Naubet Bisenov in Almaty -

The Kazakh government is shelving plans to construct nuclear power plants, despite the country being the world’s largest producer of uranium, because the economic slowdown has decreased electricity consumption.

Falling uranium prices have also forced Astana to abandon, albeit temporarily, plans to invest in covering the full nuclear fuel cycle, in which it would turn uranium the country produces into fuel usable in nuclear power stations.

Kazakhstan operated the world’s first fast breeder reactor from 1973 and started decommissioning it in the late 1990s. Since then the government has cherished the idea of building nuclear plants to utilise some of uranium it produces.

But Kazakhstan’s economic growth is expected to decelerate to 1.5% in 2015 against 4.3% in 2014 and 6% in 2013 because of the low price of its main export item, oil, and the slowdown in its main trading partners, the EU, China and Russia.

The consumption of power has fallen because of the subsequent decrease in consumption by industrial enterprises, and power-saving and efficiency measures by enterprises and households. As a result, according to Kazakh Energy Minister Vladimir Shkolnik, Kazakhstan now has 2,000 MW of excess generation capacity. Kazakhstan’s installed power-generation capacity is estimated at 20,000 MW, but it utilises only about three-quarters of it at the moment.

The country has identified two sites feasible for the construction of nuclear power plants, one jointly with Japan’s Toshiba and the other with Russia’s Rosatom: the town of Kurchatov in the former Semipalatinsk nuclear testing ground, and the settlement of Ulken on Lake Balkhash.

However, the construction will now depend on the development of the country’s power-engineering sector and the needs of the economy, Shkolnik told a news conference during the Kazenergy forum, held in Astana on September 29-October 1.

He explained that the government was analysing the electricity balance in the country until 2022 and expressed the hope that the analysis would clarify the country’s demand for electricity.

“In line with a blueprint for developing a green economy, 3% of power generation will come from renewable [and clean] sources by 2020, 10% by 2030 and 50% by 2050 and this takes into account the construction of nuclear power plants,” Shkolnik said.

As the world’s No 1 producer of uranium with more than 28,200 tonnes in 2014 and the location of a fifth of the world’s global reserves, it makes sense for Kazakhstan to utilise and consume some of the stuff it produces instead of just shipping it for export.

This fact had also encouraged the Kazakh government to make plans to cover the full nuclear fuel cycle in the country. These plans envisage building facilities to convert uranium oxide, U3O8, to uranium hexafluoride, UF6. But, again, the changing economic reality is forcing the government to abandon these plans as they have become economically unviable.

 “We extract uranium and process it into high quality U3O8. We can make yellowcake and uranium pellets,” Shkolnik said in response to bne IntelliNews’s question. “We don’t yet produce fuel elements but we have signed corresponding agreements with China to produce these elements and are [working on] building a plant [to produce fuel elements] in Kazakhstan on the basis of French technologies.”

The country has been enriching uranium it produces at the International Centre for Enriching Uranium in the faraway Russian Siberian town of Angarsk since 2007. The facility has an annual capacity to enrich 6,000 tonnes of Kazakh uranium. “This is sufficient for 30 1,000MW reactors for many years,” the Kazakh minister brags, but admits that Kazakhstan still lacks the capacity to turn yellowcake into pure uranium hexafluoride (UF6) gas used in enrichment operations in the country.

“We haven’t so far got conversion [capacity] but we are working with the Canadians on a project to build a [conversion] plant. Taking into account global trends we need to find such an economic mechanism to make full nuclear fuel cycle profitable,” Shkolnik explained.

Uranium prices have fallen nearly 75% from a peak of about $135 per pound in 2007 to around $37 per pound. “This means the full cycle for the sake of full cycle is nonsensical if we spent budget funds to [subsidise] it,” the minister said.