The July (2006) G8 summit makes one big stir. The acting head of Russian nuclear agency Sergei Kirienko said in public that Russia do not intend to prolong the HEU-LEU agreement for the delivery of Russian superfluous weapon-grade plutonium in the United States after its expiration date (2013). The destiny of the most contradictory agreement in whole history of the Russian nuclear industry is now determined; however, the perspectives of the uranium trade between two countries are still befogged.

The HEU-LEU or Megatons-to-Megawatts program is the complicate system of the treaties and contracts managing the transfer of the excess weapon-grade uranium, which is created after demolition of some Russian and U.S. nuclear warheads, to the peaceful branch of nuclear industry. The Russian part of program is dealing with some 500 tons of weapon-grade uranium (HEU) to be converted in the low-enriched uranium (LEU) and used for nuclear fuel fabrication for the Western nuclear power plants.

The United States pay Russia for enrichment service, which is already contained in the HEU. The natural uranium or feed component is returned in Russia where it is partially used for HEU conversion - so called "code A" material - and partially is sold to the European and North American companies in the frame of separate contracts.

During fourteen years after HEU-LEU initiation, the agreement and its authors and spiritual fathers were vouchsafed with the diametrically opposed assessments and epithets. This deal will provide for the irreversible demolition of some 20000 nuclear warheads, will save 1.5 trillion cubic meters of natural gas or 1.3 billion tons of oil, and will bring 12 billion dollar income for Russia, proponents say. The strategic resources of Motherland are leaving abroad for a song, 1000 times cheaper than its real price, and the HEU conversion is equivalent to using a furniture as a firewood in the blockaded Leningrad, the opponents insist.

It could be wonderful but both of them are right. Certainly, each of them is right in their own way.

A spiritual father of HEU-LEU ideology is Dr. Tomas L. Neff, a physicist at MIT. In an op-ed in the New York Times at October 24, 1991, he suggested to turn the immense danger posed by excess weapon-grade uranium into an opportunity by blending it and selling as a fuel for nuclear power plants. Some people say though that the publication has been preceded by his meeting with Mr. Victor Mikhailov, then-candidate for the position of Minatom head.

The Neff's suggestion received the bi-partisan support in the United States. In a couple of months, he was invited in the USSR to discuss his idea with Soviet nuclear experts. The upheavals of late perestroika, crush of the communist system and birth of the Russian Federation delayed but not canceled the negotiation process.

After his resignation, Victor Mikhailov said in a interview: "Iouri Osipov, Max Kampelman from the State Department, and Alex Shustorovich, who was a translator. They told me that the United States will buy the fissionable material from the demolished nuclear warheads." Soon - at February 18, 1993 - the agreement was signed at the ministerial level, which was later called as HEU-LEU agreement.

The short document of six articles read that Moscow and Washington will co-operate in the field of HEU conversion. The document stated that Russia has some 500 metric tons of HEU with an average enrichment of 90% and above. The document directed the blended HEU to the nuclear power plants as a fuel. The Americans agreed to use the Russian HEU-conversion technology for blending of U.S. excess weapon-grade uranium. In their turn, the Russians confirmed that they will use some part of future sale proceeds for military enterprise conversion, support of nuclear safety and ecology of nuclear towns and centers.

Both countries did the next step during Russian-U.S. summit in Vancouver, Canada. At May 5, 1993, U.S. State Department and Minatom signed the Basic Principles of the HEU Contract codenamed as the Vancouver Principles. They agreed the uranium deal shall be the commercial one and shall not be subsidized by the states. They supposed to calculate the LEU-from-HEU prices based on the market conditions and inflation rate, starting from the justified $780 price per kilogram. Finally, the Russian Federation was granted an access for the American uranium market, and the U.S. assumed an obligation not to use the LEU-from-HEU for rivalry with Russia on international markets.

The Russian-U.S. summit as a place of the Vancouver Principles signing was selected not randomly. From November 1991, the United States initiated the antidumping duty investigation against the Russian uranium sellers under pressure of trade-unions and U.S. branches of Canadian and French uranium corporations. The special tariff of 116% was introduced against any Russian uranium-related import to the USA. The nuclear power in whole world was in the decadence stage, and loss of American contracts stand for loss of the only source of hard currency for Minatom. The very survival of Russian nuclear industry was threatened.

Then the political rescue rangers came, and many people believed in their frankness. In October 1992, the USA and Russia signed the agreement suspending the antidumping investigation on uranium from the Russian Federation - Suspension Agreement - for that uranium, which could be delivered in the United States in the frame of HEU-LEU contract. This rarely generous offer from Washington dissembled a dirty trick. The item M.2 of Article IV of Suspension Agreement forbade indirectly any import to the USA of the HEU feed component.

Standard flow diagram for uranium enrichment in the USA

1. Consumers give the natural uranium to the enrichment company (USEC).

2. USEC provides the enrichment and produces the LEU.

3. USEC gives the LEU back to consumers.

HEU-LEU flow diagram for uranium enrichment in the USA

1. Consumers give the natural uranium to the enrichment company (USEC).

2. Russia gives to USEC the LEU from HEU.

3. USEC gives the LEU to consumers.

In second flow diagram, the customers' natural uranium is accumulated in USEC and is called as the feed component of the HEU. The item M.2 of Article IV of Suspension Agreement forbade any sell of this feed component in the USA. Therefore, the united HEU-LEU contract is dissipated in two parts - selling of enrichment service and selling of feed component.

By word of mouth, the American negotiators told about simple and understandable deal - you give us LEU-from-HEU, we pay you money ($780 per kilogram). In actual fact, the agreement began to surrounded by the additional architectural levels, and the Suspension Agreement's prohibitions were just first catalysts of this process.

The contract between the USEC and TENEX - an agent of Russian government - dated on April 14, 1994, modified the ninth Vancouver principle regarding the LEU-from-HEU price. The Americans persisted to fix separately the price of the feed component - $28.5 per kilogram - and the price of enrichment - $82.1 per SWU. Thus some 37% of total HEU-LEU deal price become linked to the feed component.

As an argument, the U.S. team referred to the Suspension Agreement's prohibitions. The only way to get round these bans - the redemption of the feed component by the U.S. federal government at the expenses of federal budget - was surely blocked by the first Vancouver principle (no side will subsidize another side).

Finally, the seventh Vancouver principle (the feed component will be paid only after its usage or selling) raised an uncertainty for near 40% of supposed earnings for the Russian LEU-from-HEU. Even more, the Americans obtained the legal right to postpone the payment for the feed component until the final date of HEU-LEU agreement, in other words, until 2013. This forced Russia to seek for alternate routes and to contribute her share in the forming of new superstructures over the initial intergovernmental agreement.

So, what was the final architecture of the HEU-LEU deal?

To be continued

SOURCE: AtomInfo.Ru

DATE: May 05, 2007

Topics: NFC, Russia, USA