Russian Uranium Mine May See Chinese Investment

Russia and China will jointly construct the uranium mine in Russia’s Zabaikalsky Krai territory, thanks to an agreement between Russia’s state nuclear agency Rosatom and the Russia-China Investment Fund for Regional Development (RCIF), which was signed in Moscow on March 12.

"Both sides consider the project as the first step in widening cooperation. I think that the project is a breakthrough for creating mechanisms for joint investments in general," said Sergei Glazyev, Russian presidential adviser on regional economic integration.

Founded in 2017, the RCIF focuses on domestic and international project financing, including in nuclear power, infrastructure, logistics and new technologies. The fund's main investors are the biggest public and private companies of the People's Republic of China, including China National Nuclear Corporation (CNNC).

The CNNC will invest more than 16 billion rubles (about $281.4 million) into the new uranium mining project over the course of the next year. In return, the CNNC will get 49 percent of the joint venture and 600 tons of uranium annually, which is a half of the production capacity of Mine Number 6 at the site. RCIF is expected to invest 2.5 billion rubles (about $43.9 million) into the 18.5 billion rubles ($325.3 million) project.

Maxim Khudalov, Head of ACRA Corporate Ratings Group, believes that the new uranium mining site, which is expected to go into operation by 2023, will repay Chinese expenditures over a period of seven years. According to Khudalov’s calculations, 600 tons of uranium is planned to be delivered to China annually, which is valued at $29.5 million.

Development of Mine Number 6 began since 1980 but 10 years later it was mothballed. Prior attempts at reopening the mine went up in smoke because of a lack of financing; even Russia’s state-run Vnesheconombank could not allocate the needed investment. The development of the Argun and Zherlov deposits at the mine with the export reserves of 38,000 tons of uranium has vivid importance, however.

According to forecasts, the reserves of the deposits, which are developed now in Krasnokamensk city of Zabaikalsky Krai to create electrical energy, will be wasted by 2022. If the new uranium mine not to be developed by that time, the 55,000 persons population of Krasnokamensk city will have to move from their homes.

According to the VivaReit ranking, Russia ranks third in world's largest uranium reserves, after Australia and Kazakhstan, holding 9.15 percent of the world's uranium reserves, which makes about 487,200 tons of uranium. Despite the size of the country and the large uranium reserves in Russia there are only seven deposits, and almost all of them are located in Zabaikalsky Krai.

Although the country annually produces 3,135 tons of uranium, the volume does not fully meet Russian energy needs, especially after sanctions because of the conflict in Ukraine. Therefore, Russia imports uranium from mainly its neighboring Kazakhstan.