The U.S. Court of International Trade struck down a 112-percent antidumping duty on Russian uranium in a ruling on a suit brought by Tekhnabexport on October 28. Although the Russian atomic fuel producer will not have access to the American market for two more months under the court's decision, it makes it possible then to deliver Australian uranium enriched in Russia to the U.S., where the market has been closed since 1991.
Federal Atomic Energy Agency (Rosatom) head Sergey Kirienko announced on Friday that Tekhnabexport won its suit against the U.S. Department of Commerce in U.S. court, where it challenged the legality of antidumping duties on the import of Russian-produced low-enriched uranium (LEU) into the U.S. Kommersant has learned that the decision was made by the court on September 26. Two days were required for the official formulation of the ruling. The court ordered the Department of Commerce to define the scope of the antidumping procedure and exempt Russian LEU uranium from it.
The antidumping investigation that led to the prohibitive 118-percent duty on Russian low-enriched uranium was imposed in 1991, when cheap uranium from Russia caused prices on the world market to collapse. In 1994, Russia and the U.S. signed an intergovernmental agreement that HEU (highly enriched uranium) from Russian nuclear weapons be processed into LEU for delivery to the U.S. through 2013. Forty-four percent of the 103 atomic energy plants operating in the U.S. run on fuel received on the HEU-LEU contract.
Combined with the antidumping duty, the agreement meant that delivery of low-enriched uranium was effectively prohibited supplies of LEU in excess of the HEU-LEU quota. All uranium that appeared on the American market as a result of the HEU-LEU contract was bought by the U.S. government's executive agent, USEC. USEC, which had sales of $1.85 billion and net profits of $106 million in 2006, was privatized in the 1990, but was a state agency when the contract with Russia was signed. Rosatom sources say, however, that Russia receives $400-800 million per year in income on the contract – obviously, the delivery price is substantially below market prices.
Deliveries of uranium under the HEU-LEU contract amount to 23.5-24 million lbs. of uranium oxide per year. A pound of uranium sells for about $85 on the spot market now. Over the summer, that price hit $138. Russia sells LEU under the HEU-LEU contract at a fixed, non-market price. No exact price information about the supplies has been made public. Tekhnabexport estimated when it filed suit in 2006 that $1.1 billion in profits were lost because of the antidumping measures. Taking into account price growth on the world market, calculations made by Kommersant and experts in the nuclear industry indicate that the sum increased to $1.9 billion this year. According to data published on the USEC website, Russia was paid $4.6 billion for uranium supplies under the HEU-LEU contract between 1994 and 2006. The full cost of the contract is $7.6 billion.
Kirienko declared the court's decision “a great victory for Rosatom both legally and politically.” The removal of the 118-percent duty, which, as Tekhnabexport noted this summer, was profitable for Russia to pay at certain times, creates the opportunity for Rosatom and Tekhnabexport companies to supply uranium to the U.S. at market prices. USEC has just begun building its own enrichment plant, which is expected to be operational at full capacity by 2012. In 2013, the HEU-LEU contract expires and USEC and Tekhnabexport will be competitors. Until then, the Russian company will remain the market leader in enrichment.
Enforcement of the court's decision will not give Russia full access to the American market. After Russian fuel uranium is removed from Commerce Department antidumping list, the lack of an agreement between Russia and the U.S. on the peaceful use of the atomic energy may become an obstacle to deliveries. Usually, trade in atomic energy plant fuel is carried out as part of an agreement of that type. The HEU-LEU contract takes the place of such an agreement now, but it does not envisage supplies outside of its bounds. Kirienko stated that the situation needs to be settled through negotiations “in order not to break into the market by force but operate under conditions that are normal for both sides.”
In two months, Tekhnabexport's window on the U.S. market opens. At the beginning of this month, Russian President Vladimir Putin signed a new agreement on the peaceful use of atomic energy with Australia. Rosatom is in negotiations on the enrichment of Australian uranium. Preliminary negotiations are underway on the purchase by Russia of 4000 tons of uranium per year from Australia. Australian uranium enriched in Russia could easily find its way onto the U.S. market, since uranium enrichment services are also being removed from the antidumping list.
