The Russian nuclear power company Atomstroyexport has been roundly criticized for helping Iran build its nuclear program. But neither that project nor the company’s mouthful of a name has hurt its business prospects.
A former branch of the Soviet atomic energy ministry, Atomstroyexport (pronounced atom-stroy-EXPORT) has been the Kremlin’s main instrument to meet rising global demand for nuclear power, now mainly from developing countries.
And Russia’s state company may just be the right kind of provider, willing to deal with governments that other nuclear power companies shun.
“We’re talking about a nuclear renaissance,” Sergei I. Shmatko, the chief executive of Atomstroyexport, said in a recent interview in the company’s headquarters in Moscow. “We are certain we have a market.”
Atomstroyexport is building seven nuclear reactors — in Iran, China, Bulgaria and India — more reactors, it claims, than any competitor, particularly Westinghouse and General Electric of the United States, Siemens of Germany or Areva of France.
Westinghouse, for example, has contracts for four new reactors in China, but has not begun work. It is a subcontractor or supplier at other sites, including six in South Korea, but is not the primary builder, a spokesman, Vaughn Gilbert, said in a telephone interview. Reactors designed by Westinghouse, however, remain the most prevalent in the world — 45 percent of currently operating reactors.
In raising capital and gearing up for new construction, the Russians are betting on an outlook that not everybody shares.
Regardless of what choices are made in America, Japan and Europe, which remain wary of new nuclear power plants, the world is poised for another boom in construction, reminiscent of the 1960s and 1970s, as one nation after another seeks alternatives to the fossil fuels that are a culprit in global warming.
Today, 26 power plants are under construction worldwide, in countries from Argentina to Romania, according to the International Energy Agency. Of these, only two are being built in developed economies — one each in Finland and Japan.
Still, some industry experts project that future demand will come from the developed economies, including the United States.
Steven C. Kerekes, spokesman for the Nuclear Energy Institute, representing owners and operators of nuclear plants in the United States, said he expected that utilities would build 30 reactors in the next 15 to 20 years. The United States now operates 104 nuclear reactors, more than any other country.
The Russians, meanwhile, are in talks with Vietnam, Malaysia, Egypt, Namibia, Morocco, South Africa, Algeria, Brazil, Chile and Argentina, according to Mr. Shmatko.
In a sign of the Russians’ reach into markets others might avoid, last month the Russian company opened negotiations for a research reactor in Myanmar, formerly Burma, a country ruled by a junta.
In Iran, critics say, the Russian company’s work on the Bushehr plant gives the Iranian government a justification to enrich uranium, which the United States says could also be used to make bomb-grade fissile material.
The Russians counter that the reactor itself is harmless if looked at separately from the effort to enrich uranium fuel. They say the site on the Persian Gulf complies with international treaties and does not contribute to nuclear proliferation.
But Atomstroyexport seems eager to rebrand itself as a modern corporation with global reach and interests — not merely as the supplier of nuclear expertise to Iran. Indeed, analysts of nuclear proliferation have not been easy on the company. Many say its narrow business interests have needlessly exposed the United States, Europe, Israel and possibly even Russia, too, to the risk that Iran may one day be able to build a nuclear bomb.
Mr. Shmatko said in the interview in his office that the $1 billion project no longer even appeared profitable to the Russians and his company, because of rising prices for stainless steel and a shortage of skilled labor in the nuclear industry. He suggested that it was a drag rather than a benefit for Russia’s nuclear business.
Yet the Iran contract is only a small part of the company’s global work and its expansive plans in the developing world.
Atomstroyexport hopes to win $5 billion to $10 billion in new business in the coming two years, Mr. Shmatko said.
In doing so, he said the company was shaking off Russia’s dark legacy of the 1986 Chernobyl disaster by convincing foreign governments of engineering advances in Russian designs since then. Mr. Shmatko said his company’s plant in Tianwan, China, is the first in the world to use a “core catcher,” a meltdown-control technology designed to trap the molten slug of uranium in a meltdown and prevent it from burrowing into the earth.
The company, he said, is also introducing a new design for emerging markets. It has a line of minireactors more typical of the power plants for nuclear submarines or ice breakers. They are sized to fit the limited capacity of ramshackle electricity grids in developing countries, he said.
Industrial reactors typically produce around 1,000 megawatts of electricity, enough to power a million American homes. Atomstroyexport says it will market reactors in the 300- to 600-megawatt range.
Indeed, with the potential profits at stake, Western investors, including such heavyweights as Citigroup, are seeking ways to bet on the Russian nuclear power industry.
Russia is pushing a business model that bundles nuclear fuel supplies with power plant construction contracts and that seeks to ensure that spent fuel — a potential ingredient for dirty bombs or fission weapons — is returned to Russia for storage.
“The world has no alternative but to develop nuclear energy,” Mr. Shmatko, a former accountant, said.
For now, investors can buy Atomstroyexport corporate bonds that were issued last month and attracted European and American investment houses. The Russian-registered subsidiary of JPMorgan, for example, bought into the $58 million offering, according to Atomstroyexport. A spokeswoman for JPMorgan said it had held only a “very short-term trading position” in the bond and no longer owned any Atomstroyexport bonds.
Subsidiaries of a related company, Tvel, which makes fuel rods, trade on Russian exchanges. Citigroup owns about 5 percent of the Priargunsk uranium mine that is part of the Tvel group, according to the mine’s Web site.
On May 31, Sergei V. Kiriyenko, a former prime minister and head of the Russian atomic energy agency, said the government planned to consolidate nuclear assets into a state-controlled holding — a sort of Gazprom of nuclear power — to be called Atomenergoprom. That company would incorporate not only Atomstroyexport and Tvel but also uranium mines and companies that make fuel rod assemblies and specialized equipment like gas centrifuges for enriching uranium. Subsidiaries will most likely be open to foreign investment, analysts say.
For Russia, the business of building nuclear power plants complements its business in fossil fuels. In fact, Russia’s business of maintaining Soviet-designed plants in Eastern Europe may get a boost as these countries worry about excess dependency on Russian natural gas from Gazprom and reconsider nuclear energy as an alternative.
Atomstroyexport’s exact ownership, meanwhile, is something of a mystery. Organized as a joint stock company, it is 50.2 percent owned, and clearly controlled, by the Russian government.
The rest of the shares, the company’s Web site says, are owned by “Gazprombank group companies.”
Marina V. Alekseenkova, an industrial analyst with Renaissance Capital in Moscow and an authority on publicly traded companies in the Russian nuclear industry, said that the phrasing shed little light on the private shareholders in the company, believed to be industry and government insiders.
And those already concerned about Russia’s role in the spread of nuclear technology should consider this: the Russian Atomic Energy agency is looking into developing floating reactors built on pontoons. The Russians envision a product that could be towed into ports in the developing world and hooked to the local power grid, for a fee.
“We are, generally speaking, the absolute monopoly here,” Russia’s first deputy prime minister, Sergei B. Ivanov, said of the floating reactors. “Nobody apart from us is able or knows how to build them.”
By ANDREW E. KRAMER
