Russia's Tenex targets 40% market share by 2030

02 July 2015

Russia expects to increase its share of the global market in products for the front-end of the nuclear fuel cycle by 10% in the next 15 years, thanks to the integrated nature of Rosatom's subsidiaries, according to the head of Techsnabexport (Tenex).

Tenex general director Ludmila Zalimskaya said the uranium enrichment company could not only draw on its 40-year history, but also work closely with uranium miner ARMZ and nuclear fuel manufacturer TVEL.

"The sum contribution of each company will lead us to the desired result - a market share of 40% by 2030," Zalimskaya said in an interview with Russian news agency Ria Novosti on 29 June. Rosatom published a transcript of the interview on its website.

"In many ways, Tenex determines Rosatom's presence on the world uranium market, since the sale of enriched uranium product and uranium enrichment services for reactors built with foreign technology has been our main activity for more than 40 years," she said, adding that this market is "the most competitive and, incidentally, the most capacious".

To increase its market share, Tenex will - in addition to its main contract-based work with energy companies - "bring about a series of strategic projects that include alliances with foreign suppliers of nuclear fuel cycle products," she said.

Asked about the potential for increased competition from Areva and Urenco, and from China, she said: "If a few years ago, manufacturers using gas centrifuge technology for uranium enrichment had a significant competitive advantage, then today, technological capabilities have evened out and, along with the traditional factor of security of supply, new instruments to enhance competitiveness have become more popular."

One such instrument is Tenex's potential to offer "an integrated product" covering the entire nuclear fuel cycle, she said, which will interest countries developing nuclear power programs for the first time, as well as those with nuclear power generation already, but which lack the technology and experience for the management of used nuclear fuel.

"We are also, of course, using the natural advantage of our geographical location, near to production-resource bases, and to customers in different regions of the world. In general, we don't believe at the moment that the balance of power in the market will change significantly in the near term. As for China's expansion plans in the foreign market, we are closely monitoring the situation," she said.

Economic situation

Asked how the effect of a difficult economic situation in Russia on some of Rosatom's projects had impacted her company, she said: "Tenex operates in the western market, bringing Rosatom up to half of its annual foreign currency revenue. In that sense, the economic situation in the country has to some extent even had a positive impact on the results of our operations - last year, the devaluation of the rouble significantly increased the company's income in rouble terms, and this was fully passed on to Rosatom to finance its industry-wide programs and projects."

Certain difficulties do exist for Tenex's business, she said. They are not linked to the Russian economic situation, but to "post-Fukushima syndrome".

"A number of countries have refused to implement programs to build nuclear power plants, while others have reduced the pace of construction. As a result, demand in the world market for goods and services has decreased and prices have fallen. As an example, the market price of separative work units (SWU) has fallen from $155 per SWU in March 2011 to $85/SWU today. This certainly complicates our work," she said.

At the same time, the post-Fukushima "crisis" has brought new opportunities.

"In such circumstances, the demand for complex products and integrated offers, including services at both the front and back end of the nuclear fuel cycle is growing. And here we have, thanks to the tremendous technological potential of the Russian nuclear industry, opportunities that are much greater than those of some of our competitors," she said.

Tenex's export contracts last year were worth more than $2.1 billion and its revenue in the global market increased by 10%, exceeding $2.2 billion. But to understand its export performance, Zalimskaya said it is necessary to take into account the "duration of industrial and commercial cycles peculiar to nuclear power", meaning long-term contracts concluded for ten years or more.

"This means that [financial] performance is to a large extent determined by the results of contract-based work in previous [accounting] periods, as well as by operational changes to the company's current activity. Regarding the outlook for 2015, I will only say that the results are likely to exceed those of last year."

At the end of 2014, the total volume of Tenex's portfolio of long-term orders is estimated to be nearly $23 billion dollars. It has completed 51 deliveries of uranium products to customers in 17 countries - 14 from the Americas, ten from Europe and 13 from the Asia-Pacific region, the Middle East and Africa.

Zalimskaya said: "Of course, we are not restricted to the current geography of our supplies and we aim to expand into new markets. We thus signed a long-term contract with Enec from the United Arab Emirates. Companies from any country planning to develop nuclear power are potential customers for us."

She also described business following the amendment to the 1992 Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation initialled in November 2007 by the US Department of Commerce and Rosatom. Within the limits set by that agreement, Tenex has signed more than 20 contracts with US utilities for the supply of enriched uranium product with a total value of just under $6 billion.

"All our contractual obligations are being met on time and in full. As of May of this year, we had used more than 85% of the limits for 2014-2020. One can say that we have pretty much realized the opportunities provided by the amendment," she said.

New route

In 2012, Tenex embarked on trials to fine-tune the operation of a new uranium product transport route to the Far East via Primorye Territory's Vostochny Seaport. Last November, for example, it shipped material intended for use in producing fuel for nuclear power plants to South Korea. The shipment was overseen by Vostochnaya Stevedoring Company - the largest provider of container transhipment services in Russia's Far East. Other companies involved in the shipment included Tenex subsidiaries SPb Izotop and Тenex-Korea Co, in collaboration with ASPOL Baltic Corporation and Federal State Unitary Enterprise SPb Emergency/Technical Centre.

"We see the Asia-Pacific market as one of the most promising and so optimization of transport and logistic schemes for the delivery of products to customers in this region will strengthen our competitiveness. To date, seven trial shipments of enriched uranium have been carried out to Japan and South Korea, including for our customer in the UAE - Enec," she said. "This year, we are moving to a regular export schedule for shipments of enriched uranium through Vostochny Seaport and next year our plans include opening the Far East route for receiving imported goods from Asia-Pacific countries."

This new transport route has reduced the number of transit points, as well as the delivery time for uranium products to Japan and South Korea to three to four weeks, she said, compared with two or three months using traditional routes through the USA.

Regular use of the Far Eastern corridor will open up prospects for the transport of nuclear materials to Japan and South Korea through Russia, Kazakhstan and Europe, she said. "A number of our foreign partners have shown interest in this."

Researched and written
by World Nuclear News