In any case, the decision of the U.S. court is a step toward opening the U.S. market to Russian suppliers. Kommersant has learned that the court's decision was unexpected at the Commerce Department, and the agency intends to appeal the decision to the U.S. Supreme Court.
Federal Atomic Energy Agency (Rosatom) head Sergey Kirienko announced on Friday that Tekhnabexport won its suit against the U.S. Department of Commerce in U.S. court, where it challenged the legality of antidumping duties on the import of Russian-produced low-enriched uranium (LEU) into the U.S. Kommersant has learned that the decision was made by the court on September 26. Two days were required for the official formulation of the ruling. The court ordered the Department of Commerce to define the scope of the antidumping procedure and exempt Russian LEU uranium from it.
The antidumping investigation that led to the prohibitive 118-percent duty on Russian low-enriched uranium was imposed in 1991, when cheap uranium from Russia caused prices on the world market to collapse. In 1994, Russia and the U.S. signed an intergovernmental agreement that HEU (highly enriched uranium) from Russian nuclear weapons be processed into LEU for delivery to the U.S. through 2013. Forty-four percent of the 103 atomic energy plants operating in the U.S. run on fuel received on the HEU-LEU contract. Combined with the antidumping duty, the agreement meant that delivery of low-enriched uranium was effectively prohibited supplies of LEU in excess of the HEU-LEU quota. All uranium that appeared on the American market as a result of the HEU-LEU contract was bought by the U.S. government's executive agent, USEC. USEC, which had sales of $1.85 billion and net profits of $106 million in 2006, was privatized in the 1990, but was a state agency when the contract with Russia was signed. Rosatom sources say, however, that Russia receives $400-800 million per year in income on the contract – obviously, the delivery price is substantially below market prices. Deliveries of uranium under the HEU-LEU contract amount to 23.5-24 million lbs. of uranium oxide per year. A pound of uranium sells for about $85 on the spot market now. Over the summer, that price hit $138. Russia sells LEU under the HEU-LEU contract at a fixed, non-market price. No exact price information about the supplies has been made public. Tekhnabexport estimated when it filed suit in 2006 that $1.1 billion in profits were lost because of the antidumping measures. Taking into account price growth on the world market, calculations made by Kommersant and experts in the nuclear industry indicate that the sum increased to $1.9 billion this year. According to data published on the USEC website, Russia was paid $4.6 billion for uranium supplies under the HEU-LEU contract between 1994 and 2006. The full cost of the contract is $7.6 billion.
Kirienko declared the court's decision “a great victory for Rosatom both legally and politically.” The removal of the 118-percent duty, which, as Tekhnabexport noted this summer, was profitable for Russia to pay at certain times, creates the opportunity for Rosatom and Tekhnabexport companies to supply uranium to the U.S. at market prices. USEC has just begun building its own enrichment plant, which is expected to be operational at full capacity by 2012. In 2013, the HEU-LEU contract expires and USEC and Tekhnabexport will be competitors. Until then, the Russian company will remain the market leader in enrichment.Enforcement of the court's decision will not give Russia full access to the American market. After Russian fuel uranium is removed from Commerce Department antidumping list, the lack of an agreement between Russia and the U.S. on the peaceful use of the atomic energy may become an obstacle to deliveries. Usually, trade in atomic energy plant fuel is carried out as part of an agreement of that type. The HEU-LEU contract takes the place of such an agreement now, but it does not envisage supplies outside of its bounds. Kirienko stated that the situation needs to be settled through negotiations “in order not to break into the market by force but operate under conditions that are normal for both sides.”
In two months, Tekhnabexport's window on the U.S. market opens. At the beginning of this month, Russian President Vladimir Putin signed a new agreement on the peaceful use of atomic energy with Australia. Rosatom is in negotiations on the enrichment of Australian uranium. Preliminary negotiations are underway on the purchase by Russia of 4000 tons of uranium per year from Australia. Australian uranium enriched in Russia could easily find its way onto the U.S. market, since uranium enrichment services are also being removed from the antidumping list. In any case, the decision of the U.S. court is a step toward opening the U.S. market to Russian suppliers. Kommersant has learned that the court's decision was unexpected at the Commerce Department, and the agency intends to appeal the decision to the U.S. Supreme Court.
Via: Kommersant|by Alena Kornysheva & Dmitry Butrin
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