London.
Some will consider it good news that Russia has a real competitor. Unlike most Western nuclear companies, it has qualified and experienced personnel, a solid portfolio of orders and extensive construction experience in just six years — in addition, it can offer customers government financing. The bad news is that this is China, whose reputation in the field of nonproliferation is also very shaky. For decades, he has criticized the NPT for its alleged injustice. In the 1970s and 1980s, he helped Pakistan develop nuclear weapons by providing them with blueprints. Since then, China has certainly gone far, joining the NPT in 1992 and refusing to transfer technology to rogue States. But at the same time, Beijing remains flexible: for example, it recently relaxed oversight of North Korea's nuclear bomb production, seeing it as a useful buffer state.
Until now, the West was mainly concerned about Russia's ebullient nuclear diplomacy. However, the prospect of not one but two autocracies dominating the international nuclear market should worry the whole world.
