Uranium Market: Russia Wants on Top

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"Now, Russia can deal directly with U.S. uranium suppliers and utilities companies. . ."

On Tuesday, Russia's Techsnabexport (Tenex) signed a landmark agreement with U.S. utilities firm Fuelco worth a reported $1 billion. Tenex is the export branch of Russia's Federal Nuclear Energy Agency (Rosatom) and Fuelco is a conglomeration made up of Pacific Gas and Electric Co, Luminant and Ameren UE.

The deal will allow Tenex to supply uranium to U.S. companies from 2014 to 2020 in the first solely commercial uranium contract between Russia and the U.S.; it also follows a negotiated settlement in February 2008 between the two nations authorizing Russian uranium imports to the U.S. civil nuclear power industry.

The agreement represents a change in U.S. policy regarding Russia and nuclear proliferation, as well as signals Washington's readiness to accept its Cold War rival's role in the nuclear power market. Prior to this agreement, Russian uranium came into the U.S. under the "megatons to megawatts program" first enacted in 1993, which allowed Russia to sell surplus weapons grade uranium for U.S. civilian reactors.

Previous Washington legislation had prohibited Russia from dealing directly with U.S. utilities and forced Moscow to sell to the United States Enrichment Corporation (USEC). The USEC was once the import arm of the United States Department of Energy with a monopoly on Russian uranium; however, Washington sold the USEC to a private company. Since then, Russia has been voicing their discontent over being purportedly underpaid by USEC.

Now, Russia can deal directly with U.S. uranium suppliers and utilities companies while taking advantage of improving spot prices. "This is a revolutionary breakthrough," said Sergei Kiriyenko, the head of Rosatom. "We have broken through the wall forbidding us to sell Russian fuel to the American market. After the contracts signed today, we will start new contracts. This is only the beginning."

The deal has been in the works for several years now and its closing is welcomed by U.S. utilities. "We worked for over 5 years to make this happen. This fuel will provide energy for 5 million American homes," said Fuelco President Bruce Hamilton.

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