KAZAKHSTAN INTENSIFIES EFFORTS TO DEVELOP NUCLEAR

C O N F I D E N T I A L SECTION 01 OF 02 ALMATY 000602

SIPDIS

SIPDIS

DEPT FOR SCA/CEN (J. MUDGE),EUR/PRA (J. CONLON)

E.O. 12958: DECL: 02/14/2016
TAGS: MNUC PREL KZ
SUBJECT: KAZAKHSTAN INTENSIFIES EFFORTS TO DEVELOP NUCLEAR
INDUSTRY

REF: A. ALMATY 6


B. MOSCOW 932

Classified By: Ambassador John Ordway, reasons 1.4 (B) and (D).


1. (C) Summary: Kazakhstan plans to develop its nuclear
industry, from increased uranium production to nuclear power
generation. The topic has attracted a significant amount of
press coverage in recent weeks, primarily due to a joint
statement on cooperation issued by President Nazarbayev and
President Putin on January 25. The national atomic energy
company KazAtomProm recently signed an agreement with two
Japanese firms to develop a large uranium mine in southern
Kazakhstan. The GOK has established a working group to
identify the type of reactor and locations for a network of
nuclear power plants. Although Kazakhstani government
officials maintain that there are no plans to complete the
fuel cycle by developing enrichment capability, one
KazAtomProm official has said that his firm is studying
conversion and enrichment technology. End summary.

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Drum Beat for Nuclear Energy Grows
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2. (SBU) High level GOK discussion of development of
Kazakhstan's nuclear power industry has intensified since
former Minister of Energy and Mineral Resources Shkolnik's
comments in December 2005 (Ref A). President Nazarbayev
discussed possible collaboration with Russia during a meeting
with President Putin after the January 11 inauguration
ceremony (Ref B). The two leaders issued a joint statement
on January 25 in St. Petersburg regarding expanded
cooperation in the peaceful use of nuclear energy. Although
no details were released, on January 26 Kommersant reported
that cooperation with Kazakhstan would involve the joint
Russian-Kyrgyz-Kazakhstani uranium mining venture in
Zarechnoye, southern Kazakhstan. During a January 24 Cabinet
meeting, Prime Minister Daniyal Akhmetov said that delays in
pursuing nuclear energy had hampered industrial innovation
and development. He instructed the Ministry of Energy and
Mineral Resources (MEMR) to convene a working group and
present a proposal in the first quarter of 2006.


3. (SBU) Commercial collaboration on uranium production has
also grown in recent weeks. On January 23, the KazAtomProm
national atomic energy company signed a strategic partnership
agreement with the Japanese Sumitomo Corporation and the
Kansai Electric Power Corporation. The parties agreed to set
up a joint venture to develop the Mynkuduk uranium deposit in
southern Kazakhstan. KazAtomProm will own 65% of the new
joint venture, Sumitomo - 25%, and Kansai - 10%. Initial
investments will total approximately $100 million. According
to press reports, uranium production is expected to begin as
early as 2007, with production of 1,000 tons per year by

2010. The mine is expected to produce 18,000 tons of uranium
over a projected lifespan of 22 years. KazAtomProm director
Mukhtar Dzhakishev announced that KazAtomProm, which mined
4,300 tons of uranium in 2005, aimed to become the world's
biggest uranium mining corporation by 2010.

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KAEC Says No Plans for Enrichment
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4. (C) In a February 1 meeting with POEC Chief, Kazakhstan
Atomic Energy Commission (KAEC) chair Timur Zhantikin
confirmed that a governmental working group had been formed
to examine the nuclear energy question. Zhantikin indicated
that Kazakhstan was considering building a network of nuclear
plants, given the country's enormous size and the high cost
of energy transmission. Zhantikin stressed that no decisions
regarding locations or the type of reactor had yet been made.
He noted that the Candu reactor used natural uranium without
enrichment, which was an advantage; it needed heavy water and
produced a great deal of waste, however. The Westinghouse
AP600 was a good plan for an LWR using LEU, but had not yet
been constructed. Zhantikin also mentioned the RBMK graphite
reactor and a 350 MW Chinese LWR as candidates. He did not
indicate whether the GOK prefers a closed or open fuel cycle,
or whether reprocessing was under consideration.


5. (C) POEC chief, noting the numerous recent GOK statements
regarding the need for nuclear power and the importance of
exploiting Kazakhstan's uranium reserves, asked Zhantikin
what types of activities were under consideration. Zhantikin
stated that Kazakhstan had no plans to develop enrichment
capabilities, as the world market price for enrichment was

ALMATY 00000602 002 OF 002


falling and there were plenty of countries that already
possessed this very expensive technology. It would be
cheaper for Kazakhstan to have its uranium enriched abroad
than to develop the capability at home. POEC chief said that
the U.S. government has concerns about the spread of
enrichment technology, and would want to discuss any such
plans if the GOK's approach changed. Zhantikin noted that
the Ulba Metallurgical Facility could be used to produce fuel
pellets, depending on the type of reactor chosen and how many
will be built. If Kazakhstan ultimately builds only two or
three plants, it would make more financial sense to obtain
the fuel from Russia.

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KazAtomProm Examining Conversion and Enrichment Technology
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6. (C) Baurzan Duisebayev, head of KazAtomProm's Institute
of Advanced Technology (IAT),told a visiting DOE team on
February 3 that his institute was exploring technology
associated with uranium conversion and enrichment. IAT is
planning to establish five new laboratories in the near
future, dealing with nuclear materials and reactors;
tantalum; beryllium; fluorine technology; and general
physical research. In a 2004 meeting with the DOE team
Duisebayev had commented that any USG concerns regarding
Kazakhstan completing the fuel cycle would be completely
unfounded given the GOK's excellent record on
non-proliferation issues. (Note: Kazakhstan is a member of
the Nuclear Suppliers' Group, a party to the NPT, and has
signed but not yet ratified the IAEA Additional Protocol.
End note.)

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MEMR Stresses Adherence to International Norms
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7. (C) In a February 8 meeting with POEC chief, senior MEMR
advisor and long-time Shkolnik associate Dr. Tleuken Akhmetov
declined to provide details of planned nuclear collaboration
with Russia. Akhmetov indicated that more information would
be made public in the near future. He stressed that as
Kazakhstan is a member of the IAEA and NSG, all activity
would be conducted transparently and in complete conformity
with international norms.


8. (C) Comment: The increasing focus on development of
nuclear energy should not come as a surprise. Although
Kazakhstan is rich in energy resources such as coal and gas,
most sources are located far from population centers, and
distribution networks are poorly developed. The government
is also leery of building additional coal-fired plants that
would generate pollutants in excess of Kazakhstan's Kyoto
quotas. Development of Kazakhstan's extensive uranium
deposits and associated technology would also support the
GOK's top priority of diversification of the economy. Post
will continue to track this issue closely, particularly the
question of whether Kazakhstan is considering enrichment.
Secretary Bodman's possible March visit to Kazakhstan and/or

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the next Energy Partnership meeting will provide additional
useful opportunities to discuss the GOK's plans for its
nuclear industry. End comment.
ORDWAY