KAZAKHSTAN: DEPUTY SECRETARY OF ENERGY'S BILATERALS

UNCLAS SECTION 01 OF 03 ASTANA 001886 SENSITIVE SIPDIS STATE FOR SCA/CEN, ISN, EEB E.O. 12958: N/A TAGS: PARM PGOV PREL ECON MNUC KNNP KZ SUBJECT: KAZAKHSTAN: DEPUTY SECRETARY OF ENERGY'S BILATERALS EMPHASIZE NON-PROLIFERATION AND PEACEFUL NUCLEAR DEVELOPMENT ASTANA 00001886 001.2 OF 003 REFTEL: ASTANA 1814 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: Deputy Secretary of Energy Daniel Poneman discussed cooperation on counter-proliferation and peaceful nuclear energy production with several of Kazakhstan's most influential non-proliferation policymakers during his October 6-8 visit to Kazakhstan. Poneman and his delegation, which included representatives from the Department of Defense, Department of State, and the National Security Council, met Sauat Mynbayev, Minister of Energy and Mineral Resources; Vladimir Shkolnik, Director of Kazatomprom; and Timur Zhantikin, Director of the Kazakhstani Atomic Energy Committee. The delegation toured the decommissioned BN-350 reactor in Aktau and inspected the remaining 300 metric tons of spent-fuel -- which contains enough plutonium and highly enriched uranium to fabricate 775 weapons of mass destruction -- which the United States and Kazakhstan are preparing to ship to a secure storage facility. Deputy Secretary Poneman's interlocutors thanked the U.S. government for its assistance in securing nuclear materials, and asked for increased cooperation to enhance nuclear safeguards and facilitate commercial developments in the nuclear industry. END SUMMARY. SECURING SPENT-FUEL AT BN-350 REACTOR CONTINUES ¶3. (SBU) On October 6, the Deputy Akim of Mangystau Oblast, a Vice Director of the Mangystau Atomic Energy Company (MAEC),and the BN-350 nuclear reactor Plant Director led Deputy Secretary Poneman on tour of the reactor, which the United States decommissioned in ¶1999. In addition to the reactor itself, they saw the spent fuel storage area and the casks of spent fuel that will be loaded for transportation to a secure site for up to 50 years of safe storage. MAEC's BN-350 representatives demonstrated the U.S. technology used to ensure physical security at the BN-350 facility. Due to the long history of U.S.-Kazakhstani cooperation at the site in Aktau, the atmosphere throughout the visit was positive and upbeat. Poneman's interlocutors thanked the United States for "its tremendous help on all aspects of decommissioning BN-350" and proudly discussed plans to build a new (non-plutonium -producing) reactor on the BN-350 site to produce nuclear energy and desalinate water for Mangystau Oblast -- as BN-350 once did. ¶4. (SBU) MAEC and BN-350 officials also gave the delegation a guided tour of the U.S.-funded $3.35 million sodium processing facility (SPF). Once the government of Kazakhstan completes a planned geo-cement stone facility, the SPF will be used to process radioactive sodium for safe storage in cement blocks fabricated in the geo-cement stone facility -- the final step in the safe disposal of waste from the nuclear reactor. KAZATOMPROM WANTS TO SELL URANIUM TO U.S. COMPANIES ¶5. (SBU) Vladimir Shkolnik, President of Kazakhstan's National Atomic Company, Kazatomprom, met the delegation in Almaty on October ¶7. Shkolnik -- a nuclear physicist and former director of BN-350 with close relationships with U.S. officials from his prior tenure as the Minister of Industry and Trade -- said the United States and Russia are Kazakhstan's leading partners in nuclear non-proliferation. Appearing friendly and relaxed throughout the meeting, Shkolnik expressed disappointment that Kazatomprom does not supply uranium to any U.S. companies, and advocated for an event to introduce U.S. and Kazakshtani nuclear companies to one another. CRADLE-TO-GRAVE FUEL CYCLE ¶6. (SBU) In response to Poneman's comments that the international commercial nuclear sector should provide fuel assurances to compliant members of the Nuclear Non-proliferation Treaty, Shkolnik welcomed the concept as a necessary prerequisite to the expansion of the nuclear energy industry. He replied jokingly that Kazakhstan "cannot refuse" to cooperate with the United States on the development of a reliable system of fuel assurances. Shkolnik told ASTANA 00001886 002.2 OF 003 Poneman that, as a physicist, he is convinced that the closed nuclear cycle, which generates no waste, is the future. Therefore, re-fabrication should be considered as one element of the proposed "cradle-to-grave" fuel assurance cycle. GLOBAL NUCLEAR ENERGY PARTNERSHIP ¶7. (SBU) Poneman proposed that U.S. and Kazakhstani experts continue to discuss such issues over the next few weeks and on the margins of the October 23 Global Nuclear Energy Partnership (GNEP) Ministerial in China. (COMMENT: Kazatomprom's President said he would be in China on October 15, but he appeared unfamiliar with GNEP. Kazakhstan is a member of the GNEP, but Ministry of Energy and Mineral Resource officials told PolOff that Kazakhstan has not participated actively over the last year. END COMMENT.) NO PROGRESS ON NUCLEAR FUEL BANK ¶8. (SBU) Concerning Kazakhstan's offer to create a nuclear fuel bank, Shkolnik said although the fuel bank would be feasible for Kazakhstan, the government has not initiated negotiations with the International Atomic Energy Agency (IAEA). Shkolnik said Kazakhstan -- number one in uranium output this year -- possesses both the technology and the uranium resources to host the