The Economics of the Russian Nuclear Power Industry - Bellona

26low prices, because a decrease in profit will not be balanced out by a decrease in costs. For instance,market liberalisation and a slump in prices in Great Britain caused many nuclear power plants to fail torecoup their operating costs and led to their bankruptcy.There is a global market for natural uranium, but trading deals are done outside organisedtrading venues, being usually concluded privately via specialised companies acting as intermediaries onthe market. In the past years, prices have been extremely volatile, and on the whole, price levels grewnoticeably, triggered both by the depletion – in real estimates or otherwise based on hyped‐up claims –of global uranium reserves and a growing demand for nuclear fuel. Uranium for nuclear power plants’needs is customarily bought on the global market under long‐term contracts and, as a rule, at lessvolatile prices than quoted for spot settlements (or deals concluded for immediate delivery). Accordingto data from Canada’s leading uranium mining and processing company Cameco, the long‐termindustry average price of U 3 O 8 as of November 2010, was $65 per pound (or $169 per kilogram).Fig. 1. Global uranium market prices (in US dollars per kilogram of U 3 O 8 ). 63So far, the Russian nuclear industry has satisfied its uranium demand by domestic productionand has not been directly involved in the global uranium trading market – not, in any case, as abuyer. 64 The Russian uranium producer Priargunsky Mining and Chemical Works 65 supplies all of theuranium it mines to Rosatom’s fuel production company TVEL 66 at fixed prices that are much lower thanglobal market prices and, according to statements made by Priargunsky representatives, uranium mininghas lately been yielding losses for the company. 6763 Cameco calculates industry average prices from the month‐end prices published by the US‐based Ux Consultingand TradeTech. For more information, such as current long‐term and spot prices for uranium, as well as pricehistory, please see http://www.cameco.com/investors/uranium_prices_and_spot_price/.64 By various estimates, Russia will start experiencing a shortage of uranium sometime between 2015 and 2017,and Rosatom has been actively pursuing deals seeing purchases of foreign uranium production assets. For moreinformation, see, for instance, here: http://bellona.org/articles/articles_2011/slivyak_comment. – Translator.65 Priargunsky Mining and Chemical Works is a subsidiary of the Rosatom‐owned uranium supplierAtomredmetzoloto (or ARMZ) Uranium Holding. For more information, please seehttp://www.priargunsky.armz.ru/eng/. – Translator.66 More information about TVEL Fuel Company is available at http://www.old.tvel.ru/en/. – Translator.67 “Russian Nuclear Fuel Producers,” a research report by OLMA Investment Group, December 11, 2006 (Rossiiskyyaderny sektor, OLMA Investment Group, 11.12.2006, http://www.olma.ru/files/analytic/tvel_061211_Rus.pdf, inRussian).