The price of uranium extracted from Ukrainian mines has become significantly lower than the cost of its extraction.
The Ukrainian energy industry is based on nuclear power. On average, nuclear power plants: Rivne, Khmelnitsky, South Ukraine and Zaporizhzhia (before its occupation by Russia) generated more than 55 per cent of Ukraine’s electricity.
Before the armed invasion, Ukraine’s nuclear reactors ran on Russian fuel. Since the start of the war, however, the country has refused supplies of Russian fuel. Nevertheless, according to Petro Kotin, the head of the national energy company Energoatom, fuel reserves should be sufficient for five to six years.
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To avoid a shortage, Ukrainian nuclear reactors have been switching to American fuel. In September 2023, the first Westinghouse Electric nuclear fuel was loaded into one of the reactors at the Rivne nuclear power plant. According to the Ukrainian Ministry of Energy, a contract for the supply of the corresponding VVER-440 fuel assemblies was signed in September 2020.
However, Kazakhstan, Uzbekistan and Russia account for a large share of the commercial uranium imported by Westinghouse. The Russian company TVEL provides 12 per cent of its needs. It enriches uranium, forms fuel pellets and transfers them to the British plant Urenco, where they are placed in fuel assemblies.
Energoatom’s plans and state guarantees
This summer, Energy Minister German Galushchenko announced the possibility of increasing domestic uranium ore production and establishing cooperation with Westinghouse to produce reactor power for four nuclear power plants.
In May 2023, the Ukraine’s cabinet approved the country’s Energy Strategy for 2050, which plans to develop modern and safe nuclear generation and renewable energy sources. A month earlier, Energoatom signed a contract with Canada’s Cameco—which together with Brookfield Renewable Partners acquired Westinghouse for 7.88 billion US dollars in 2022— for the use of Ukrainian uranium mined at the Eastern Mining and Processing Plant to produce fuel for Ukraine’s nuclear power plants. Cameco will provide conversion of this uranium.
The holding undertook to provide 100 per cent of Energoatom’s needs in uranium hexafluoride UF6, which will be used in the production of nuclear fuel for Ukrainian VVER-1000 and VVER-440 reactors from 2024 to 2035.
Six reactors of the occupied Zaporizhzhia plant are not on this list, but (after de-occupation) supplies are envisaged for those as well. Ukraine also received a 192 million UK pounds loan guarantee from the UK government for uranium enrichment services in cooperation with Urenco.
The first shipment of Ukrainian uranium from the Eastern Mining and Processing Plant was loaded and shipped by Energoatom to Canada last month.
In early October 2023, Energoatom President Kotin and Cameco representatives visited the Eastern Mining and Processing Plant. The Canadians familiarised themselves with uranium ore mining and its processing at the hydrometallurgical plant, and assessed the possibility of increasing the production of uranium product and promised to help modernise the three existing shafts of the mine.
The state enterprise Vostochny GOK (VostGOK) is Ukraine’s only uranium ore producer, the largest in Europe, and is one of only 28 uranium mining centres in the world. Estimated ore reserves exceed 100 thousand tonnes.
However, energy experts are sceptical. One energy analyst, Hennadiy Ryabtsev, believes that in the near future, Ukraine will not be able to produce the necessary amount of ore for self-sufficiency in fuel. To increase production, investments are needed for exploration, modernisation of mining technologies, replacement of outdated equipment, logistics, and salaries for miners at the Eastern Mining and Processing Plant.
According to Ryabtsev, only 10 years of continuous investment will be enough for Ukraine to meet its own needs in mined uranium.
Over the past five years, however, the company has been on the path to bankruptcy. Strikes at VostGOK over delayed wage payments, which began in 2020, are still relevant today. As a result of the strikes, production of uranium oxide, the plant’s marketable product, has fallen several times.
For decades, VostGOK’s uranium production ranged from 800 to 1,000 tonnes of uranium concentrate per year. In 2022, it amounted to only 120 tonnes. According to official information, the debt of the mining and processing plant is 3.7 billion hryvnias, around 96 million euros.
The Ukrainian government has been trying to solve the problem for years. After VostGOK was transferred to Energoatom in 2021, Ukraine’s National Security and Defence Council decided to focus production on one mine, at Novokonstantinovskaya. The company’s other mines, Smolensk and Ingul, were planned to be closed within three years. Smolensk was closed in February 2023.
Several decisions of the National Security Council and the Decree of the President of Ukraine Volodymyr Zelensky on stimulating the exploration, production and enrichment of minerals of strategic importance for the economy and defence of Ukraine, signed in July 2021, did not affect the situation.
Why is uranium mining not profitable?
VostGOK’s unprofitability is due to the methodology used to determine the price of nuclear fuel and uranium oxide concentrate in the electricity tariff structure approved by the National Energy and Utilities Regulatory Commission. Electricity prices for the Ukrainian population are below market prices. The price of uranium extracted from Ukrainian mines using this methodology has become significantly lower than the cost of its extraction.
In addition, “The high cost of uranium mining in Ukraine is due to the peculiarity of the uranium deposit,” explains nuclear energy expert Olha Kosharna.
“Uranium is found in granite rocks, and it is extracted in granite mines by block leaching, which significantly increases the cost of the extracted products. In other countries, uranium is found in soft soils, and it is mined using the less expensive method of underground leaching.”
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