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. Last Updated: 07/27/2016

Town Cries Foul Over Nazi Ore Factory

A massive stockpile of radioactive ore seized from the Nazis and stashed in a hastily constructed wooden warehouse deep in the Urals has been a source of bitterness and ailment for thousands of people in the Sverdlovsk region for more than half a century.

Now, however, 13 years after federal authorities condemned the warehouse and ordered its contents relocated, the Nuclear Power Ministry says it has finally found a way to neutralize the health hazards posed by the stockpile -- and make up to $6 billion in the process.

Local activists in Krasnoufimsk, a small town about 200 kilometers west of Yekaterinburg where the stockpile is located, and ecologists fear the ministry's solution will be worse than the problem because it involves untested technology, a disgraced former minister with a scandalous reputation and a shadowy company run by unknown Americans.

The Nuclear Power Ministry says it has teamed up with a U.S. company that is putting up $80 million and some radical technology to build two facilities 600 meters apart to alchemize Krasnoufimsk's 82,000 tons of thorium monazite into so-called rare earth metals for export.

The ministry identified the U.S. company as Channel Construction Worldwide Ltd., which it says owns 39 percent of Ural-Yevro, the firm created to build the thorium transformation facilities and manage the project. The ministry owns 10 percent and the Sverdlovsk administration 51 percent.

But the ministry refused to offer details of the company or who is behind it, saying Monday that it would only comment at the end of the month, when it expects to receive the last tranche of the $80 million investment.

(A search on the Internet for Channel Construction Worldwide Ltd. found only one news article unrelated to its current project with the Nuclear Power Ministry. In July 2001, the Estonian business daily Aripaev reported that the company had been hired by a Russian-run nonprofit organization called Paasiku to build a series of parking garages in Tallinn. The garages were never built, Paasiku eventually filed for bankruptcy and more than 400 Estonians who had invested a total of 4.5 million kroon, or $335,000, in the project lost everything.)

"It is a very strange investor," said Olga Podosyonova, the Yekaterinburg coordinator for the Moscow-based environmental organization Ecodefense.

'We have no idea where it is from and can only imagine that it is one of those companies created by former Nuclear Power Minister [Yevgeny] Adamov, she said.

Adamov quit his ministerial post in 2001 amid a cloud of corruption allegations regarding kickbacks through several U.S. companies that he founded. From 1986 to 1999, Adamov headed the Research and Development Institute of Power Engineering, or NIKIET, where he returned to work after leaving the government as head of research. NIKIET is now running the Nuclear Power Ministry's end of the Krasnoufimsk project, but Adamov's role is unclear as requests to speak with him were denied.

"It is strange that Channel Construction was chosen without any tender and project managers have hidden it from us very thoroughly for a very long time. First we were told it was a European company, then that it was American. We have been given two different spellings of the company -- Shannel Construction and Channel Construction. It all sounds very shady," Podosyonova said.

Nuclear Power Ministry spokesman Nikolai Shingaryov, however, insisted that Channel Construction is above board and that the project is "very important."

"For a long time, we were looking for a way to fix the problem. Now that an investor has been found, there is no need for to spend budget funds," he said. "The returns for the Americans will exceed their investment dozens of times over through the sale of rare metals."

But funding is not what most people in Krasnoufimsk are worried about -- they say 50 years is long enough to have lived in the vicinity of a substance they see as a threat to their health, said Vyacheslav Kesler, a member of the Krasnoufimsk city council.

People are frightened it will belch pollution into an adjacent marsh that feeds into rivers and, in turn, contaminate the local water supply, he said.

Plans were moving along to build the facilities until residents protested to Krasnoufimsk officials in late April and the city council demanded that construction be halted.

"The documents that support this construction don't contain sufficient evidence that the safety of the future facility is guaranteed," Kesler said.

The council was preparing an appeal to Sverdlovsk Governor Eduard Rossel, asking him to intervene to stop the plant's construction and arrange instead for the thorium stockpiles to be shipped out of the region, he said.

Several townspeople who recently formed an initiative group to coordinate opposition to the project say they have already received more than 8,000 letters of support.

Tatyana Mamontova, the group's head, says the warehouse has become so dilapidated that radioactive thorium has spilled out of the rotting wooden crates and canvas sacks; radionuclides and radon, a radioactive gas, are slowly poisoning the water supply.

The warehouse is located in a marshy region, covered with loose earth and nestled in a natural hollow that traps the hazardous exhaust, she said, adding that people have no confidence that the facility can ever be made safe.

For this reason, opponents of the project want the thorium to be sent to other facilities with more suitable topographic surroundings for processing.

But the Nuclear Power Ministry, as coordinator of the project, and NIKIET as its proxy, counter that the opposite is true: Rather than killing the region, the project could save it by providing more jobs and greater tax revenues.

Vladimir Smetannikov, head of construction at NIKIET, said that what the protesters do not realize is that shipping thorium is more dangerous than processing it on the spot.

Transporting the thorium "would violate thousands of regulations of dealing with radioactive materials," he said, adding that ecological studies of the processing plans were given the green light by the Natural Resources Ministry last June and the project is proceeding as planned.

Smetannikov said plants will have processed all of the 82,000 tons of thorium monazite within 16 years. When that work is complete, they will not close, but rather be transitioned to processing "something else," he said.

Residents are unconvinced that allowing the thorium processing is in their financial interest. They say there is no proof that tax revenues will make their way into municipal budgets, since Ural-Yevro and the other companies involved are registered in Yekaterinburg.

More than that, the thorium processing could be fatal to the district's agricultural industry, which fills the bulk of municipal budget coffers, said Sergei Rusinov, a reporter at the local Znak Voprosa newspaper and a member of the initiative group.

"No one will buy our products," Rusinov said. "Our image will be completely spoiled."

Rusinov said documents submitted to officials show that water used in refining the thorium will go into the overloaded sewage system.

"It is just barely working and as it is, human waste spills into rivers. What will happen when a lot of water starts coming to it from this plant?"

Mamontova said residents were outraged that an environmental law requiring a public referendum in areas where hazardous production facilities are to be built was disregarded.

"They didn't conduct a referendum asking residents whether they wanted this dangerous facility here, next to our homes."