Kazakhstan uranium Bank
THE world suffers no shortage of uranium, the raw material for nuclear energy and nuclear weapons. The amount of electricity generated globally by nuclear power peaked almost a decade ago. And no reactors have ever been shut down because of a lack of fuel. Yet Warren Buffett has put the first $50m behind a $150m project agreed on August 27th to build a uranium bank in Kazakhstan, the worldās biggest producer of the mineral. It sounds like something a Bond villain might dream up, rather than a philanthropic American billionaire. What is the logic?
Though there has been a nuclear non-proliferation treaty since 1970, there is nothing to stop countries enriching uranium for civilian purposes. But from North Korea to Iran, questions are constantly asked about whether uranium-enrichment facilities built ostensibly to produce low-enriched uranium (LEU) for nuclear power are in fact thinly disguised bomb-making kits ā enabling the fuel to be spun into the more highly enriched forms used in nuclear weapons. For two decades the world has agonised over whether Iranās centrifuges were producing more of the uranium 235 isotope than was needed for nuclear power, posing a threat to the world. An international agreement in July to limit for 15 years Iranās level of enrichment to 3.67%āwell below the 90% required for weaponsāseeks to ease those concerns. LEU is available on the open market, but if supply unexpectedly dries up, the bank in Kazakhstan can act as a lender of last resort.
To ensure the fuelās safety and that it is distributed fairly when the bank opens in 2017, the bank will be owned by the International Atomic Energy Agency (IAEA), a global nuclear watchdog based in Vienna, but operated by Kazakhstan. Its uranium will be available only to IAEA members, and will contain 90 tonnes of LEU rather than the "weapons-grade" form. That is enough to power a 1, 000-megawatt reactor that could power a large city for three years. There is some symbolism to the bank being in Kazakhstan. The country says it was the site of 456 devastating nuclear tests when part of the former Soviet Union. It gave up its own nuclear arsenal in 2001, yet remains the worldās largest uranium producer. The bank will be located in the northeastern city of Oskemen, a centre for nuclear fuel production for 60 years.
No doubt, excuses to build more centrifuges will persist. Many countries ascribe international prestige to having uranium-enrichment facilities. Some, like Japan, have the capacity quickly to turn LEU into weapons-grade material. Rogue nations rail at the unfairness of being left out of the club of nuclear-weapon states. Moreover, no nuclear-power provider will need the bank's services imminently: the World Nuclear Association says uranium supply has expanded significantly in the past decade, prices have slumped, and reactors have become more efficient. Yet any country embarking on a civilian nuclear programme need only look at Russiaās stranglehold over gas supplies to Western Europe to appreciate the importance of having a secure LEU backstop. If the Kazakh bank helps to limit the number of centrifuges spinning around the world, it may be one of Mr Buffettās best investments yet.