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Cablegate: Angarsk International Uranium Enrichment Center:

VZCZCXRO9825
PP RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHMO #5591/01 3340741
ZNR UUUUU ZZH
P 300741Z NOV 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5562
INFO RUCNCIS/CIS COLLECTIVE
RUEHII/VIENNA IAEA POSTS COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 MOSCOW 005591

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KNNP IAEA PREL RS
SUBJECT: ANGARSK INTERNATIONAL URANIUM ENRICHMENT CENTER:
MOVING FORWARD


Sensitive but unclassified; please protect.

Summary
--------

1. (SBU) Russia's plan to establish an international uranium
enrichment center in Angarsk (Siberia) -- which stems from a
Putin proposal made almost two years ago -- is moving
forward. Russian officials and experts are confident in the
ability of the Angarsk facility to handle increased demand
for enrichment services. Kazakhstan has signed on as a ten
percent owner. Russia is approaching other potential
partners and consulting on modalities with the IAEA. Embassy
has requested to visit the facility in December. End Summary.

Background: A Putin Initiative
------------------------------

2. (U) In January 2006, President Putin proposed the creation
of international uranium enrichment centers as a way to allow
countries pursuing nuclear power to have increased access to
nuclear fuel consistent with nonproliferation goals. In
September 2006, Rosatom announced plans for the establishment
of such a center at the Angarsk Electrolysis Chemical Combine
in Siberia, one of four uranium enrichment facilities
operating in Russia. The facility would operate under IAEA
safeguards and be open "to all IAEA member states which meet
nuclear arms non-proliferation requirements." Following the
signature of an intergovernmental agreement between Russia
and Kazakhstan, Kazatomprom agreed to assume a ten percent
ownership share of the Angarsk center.

TENEX: Looking For More Partners
--------------------------------

3. (SBU) On November 16, EST Counselor and DOE Moscow Office
Deputy Director met with Aleksey Grigoriev, General Director
of the state-owned uranium services company Tenex (which is
under the Atomenergoprom umbrella). Grigoriev's
responsibilities include serving as director of the Angarsk
international enrichment center project. Grigoriev
underlined to us that the Angarsk concept and the Global
Nuclear Energy Partnership (GNEP) shared common goals. He
said his main task as director of the Angarsk project was to
"turn Putin's words into reality." He reported good progress
toward that end, including recent moves to provide the
Angarsk center's headquarters in Moscow with dedicated staff
and budget. (Previously, he said, staff working on the
Angarsk project had been on loan from other offices.)

4. (SBU) Tenex currently holds 90% of the ownership of the
Angarsk center. Grigoriev told us Kazakhstan would likely
put up the money to cover its ten percent stake by the end of
the year. He noted that Kazakhstan may also provide supplies
of natural uranium for the center's operations. Grigoriev
emphasized to us that Tenex was actively holding talks with
other potential partners. He cited Armenia as the most
likely next shareholder. He listed Ukraine, South Korea,
Finland and Japan as among other prospects.

5. (SBU) Grigoriev told us that the equity stake for new
shareholders would come from Tenex's 90% share. The goal is
to take Tenex down, eventually, to 51%. Grigoriev confessed
that Tenex was still working out the center's business plan.
Tenex may, at least initially, subsidize the price of
enrichment services to attract clients. Clients of the
center do not necessarily have to become shareholders.
However, Grigoriev explained that shareholders would be first
in line for supplies and get a share of any profits.

IAEA/Nonproliferation Role Central
----------------------------------

6. (SBU) Grigoriev underlined the importance of the IAEA's
role. IAEA teams have been out to visit Angarsk. All
activities, including delivery and disposal of fuel, would
take place under IAEA safeguards. Russia and the IAEA would
guarantee supplies and services from the center as long as
the clients abide by IAEA requirements. Grigoriev said that
to advance nonproliferation goals, Russia understood that the
price for enrichment services had to be attractive. However,
at least as important for potential clients -- he cited
Vietnam or Indonesia as examples -- are guarantees from
Russia and the IAEA regarding supplies.

Capacity in Angarsk: Not a Problem
----------------------------------

7. (SBU) Grigoriev assured us that the Angarsk center has

MOSCOW 00005591 002 OF 002


ample capacity to meet projected demand. A variety of
experts with whom we have spoken in recent weeks -- including
nuclear scientists intimately familiar with the facility --
agree. Kurchatov Institute Vice President Nikolay
Ponomarev-Stepnoi told us that a major advantage of Angarsk
from a non-proliferation perspective is that it is an
existing national facility with spare capacity. He is
convinced Angarsk has sufficient capacity to meet existing as
well as projected demand for enrichment services. Nikolay
Laverov, Vice President of the Russian Academy of Sciences
(and a nuclear scientist), agreed that excess capacity at
Angarsk was more than sufficient to meet demand. If future
demand required, Laverov envisioned expanding capacity
through outside participation. Anton Khlopkov, Executive
Director of the Center for Policy Studies (PIR) told us he
understood plans were underway to triple the enrichment
capacity at Angarsk by 2015.

Comment
-------

8. (SBU) The Angarsk initiative underlines Russian leadership
in nonproliferation while opening up a potentially lucrative
market in nuclear fuel services. There is momentum behind
the project, although establishment of the center has likely
been slowed by Rosatom's ongoing reorganization. Embassy is
awaiting a reply from Rosatom on our request to visit the
site the week of December 17.
BURNS

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