Kazakhstan’s low-enriched uranium (LEU) bank launched at Ulba Metallurgical Plant in Oskemen, eastern Kazakhstan, on August 29.

In an attempt to secure and safeguard last resort fuel supplies for nuclear power stations around the world, the International Atomic Energy Agency (IAEA) and Kazakhstan in 2015 signed an agreement to build the bank that will hold a reserve of LEU, the fundamental ingredient of nuclear fuel.

The bank is a physical reserve of up to 90 tonnes of LEU suitable for making fuel for a typical light water reactor. It has been clear from the beginning that the bank is to act as a last-in-the-chain supplier to IAEA member states and thus cannot distort the commercial market.

IAEA members will have the opportunity to "draw" low-enriched uranium at market prices if fuel supplies to a nuclear power plant are disrupted "due to exceptional circumstances." The goal is to discourage nations from allocating time and money to nuclear-enrichment technologies development, which could lead to weapons-grade level uranium purification. At the same time, the bank is aimed at deterring countries from trying to acquire uranium illegally.

The bank will "provide countries investing in nuclear power an assured supply of fuel to use for peaceful purposes without incurring the significant costs of building their own enrichment facilities and without adding to global proliferation risks," the US-based Nuclear Threat Initiative (NTI) said in a statement.

“The bank is part of global efforts to create an assured supply of nuclear fuel to countries in case of disruptions on the open market or of other existing supply arrangements for LEU,” the IAEA said in June 2015.

The bank will be governed under Kazakhstan’s legal and regulatory standards but will be fully managed and operated by the IAEA. The LEU bank will be "the first of its kind not to be under the control of any individual country," NTI noted. While Russia has operated an analogous bank since 2010, the Kazakhstan’s LEU bank will be the first one to be fully owned and operated by IAEA, though Kazakhstan will be responsible for the bank’s security.

The bank is exclusively funded by voluntary contributions – donors have provided $150mn to establish and operate the bank for at least 10 years. The US, United Arab Emirates, European Union countries, Kuwait and Kazakhstan have contributed $100mn to the project, while US investor Warren Buffett provided $50mn. It is expected to become fully operational in September 2017, after IAEA approval.

The bank is being established after four years of heavy lobbying from Kazakhstan. In terms of its political significance, the bank project is being used by the Kazakh authorities to strengthen the country’s image in the international arena by positioning the Central Asian country as a key element in ensuring the global security of the nuclear fuel cycle.

Hosting the bank is also aimed at gaining additional security guarantees for the country squeezed between two nuclear powers – Russia and China.