INDIANS ASK ABOUT URANIUM

C O N F I D E N T I A L SECTION 01 OF 02 TASHKENT 001514

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/20/2017
TAGS: PREL ENRG PARM IN UZ
SUBJECT: INDIANS ASK ABOUT URANIUM

Classified By: CDA Brad Hanson for reasons 1.4 (b) and (d).

Action Request - Para 4.


1. (C) Charge met with Indian Ambassador Skand Ranjan Tayal
at the latter's request August 17 to discuss potential
supplies of uranium to India. Tayal mentioned the Government
of Uzbekistan (GOU) in 2004 had discussed selling uranium
yellow cake to India, but nothing had come of these
discussions. Tayal cited several provisions of the completed
U.S.-India nuclear cooperation agreement in which the United
States agrees to assist India in obtaining reliable and
uninterrupted access to uranium fuel supplies for its civil
nuclear sector. He handed Charge a nonpaper noting that
U.S.-based NUKEM, Inc. has had exclusive rights to market
Uzbek uranium internationally since 1992, an arrangement that
will last until at least 2013. (Note: NUKEM has exclusive
rights through 2013 to sell uranium mined only at the Navoi
site. End note.) Tayal stated he had not discussed possible
uranium sales with the GOU, but rather was doing research.
The nonpaper (text below) seeks information regarding the
terms of NUKEM's agreement with the GOU and whether recent
deals reported in the press between the GOU and Japan and
South Korea involve NUKEM.


2. (C) Charge responded NUKEM, under contract with the GOU,
has been the exclusive marketing agent for Uzbekistan's
uranium abroad. However, Charge added he understood in
recent months the GOU and NUKEM have been discussing changing
their agreement to allow other marketing agents. Tayal
commented that it is a seller's market for uranium these days
with world prices so high. Asked where India bought most of
its uranium now, Tayal responded Russia, France, and, in the
past, China. He added India had a couple small indigenous
sources of uranium it was working hard to exploit. Charge
said he would bring Tayal's request for information to the
Department, but that much of what the Indians are asking for
is business privileged information for which Post would need
authorization to share.


3. (C) Comment: We find it interesting that the Indians are
citing provisions of the U.S.-India agreement despite the
fact that neither country's legislature has yet ratified the
agreement. Tayal mentioned as an aside that the agreement
has run into a little trouble in the Indian Parliament
because the Communist Party has chosen to make it a
"political issue." Although never saying so directly, Tayal
implied several times that India is thirsty for a dependable
supply of uranium, leading us to suspect that India may have
tasked its embassies in uranium producing countries to look
into potential supply sources. Post has, or could likely
easily get, all of the information Tayal asked for, as
NUKEM's Tashkent representative usually is willing to talk to
us. We are hesitant to pass this information to the Indians,
however, without NUKEM's consent since some of it may be
considered business privileged information. Our inclination
is to suggest to Tayal that the Indian Embassy talk to NUKEM
directly.


4. (C) Action Request: Post requests Department's guidance on
how forthcoming/activist we should be in responding to the
Indian Ambassador's request, given the recently concluded,
but not yet ratified, bilateral agreement on civilian nuclear
energy cooperation.


5. (SBU) Begin text of nonpaper:

1) Since 1992, the American company NUKEM Inc. has had
exclusive rights for the international marketing of uranium
produced at the Novoi Mining and Metal Combine plant (NMMC).

2) This agreement was reportedly extended in the year 2004 up
to 2006 and was further extended in 2006 until 2013.

3) Uzbekistan has reportedly signed an agreement in September
2006 with ROK for the supply of 300 tonnes of uranium ore
concentrate annually to South Korea for the period 2010-2014.

4) Uzbekistan has reportedly signed an agreement with Japan
for supply of 30 tonnes of low enriched uranium via trading
company Itochy Corp.

The following questions arise:

i. What are the provisions of the latest agreement between
NUKEM Inc. and Uzbekistan?

ii. Whether NUKEM still has exclusive rights to market Uzbek
uranium would wide (sic)? If yes, is there any limit about

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annual quantity commitment to NUKEM?

iii. Is Uzbek uranium being supplied to Japan and ROK
directly by NMMC or through NUKEM?

iv. Will NUKEM have any claim on uranium produced from new
Uzbek mines which might operate in the future?

End Text.
HANSON