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. Last Updated: 07/27/2016

Miners Miss Out on World Uranium Boom

Mineral-rich Russia has every reason to experience a "uranium rush," but contradictory Soviet-era nuclear laws and a lack of investment are preventing a boom, a top uranium official said.

In Soviet days Russia's uranium empire, set up in the early years of the Cold War confrontation, stretched from communist satellite states in Eastern Europe to the Pacific coast.

But the Soviet fall left only a fraction of that glory, and Russia failed to adjust as the Western nuclear industry shifted its focus from the arms race to commercial energy generation.

Russia's uranium industry is now facing collapse.

"Not only the uranium mining sector itself, but the whole of Russia's nuclear industry is still stuck in its Soviet ways," Sergei Grishin, head of the state uranium company, AtomRedMetZoloto, said in an interview.

"Feasibility programs have been frozen. And mining laws are preventing firms from investing in much-needed exploration," said Grishin, whose agency was once personally supervised by Josef Stalin's dreaded security chief, Lavrenty Beria.

Natural uranium, also known as yellowcake, contains radioactive elements. Once enriched, it is used to make fuel for nuclear power stations or nuclear bombs.

Grishin said Russia still held a solid 40 percent global market share for uranium enrichment services. But without sustainable mining resources, it can keep that share only by tapping into the vast but rapidly depleting state uranium stocks.

"There are very few sources of domestic yellowcake supply, and it's impossible to live on state supplies forever," he said.

"If we don't start developing new mines, serious problems will emerge in a few years, and by 2012-2013 it will be a catastrophe."

And that may eventually lead to Russia losing its key nuclear partners -- including strategic ones like Iran -- to European and other rivals, analysts say.

The global uranium industry has experienced a revival in past years as prices for the metal skyrocketed due to shrinking supply.

That has helped nuclear firms in Canada, Australia and elsewhere boost margins and invest in new deposits.

Nuclear power, which fell out of favor in the West after the 1986 Chernobyl disaster, is now becoming increasingly attractive to Asian and European markets, keen to switch to alternative sources of energy to shield themselves from oil price hikes.

Russia's sole uranium deposit in Chita region produces 3,000 tons of uranium a year. By comparison, Canada produces 12,000 tons -- close to Soviet production levels, Grishin said.

"To maintain the current share on the global enrichment market, Russia needs at least 16,000 tons a year," he said.

"And foreign investors, the French, Australians and Canadians, are watching these processes very closely."

The main problem, he said, was in Russia's obsolete mining laws.

The natural resources law states that any company is welcome to invest in any new mines. But the special atomic energy law says that all uranium mined in the country belongs to the state.

"That is a major obstacle. Investors are not going to do this -- because they cannot make any profits," Grishin said. "This contradicts the logic of Russia's current economic development, which is based on market economy principles."

At the same time, it can take up to 20 years to develop and start up a uranium mine, partly because most deposits lie in the remotest areas of Siberia where infrastructure is insufficient.

"That means that by the time a deposit is up and running, it might be too late for Russia to recoup its status as a major uranium player," Grishin said.

"Everyone is talking about it, there is a lot of debate in parliament and in the government -- but I am not aware of anything specific being done to remedy the situation."