It was reported this week in the Boston Globe that President Barack Obama, as part of a broad nuclear arms reduction initiative, will call for the creation of an international supply house for uranium that will be open to nations that want to pursue peaceful nuclear power projects, but denied to anyone wishing to make a bomb.
While not specifically aimed at nuclear “rogues” Iran or North Korea, the idea is obviously meant to put to the test their claims, at least in Iran’s case, that their nuclear ambitions are entirely peaceful.
According to an unnamed administration official quoted in the story, “What we can do is create a system of incentives where, as a practical matter for countries that want nuclear power, the best way to obtain their fuel and to handle fuel services is through a new international architecture.”
The good news for this proposal is that the uranium industry is already relatively centralized and tightly controlled. According to the World Nuclear Organization, there are only 18 countries that produce sizable quantities of uranium, with the top three — Canada, Kazakhstan and Australia — producing over 60 percent of the global supply.
Likewise, the top four companies that mine uranium — Rio Tinto (UK/Australia), Cameco (Canada), Areva (France) and KazAtom Prom (Kazakhstan) — all belong to countries that have signed on to the major non-proliferation protocols. The top 10 mining companies account for 87 percent of production. However, in terms of actual nuclear fuel production for peaceful purposes, there are only four tightly regulated entities currently doing it commercially — one each in Russia, the U.S. and France, plus an Anglo-Dutch consortium.
The problem for the president’s proposal comes further down the nuclear supply chain. As I mentioned last month, the sub-Saharan country Niger, also one of the world’s top suppliers, has been experiencing a decades-long insurgency precipitated in part by Taureg tribesmen who want a 30 percent share of revenue coming out of foreign (mostly French) mining operations. In addition, the president of Niger recently announced he would like to stay on for life, an extra-constitutional move that can only create additional instability. The odds of some “yellowcake” slipping out of Niger (as was alleged prior to the Iraq War), is not negligible. And the more Niger slips into political instability, the higher the chances for something like this happening.
Likewise, it was recently alleged in Israeli intelligence reports that Venezuela and Bolivia, two countries that don’t even make it onto the World Nuclear Organization’s list of suppliers, have been passing uranium over to Iran.
From a purely economic point of view, controlled supplies generally mean higher prices. On a more practical level it should be noted that uranium happens to be one of the most ubiquitous of elements. It is literally found everywhere, even though large concentrations of extractable ore are only to be found in the countries previously mentioned.
From an inspection point of view, spy satellites can easily detect activity around any large-scale mining operations involving ore removal. There is, however, a growing trend towards in situ techniques that leech uranium from the ground without the need for digging huge, visible holes in the earth. Any country that wanted to produce uranium in the least detectable way possible would have this option available.
There is no way that the supply of uranium ore can be totally controlled. And with the technology for enrichment widely available, President Obama’s proposal, while worthy, is unlikely to achieve its objective. Diplomacy and deterrence would seem to be a more effective path. Trying to corner the market would undoubtedly enrich a few players in the global nuclear industry, but would only embolden the nuclear black marketeers who already have many supply points and a growing list of eager customers.