Kazatomprom experiences delays in alternate uranium export route

State-controlled uranium producer Kazatomprom is experiencing delays as it seeks to deliver uranium to joint venture partner Cameco using an alternate route across the Caspian Sea that avoids land transit through Russia, the company said in a production update Oct. 26.

Speaking at a Nuclear Energy Institute fuel seminar in Las Vegas Oct. 18, CCO Askar Batyrbayev said the first shipment this year using the trans-Caspian route could be completed before the end of the year. However, the company warned in the Oct. 26 statement that it had experienced delays in exercising the route, and 2022 production forecasts were at risk if delays continued.

Kazatomprom is proposing the route as an alternative to moving U3O8 through Russian territory to the Port of St. Petersburg, where it has routinely been shipped to Europe and North America for decades.

There are no restrictions on using that transport route, Batyrbayev said, but shipping companies have hesitated to move products from St. Petersburg due to global sanctions on Russia in the wake of that country's Feb. 24 invasion of Ukraine.

The trans-Caspian route was established in 2018 "and used a lot for routine cargo," Batyrbayev said. The route connects production centers in Kazakhstan to the Kazakh port of Aktau, then crosses the Caspian Sea to Baku in Azerbaijan where it moves overland to the port of Poti in Georgia.

There, cargo is loaded onto ships that sail through the Black Sea and the Bosporus Strait to the Sea of Marmara and then the Aegean Sea and the Mediterranean.

The Kazatomprom official said the route has been qualified to ship class 7 material, which international rules define as radioactive material such as uranium. "It took a while for Georgia and Azerbaijan to understand how to manage nuclear materials," Batyrbayev said.

After using it in 2018 to make a delivery to Orano's conversion facility in France, the route has been used to make at least one shipment per year, Batyrbayev said.

No shipments from Inkai in 2022

Yet Canada's Cameco said in third-quarter earnings Oct. 27 that deliveries of its share of uranium production from the Inkai joint venture with Kazatomprom have been delayed this year as the Kazakh producer finalizes plans to use the trans-Caspian route.

Cameco and Kazatomprom jointly own the Inkai uranium operation, which produced 5.8 million lb in the first nine months of 2022, according to Cameco's earnings.

In the Oct. 26 update, Kazatomprom said the alternate route requires the use of chartered vessels in the Black Sea, and to be cost effective, cargoes must be consolidated. The first shipment of 2022 has been initiated and is at the port of Poti in Georgia, Batyrbayev said. The remainder of the cargo, which is material from the Inkai joint venture, is in transit to the port but has been delayed, Kazatomprom said in the production update.

"As it is the first time the TITR [trans-Caspian]-related jurisdictions are reviewing such [JV] arrangements, there is an elevated risk of transportation delays," the company said.

According to Batyrbayev's presentation slides, Kazatomprom is "currently ensuring that [the trans-Caspian route] has the capacity to potentially accommodate greater quantities for both Kazatomprom and its JV partners." In the update, Kazatomprom said its agreements with authorities in the countries through which this route passes were for only 3,500 mtU.

In addition to physical deliveries, "Kazatomprom maintains inventories at western converters and has the ability to negotiate swaps with market participants to help mitigate potential risks to Kazatomprom's deliveries to its western customers," Batyrbayev said in the slides.

Responding to a question, he said Kazatomprom would "definitely consider air transport, as long as freight costs are high enough." One issue with such shipments is "how much [uranium] a plane can carry," Batyrbayev said.

Two more alternate routes

The Kazakh producer said that it is now considering two more alternate routes for transporting uranium.

The first route follows the trans-Caspian route to Baku. Instead of moving overland to Poti, the route heads southwest through Turkey to the Port of Mersin on the Aegean Sea, potentially cutting down travel time. The company is speaking with Turkish officials about the potential to deliver material through that country, he said.

In the second, uranium would travel through Kazakhstan to the Alashankou Comprehensive Bonded Zone, a border crossing between China and Kazakhstan that has been proposed as a future trading hub by Chinese uranium officials.

"Talks are ongoing with China for a couple of years" to set up a land route from Alashankou through China to Shanghai and then on to other countries, Batyrbayev said.

Kazakh uranium has been shipped from Alashankou to Chinese conversion plants for some time.

"We have to be a little more patient," he told the NEI audience, noting that establishing the Shanghai route "is more challenging" than the trans-Caspian one.

The Shanghai route "will require a lot of legislative changes" to China's internal transportation regulations, he said. But China "has all the infrastructure" in place to support it, Batyrbayev added.

Separately, regarding Alashankou, the Kazatomprom official said a 3,500 mtU bonded warehouse to support the zone's establishment as a U3O8 trading hub has been completed. He said that by 2026 the warehouse will store more than 23,000 mtU, noting that the amount would total more than Kazakhstan's annual uranium production.