bank. According to Schkolnik, "for us, an international nuclear fuel bank is just a derivative from our production." Shkolnik concluded by stating that Kazakhstan's decision to renounce its nuclear weapons allows it to serve as a good example to other countries -- and a good host for a fuel bank. KAZATOMPROM SEEKS COOPERATION ON BUILDING SMALL REACTORS ¶9. (SBU) Kazatomprom's President, a well-known advocate of nuclear power, affirmed that Kazakhstan plans to build a nuclear reactor at Aktau. He explained that since the electric grid in Mangystau cannot accommodate a high-capacity reactor, Kazakhstan is considering constructing two 300-megawatt reactors. Shkolnik said that Kazatomprom, which sees a need to develop reliable small to medium-size reactors in Southeast Asia, Africa, and South America, is considering expanding into this new commercial arena. Poneman suggested that DOE and Kazatomprom experts discuss potential cooperation in the development of small, modular reactors -- an area in which DOE already has significant experience. ONLY 20 KILOGRAMS ¶10. (SBU) When asked about DOE's project to down-blend highly enriched uranium (HEU) from the experimental reactor at the Institute of Nuclear Physics (INP),Shkolnik -- a former director of the INP -- quickly told Poneman "this project is not in my jurisdiction." Kazatomprom's President nonetheless remarked, "the supply of HEU for the INP reactor is only 20 kilograms of uranium, and it is very important for Kazakhstan to have new low enriched uranium fuel that will enable research." KAZAKHSTAN SEEKS COOPERATION ON NUCLEAR DEVELOPMENT AND SAFEGUARDS ¶11. (SBU) On October 8, Timur Zhantikin, another nuclear physicist well-known to U.S. officials and Director of Kazakhstan's primary regulatory body in charge of nuclear physical security, thanked the United States for cooperation on the BN-350 and INP projects. Zhantikin reiterated Shkolnik's call to cooperate on the physical security of small nuclear reactors. Zhantikin said the Kazakhstani Atomic Energy Committee (KAEC) is working to produce nuclear isotopes for medicines and develop a research center for biophysics and nuclear medicine at INP. Deputy Secretary Poneman expressed interest in potential cooperation in these fields. ¶12. (SBU) Poneman also told Zhantikin that the United States would like to discuss fuel assurances and Kazakhstan's nuclear fuel bank proposal, and that liability protection is an important pre-requisite for civil nuclear cooperation. Zhantikin confirmed that Kazakhstan plans to ratify the convention on liability ASTANA 00001886 003.2 OF 003 protection this year, but said Kazakhstan has not been considering any other liability-related conventions. Zhantikin, Kazakhstan's highest-ranking delegate to this year's U.S.-Kazakhstan energy partnership working group on atomic energy and nuclear security, said he had already discussed -- and reached basic agreement with U.S. delegates -- on next steps for U.S.-Kazakhstani cooperation on nuclear safeguards (reftel). KAZAKHSTAN RELUCTANT TO GIVE UP HEU ¶13. (SBU) Poneman told Zhantikin that the U.S. government would like to proceed with the down-blending of the bulk HEU at the INP reactor as soon as possible. Zhantikin explained that the INP project consists of several stages: design of the reactor to use low enriched uranium (LEU) fuel instead of highly enriched uranium (HEU) fuel, verification of its operability, and down-blending of the remaining HEU after the new LEU fuel is qualified. When asked about "de-linking" fuel qualification from HEU down-blending, Zhantikin admitted that the Kazakhstani government is not yet convinced that the new fuel will work. Poneman promised further explanation and evidence that the new fuel will work. Zhantikin also admitted that Kazakhstan's possession of HEU may be perceived as "a political problem," but reiterated that the INP's bulk HEU is protected under strict nuclear safeguards. Zhantikin also asserted that HEU is less efficient for production of isotopes. He proposed the introduction of a tariff -- or other market mechanism -- on HEU-produced isotopes to compensate for the efficiency losses faced by Kazakhstan and other countries utilizing LEU. According to Zhantikin, such a proposal would use market forces to promote nuclear non-proliferation. Alternatively, Zhantikin suggested nuclear certification "licenses," "just as companies are rewarded with ISO certifications for compliance with industrial standards." ENERGY PARTNERSHIP PROMOTES COOPERATION ¶14. (SBU) COMMENT: Poneman's interlocutors on non-proliferation issues -- in Aktau, Almaty and Astana -- praised U.S.-Kazakhstani cooperation and asked for collaboration on small and medium-sized reactors and nuclear safeguards. Shkolnik and Zhantikin, both scientists who were part of Kazakhstan's former nuclear program, are anxious to help Kazakhstan build a strong, peaceful nuclear program and reluctant to give up Kazakhstan's supply of bulk HEU until new LEU fuel is qualified. Kazakhstan's influential nuclear policymakers want to ensure that the new LEU fuel will work before down-blending the bulk HEU. By signing the October 8 Joint Statement and Action Plan in the context of the 6th U.S.-Kazakhstani Energy Partnership, the United States reiterated the importance the U.S. government attaches to a partnership which has promoted, and we hope will continue to promote, nuclear security and peaceful nuclear development. END COMMENT. HOAGLAND