KAZAKHSTAN: ULBA METALLURGICAL PLANT SECURE AND

UNCLAS SECTION 01 OF 02 ASTANA 002126 SENSITIVE SIPDIS STATE FOR SCA/CEN, ISN, H FOR SENATOR RICHARD LUGAR E.O. 12958: N/A TAGS: PGOV PINR ENRG EINV OREP KNNP KZ SUBJECT: KAZAKHSTAN: ULBA METALLURGICAL PLANT SECURE AND SUCCESSFUL REF: ASTANA 1867 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: Poloff met on September 10 in Ust-Kamenogorsk with several officials from the Ulba Metallurgical Plant, Kazakhstan's leading uranium production enterprise, to discuss the company's business plans. Ulba is trying to increase its international cooperation, especially with Russia, Japan, and China. Ulba's management also remains focused on maintaining the safety of their highly-secure facility. END SUMMARY. FROM TOP SECRET TO ISO-CERTIFIED ¶3. (SBU) Located in Ust-Kamenogorsk, in East Kazakhstan oblast, the Ulba Metallurgical Plant -- originally a top-secret Soviet uranium production facility -- is currently one of the world's largest producers of fuel for nuclear power plants. In addition to uranium, the plant also produces beryllium and tantalum byproducts. Ulba advertises that its facility was certified in 1999 by General Electric to supply uranium dioxide ceramic powder to the U.S. market and was ISO certified in 2000. Ulba maintains that since leading global companies such as General Electric, Westinghouse, AREVA, NFI, and MNF certify its uranium dioxide powders and fuel pellets, its products are among the highest quality in the world. Ulba invested $4 million over the last four years to develop lower-cost and more effective uranium production techniques. Ulba, which is one of the largest enterprises in the world capable of processing a full production-cycle of beryllium and tantalum, also announced plans to begin a five-year $20 million investment program to improve its tantalum production line. SEEKING MORE COOPERATION WITH RUSSIA, CHINA, AND JAPAN ¶4. (SBU) Poloff met on September 10 with two Ulba officials and one from Kazatomprom, majority owner of Ulba, to discuss Ulba's role in Kazakhstan's efforts to become a leading producer of uranium products. The meeting took place on the margins of a Global Initiative (GI) exercise conducted at Ulba (see reftel). Kazatomprom Deputy Security Director Victor Pshenichniy, Ulba Security Director Roman Nadtochniy, and Ulba Nuclear Materials Control and Accounting Director Yevgeniy Yasko underlined to poloff that Ulba has been very successful commercially and plans to continue to grow its 
scope of business. The three officials emphasized that Ulba is seeking cooperation with international partners, especially with Russia, China, and Japan. ¶5. (SBU) Pshenichniy reminded poloff that Kazakhstan does not currently enrich uranium, despite the fact that the country has some of the world's richest deposits of uranium. Thus, while Ulba produced highly enriched uranium (HEU) during the Soviet period, the bulk of the plant's current production involves turning lowly enriched uranium (LEU), imported into Kazakhstan from Russia, into fuel pellets for nuclear power facilities. The Ulba and Kazatomprom representatives hinted that they hoped cooperation with Russia would open up new business opportunities, but did not clarify whether this would take the form of more LEU fuel pellet production or production of other uranium products. (NOTE: Kazatomprom, majority owner of Ulba, is a partner in two uranium enrichment projects with Russia, both located in Angarsk, Russia: the International Uranium Enrichment Center and the Russian-Kazakh Uranium Enrichment Center. Analysts suggest that Kazatomprom may gain added value for its uranium exports from this cooperation. Russia, on the other hand, ASTANA 00002126 002 OF 002 would like to gain guaranteed access to Kazakhstani uranium deposits, which are the second largest in the world. END NOTE.) Other areas of Ulba's cooperation with Russia include the production of high-precision equipment through Ulba subsidiary Mashzavod LLP and the production of hydrofluoric acid through Ulba Fluorine. ¶6. (SBU) Regarding cooperation with China and Japan, Ulba has a Chinese joint venture called Yingtan Ulba Shine Metal Materials Company Ltd., and also sells aluminium-beryllium master alloys through its subsidiary, Ulba-China Company Ltd. On its website, Ulba advertises its cooperation with Japanese companies NFI and MNF, as well as with General Electric Japan Ltd. PLANT REMAINS SECURE ¶7. (SBU) All three officials emphasized that Ulba's main achievement has been avoiding any nuclear smuggling incidents as a result of its excellent physical security and accounting procedures. IAEA inspectors conduct a thorough annual inspection of the plant, especially the uranium production process. Poloff personally observed that the Ulba facility was, in fact, shut-down, ostensibly for an IAEA inspection, during the GI exercise. HOPES FOR NUCLEAR COUNTER-TERRORISM CENTER ¶8. (SBU) Pshenichniy, an ethnic Russian with a Ministry of Defense background who has over 17 years of experience in the nuclear security field, stated that he is deeply worried about the potential for nuclear terrorism and that his goal is to establish a nuclear counter-terrorism center in Kazakhstan before he retires. For detailed information on Ulba's security, Pshenichniy occasionally deferred to Yasko, a "rising star" within Ulba's bureaucracy. Yasko, an ethnic Russian who spoke excellent English, had previously been to the United States on a training program for several months. Yasko was very willing to talk about Ulba's prospects with poloff, and expressed genuine appreciation for the Nunn-Lugar Cooperative Threat Program, explaining that much of Ulba's state-of-the-art security system is based on U.S. equipment provided through the program. HOAGLAND