Ukraine is one of the world’s largest users of nuclear power. Ukraine has 15 operable reactors rated at an aggregate 13.2 MWe, and the Eastern European nation has relied on nuclear for between 46% and 51% of their grid for the past 10 years. Last year, reactors powered 47% of the grid in Ukraine. Only France, Belgium and Slovakia relied on nuclear more than Ukraine did.
One of the Ukraine’s most important stated objectives is to increase energy independence from Russia. Ukraine requires approximately 5.2 million pounds of uranium each year to keep their reactors operating at capacity. However, currently Ukraine depends on Russian imports for two-thirds of that fuel supply. Is it because they don’t have the uranium? Absolutely not. According to the OECD, Ukraine has over 230 million pounds (one of only twelve countries to have over 100,000 tonnes). In fact, perusing Soviet geological survey documents shows that there is much more than that. Studies show that there are several multi-hundred-million-pound deposits, all at the very respectable grade of 0.1%. A conservative estimate might be 1 billion pounds economic at $130 per kilogram (today’s long-term price), and much more at higher prices. Yet, the Ukraine only mines 1.8 million pounds per year. For reference, Kazakhstan mines over 40 million pounds per year.
Ukraine has plans to build 13 more reactors, meaning their uranium needs will increase significantly over the next 15 years. What could be the reason for Ukraine’s lack of production, when all the signals suggest that they should be producing much more than they do? The answer is two-fold:
Firstly, Ukraine’s infrastructure is in a decrepit state. The nation itself is not wealthy – suffering badly after it separated from the Soviet Union. Their GDP per capita is ranked 133 out of 227 sovereign nations by the CIA. Ukraine has less wealth than countries such as El Salvador, Dominican Republic, and Tunisia. It has been reported that ninety-five percent of the nation’s energy infrastructure urgently requires replacement, but there is no capital in the national treasury for these upgrades. The country has not invested properly in technical training, so they find themselves with little or no technical expertise.
Secondly, corruption is still rampant in Ukraine. Uranium mining companies of all kinds have been through the Ukraine trying to take advantage of the vast deposits. Not one single foreign company has invested in Ukrainian uranium deposits – western or otherwise. What has kept them away so far? It is the certainty that they will be sucked down into an endless spiral of bribes that never actually achieve anything. All the uranium deposits are owned by the state, and not the oligarchs. At least with the oligarchs, there is a chance of making one fantastically large payment – usually in cash delivered in a suitcase – and having the deal over and done with. But with the state, there is an endless chain of bureaucrats, each seeking a non-stop flow of smaller payments, making promises that are never kept, until they are either reassigned or disappeared.
There is an immense opportunity for uranium companies, and the Ukraine, to benefit significantly from these rich uranium deposits. But the rule of law must be established, and it must be strictly enforced before anyone will consider doing business in the Ukraine.