China has the upper hand in the battle for nuclear fuel but is on the hunt for more.
China’s energy ambitions are setting off a new nuclear race with the U.S. and other major economies — this time to secure enough uranium to power its growing roster of reactors.
The world’s second-largest economy has long embraced nuclear power as part of its energy mix to help cut down its use of high-polluting coal. China already accounts for half of the new reactors installed globally in the past decade and has increased its nuclear power output by nearly fourfold during this period. It now has 58 operable reactors, with another 29 under construction.
Those plans mean China is set to surpass both the U.S. and Europe in installed nuclear capacity by 2030, according to a new report by the International Energy Agency. But they also mean the country’s annual demand for uranium is expected to almost double from 11,500 tonnes now to 21,000 tonnes by the end of this decade, according to projections by industry research firm UxC provided to The Wire China.
To ensure it has enough fuel for its nuclear program, China has stepped up its efforts to procure the metal. Data around uranium is slow to emerge, but China was already sitting on a massive stockpile of 132,000 tonnes of uranium in 2022, triple that of the United States, according to estimates by the World Nuclear Association. Since then, China has uncovered new domestic sources: Chinese state media reported the discovery of a substantial uranium deposit in the Ordos Basin in northern China in January. It has also tapped further into the reserves of uranium-rich countries like Kazakhstan and Namibia.
As a result, other countries with large nuclear programs are increasingly having to compete with China for resources.
“China is playing the long game when it comes to nuclear and uranium. They’re clearly looking a decade-plus down the road, making sure that it can acquire and maintain a supply of uranium,” says Jonathan Hinze, president of UxC. “And right now, the U.S. and other key markets such as France are way behind when it comes to securing supply for the long term.”
There are a number of steps in the nuclear fuel cycle. Uranium ore is first extracted from the ground and milled into a concentrate called yellow cake. It then goes through conversion and enrichment, before being fabricated into pellets which form the fuel rods that are loaded into a nuclear reactor’s core.
Uranium conversion and enrichment have been bottlenecks for Western utilities in recent years due to their reliance on Russia for these processes. China is largely self-sufficient in these latter stages of the cycle: Its Achilles heel instead lies in sourcing raw uranium ore. As early as the 2010s, Beijing set out a strategy to source more of the metal from a combination of higher domestic production, Chinese mining activities overseas, and international trade — with each accounting for one third of its supply.
On the domestic front, China has now identified some 2.8 million tons of uranium across its vast territory, according to an official evaluation of potential resources in 2022. The tricky part, however, is extracting the metal ore from the ground at a cost lower than the market prices, a process that is subject to geological constraints.
“You extract uranium when it makes economic sense, so it depends on very complex market factors,” says Yanliang Pan, a researcher at the James Martin Center for Nonproliferation Studies in California. “It’s just not something that can be dictated by policy.”
China’s ability to embed its minerals policy into its foreign policy has been the biggest driver of its success.
Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies
The cost factor might be why China’s uranium output has hovered around 1,800 tonnes for over a decade, accounting for only 3 percent of the global production in 2022, according to estimates by the World Nuclear Association.
And while China National Nuclear Corporation (CNNC), the leading Chinese nuclear utility, started constructing what will be the country’s largest uranium mining project in Inner Mongolia last July, it could take years before the results are reflected in China’s output figures.
Obtaining uranium from abroad has been more successful, thanks to two key relationships. China imported 17,841 tonnes of uranium last year from Namibia, in southern Africa, and central Asian Kazakhstan, where Chinese companies have invested in local mines, customs data shows.
“China’s ability to embed its minerals policy into its foreign policy has been the biggest driver of its success,” says Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies.
Chinese foreign minister Wang Yi made his first overseas trip this year a visit to Namibia, where Chinese companies have gained significant control over the country’s three operating uranium mines. CNNC owns a quarter of the Langer Heinrich mine and runs another mine at Rössing, in which it took a majority stake in 2019. Meanwhile China General Nuclear Power Corporation (CGN), another Chinese state-owned enterprise, formed a joint venture with a local company and took over the Husab mine from the Australian company, Extract Resources, in 2012. The Chinese ambassador to Namibia said in October that $5.1 billion has been ploughed into the project, the largest single Chinese investment in Africa.
Namibia is now seeking Beijing’s help to move the country up the nuclear value chain. “We want to add value to our uranium for the peaceful development of nuclear energy,” President Nangolo Mbumba told Wang during his visit.
China is active in Kazakhstan as well. In December, two Chinese companies bought stakes in mines operated by Kazatomprom, Kazakhstan’s national uranium producer, from their previous Russian owners for an undisclosed amount. Meanwhile, CGN Mining, a subsidiary of CGN, holds a 49 percent share in two of Kazatomprom’s uranium mining assets, which entitles the company to the same percentage of the offtake.
China is already Kazakhstan’s largest uranium buyer: Last year, it imported 11,337 tonnes of the metal from the country, according to customs data, equivalent to nearly half of Kazatomprom’s annual output. With these recent deals, that import volume may rise further.
“China has such a strong gravitational pull, given its proximity to Kazakhstan and its huge demand, that more uranium is going eastwards,” says Benjamin Godwin, partner at Prism Strategic Intelligence.
Rivalry among Chinese players has in part driven this aggressive expansion overseas. CGN and other Chinese companies have been forced to look for resources beyond the borders, says Pan, of James Martin Center, as the centrally-managed CNNC has a monopoly over fuel cycle activities in China.
“Externally, it might look like these Chinese state companies are beholden to the Chinese government, but internally, they are competitors commercially, so they want to secure their own independent uranium resources as much as possible,” Pan says. “And that’s where the overseas exploration or development of uranium deposits really comes in.”
Their growing footprint serves Beijing’s goals in energy security nevertheless — and is also rattling Western companies, which warn of a pending supply crunch.
“As more and more of Kazakhstan’s uranium goes to Russia and China, less of it is available to places like the U.S. or Europe,” says Hinze, of UxC.
I don’t think that there’s ever been a situation where there’s physically not enough uranium to keep reactors going because of the secondary market. But it could mean that American utilities pay more because they haven’t invested in security of supply.
Ian Hiscock, founder of consultancy MMC
“The risk is similar to the critical minerals industry in that Russia and China have significant control, through their commercial or political relationships, over uranium production around the world,” adds Godwin. “And the U.S., Canada, and Europe have to think very hard about what they can do to secure a more diverse supply.”
The Trump administration, for instance, had been negotiating a deal with Ukraine that could give the U.S. access to the country’s mineral resources, including uranium, although that deal appears now to be off the table following the public falling out between the U.S. and Ukrainian presidents last week. Trump also signed an executive order in January, instructing the U.S. Geological Survey to consider including uranium in its list of critical minerals.
The more difficult task, however, is restarting uranium production within the United States. Until these efforts can deliver, the U.S. may have to cope with high uranium prices, which reached a 17-year high last January before falling over the rest of the year.
“I don’t think that there’s ever been a situation where there’s physically not enough uranium to keep reactors going because of the secondary market,” says Ian Hiscock, founder of consultancy MMC. “But it could mean that American utilities pay more because they haven’t invested in security of supply.”
Correction: An earlier version of this story included an image of a coal plant in China, which had been mislabelled as a nuclear plant by the stock image supplier. Additionally, an image of Namibia’s Langer Heinrich mine had been mislabelled as the Rössing mine.
Source: The Wire China
