EU Scrambles to Diversify Uranium Supply Away from Russia

• The EU imported 97% of its natural uranium in 2022, with Kazakhstan, Niger and Canada supplying over 74%.
• Russia accounted for 16.89% of EU uranium imports, down 16% from 2021 as the EU reduces energy dependence on Russia.
• Deliveries from Australia dropped 82% while Kazakhstan and Canada increased deliveries by 14% and 50% respectively.
• CIS countries supplied 47.47% of EU uranium, but non-CIS supply fell over 5%.
• The EU aims to diversify away from Russian VVER nuclear fuel, but still depends on Russia for 30% of enrichment services.

The European Union imported 97% of its natural uranium last year from overseas suppliers, with Russia still accounting for nearly 17% of total needs despite efforts by the bloc to wean itself off Moscow’s energy exports following the invasion of Ukraine.

Data published this week by the Euratom Supply Agency, which oversees the EU’s nuclear fuel supply chain, shows the EU’s urgency to find new uranium providers and reduce decades-long dependence on Russian nuclear fuel. While Russia’s share of EU natural uranium deliveries fell 16% last year, Moscow remains a key supplier of enriched uranium needed to fabricate fuel for reactors built by Russian state-owned company Rosatom.

The report lays bare the EU’s vulnerabilities in securing stable nuclear fuel supplies as the bloc turns increasingly to nuclear power to displace Russian gas and meet climate goals.

Top Uranium Providers

Kazakhstan was the EU’s top uranium provider last year, delivering 26.82% of the bloc’s total needs. The Central Asian nation has rapidly increased production thanks to low operating costs at its in-situ leaching mines.

Niger placed second with a 25.38% share, followed by Canada with 21.99%. Both countries boosted exports to Europe as the EU sought new long-term contracts to offset falling Russian volumes.

Australia, formerly the EU’s second-largest supplier, saw its share collapse 82% last year due to production problems at the Olympic Dam and Ranger mines.

While deliveries from Russia dropped in absolute terms, Moscow remains a major player in the global nuclear energy market due to its near monopoly in VVER fuel fabrication and enrichment services. Utilities operating VVER-440 and VVER-1000 reactors in Europe currently have no choice but to buy fuel from Russia due to licensing and technology restrictions.

Diversifying Away from Russia

To reduce dependence on Moscow, EU utilities with VVER fleets have been increasing inventory levels to bridge the gap until alternative fuel suppliers are qualified. This led to a 22% year-on-year increase in enrichment services delivered from Russia last year, highlighting the difficulty of substituting Russian nuclear fuel in the short term.

In July 2022, the Euratom Supply Agency signed a contract with a consortium led by U.S. company Westinghouse to develop fuel fabrication capability for VVER reactors in Europe. But such efforts will take years to bear fruit. In the meantime, EU utilities have no option but to continue purchasing Russian services to keep their VVER reactors online.

Russia currently supplies around 30% of the EU’s nuclear fuel enrichment needs. While domestic providers like Orano and Urenco are ramping up capacity, they are unable to fully substitute for Russia anytime soon.

A Challenging Outlook

The disruptions caused by Russia’s war on Ukraine will clearly make meeting the EU’s nuclear diversification goals more difficult. Not only will utilities need to find alternate fuel sources for Russian-designed VVER units, they will also have to compete with each other to secure new long-term natural uranium supply deals. With demand from nuclear newcomers like Poland expected to rise in coming years, this could place further upward pressure on already elevated uranium prices.

The Euratom report warned that clear policy decisions are urgently required at the EU and national level to address the bloc’s nuclear fuel supply vulnerabilities. Failure to act could hamper efforts to displace Russian gas with carbon-free nuclear generation and undermine energy security when it is needed most. The EU’s nuclear diversification drive comes as the bloc plans to label nuclear as a sustainable investment in its green finance taxonomy.

This could spur capital inflows to new build projects across Europe. However, developers may find it difficult to secure fuel supplies without significant government coordination.

There are also questions about the availability of enrichment capacity to meet rising demand. With the EU reluctant to invest directly in new enrichment plants for non-proliferation reasons, there are concerns over future supply bottlenecks. The Euratom report made clear that while the EU has made progress in reducing reliance on Russian natural uranium, the bloc remains heavily dependent on Moscow for value-added nuclear fuel services and technology.

With the EU now getting over 25% of its electricity from nuclear, securing reliable fuel supplies from diverse sources is becoming a strategic imperative. Failure to do so would undermine energy security and the push towards carbon neutrality. The good news is high prices and policy support are stimulating new production outside Russia. However, the EU will require a coordinated strategy encompassing trade, industrial policy and diplomacy to align fuel demand with supply.

This will be no easy task given the complex geopolitics of the global nuclear market. However, the urgency has never been greater as the EU seeks to navigate the energy crisis while maintaining progress towards its climate goals.