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Ulba Metallurgy Plant

Location: Ust-Kamenogorsk
Subordinate To: Kazatomprom
Size: N/A
Facility Status: Operational

Known as Mailbox 10 until 1967, the Ulba Metallurgy Plant was established in 1949.[1] Ulba produced low-enriched uranium fuel pellets used in half of the fuel fabricated for Soviet-designed reactors. In recent years fuel pellet production has been somewhat reduced and the plant has also been converting uranium hexafluoride to powder for use at Western fuel fabrication facilities.[2] Ulba also produces beryllium and tantalum products,[3] superconducting niobium-titanium alloys,[4]and zirconium materials.[5] Ulba is reportedly able to process any type of uranium-containing materials, including fuel assembly by-products.[6] During the Soviet era, Ulba produced HEU fuel for the secret Alfa submarine program[1] and participated in the development of fuel for nuclear-powered satellites.[7]In November 1994, approximately 600kg of weapons-grade uranium was removed from Ulba to the United States under Project Sapphire.[8]Ulba currently has the capability to process HEU into low-enriched uranium (LEU), suitable for use in nuclear power plant fuel.

Ulba receives low-enriched uranium from two Russian enterprises: the Angarsk Electrolytic Chemical Combine and the Electrochemical Plant in Zelenogorsk.[9] Production stages include treatment of the supplied enriched uranium material, transformation of UF6 into UO2, and manufacture of UO2 pellets; quality control is performed at all stages. The content of U-235 in the pellets ranges from 1.6% to 4.4%.[10] The UO2 pellets are sent to fabrication facilities in Elektrostal (Moscow Oblast) and Novosibirsk, where they are made into fuel rods and assemblies.[9] Ulba officials hope to increase uranium fuel production at the plant to 90% of capacity by 2012 and to become self-sufficient by creating a full nuclear cycle.[16]

In a jointoperation involving Kazatomprom and the Nuclear Threat Initiative that began in 2001, 2,900 kg of 26% enriched nuclear fuel was transferred from Aktau to Ulba to be blended down to non-weapons usable forms of uranium for use in commercial and scientific activities. The project involved several steps: Nuclear workers in Aktau loaded onto rail cars fresh HEU fuel assemblies designed, but never used, for the BN-350 reactor. The fuel assemblies were transported Ulba, where security upgrades had been installed to permit HEU storage. A blend-down line and additional security upgrades to allow HEU processing were designed, licensed, and installed at Ulba to carry out the operations. Costs of the project, approximately $2 million, were shared equally between NTI and Kazatomprom. The IAEA applied safeguards during transport, commissioning, and downblending. The facilities constructed at Ulba to blend down the BN-350 HEU fuel will remain operational and will be used in the future to eliminate other weapons-usable uranium, including the downblending of HEU fuel stored at the Institute of Nuclear Physics in Alatau.

As of January 2000, 90% of the shares in the Ulba Metallurgy Plant were managed by Kazatomprom.[11] In order to solidify its relationship with Russian companies, Kazatomprom agreed to exchange 34% percent of Ulba's shares with TVEL for shares in three Russian companies involved in the nuclear fuel cycle: Priargunskiy Mining and Chemical Association Joint Stock Company, the Novosibirsk Chemical Concentrate Plant, and the Chepetsk Mechanical Plant.[12,13,14] In response to concerns of the Russian Ministry of Atomic Energy, Ulba's bylaws were changed to allow the temporary issuance of "golden shares," which give TVEL veto powers over major policy changes.[15] For more information on the share exchange, see the entries below from 7/6/98, 6/12/99, and 12/27/99. At a January 2006 meeting in Astana, Kazakhstan agreed to work out a plan by May 2006to integrate its nuclear industry, including Ulba, with Russia's.

Sources: 
[1] William C. Potter, "The 'Sapphire' File: Lessons For International Nonproliferation Cooperation," Transition, 17 November 1995, p. 14. 
[2] Boris Kuznetsov et al., "Implementation of Material Control and Accounting at the Nuclear Facilities in Kazakhstan," Partnership For Nuclear Security: United States/Former Soviet Union Program of Cooperation on Nuclear Material Protection, Control, and Accounting (Washington, DC: Department of Energy, September 1998), pp. 237-242. 
[3] "O kompanii," Ulba Metallurgy Plant Web Site, http://www.pjsc-ulba.com/. 
[4] A. Yu. Gagarinski, "Can Kazakhstan capitalize on its assets?" Nuclear Engineering International, December 1996, pp. 18-19. 
[5] "Nuclear Sites of Russia and the Newly Independent States of the Former Soviet Union," U.S. Department of Energy, September 1995, p. 50. 
[6] "O Natsionalnoy atomnoy kompanii Kazatomprom," Kazatomprom Web Site, http://www.kazatomprom.kz/About/rus.asp. 
[7] "Osnovnyye etapy razvitiya atomnoy promyshlennosti Kazakhstana," Kazatomprom Web Site, http://www.kazatomprom.kz/about/history/rus.asp. 
[8] U.S. General Accounting Office, "Nuclear Nonproliferation: Status of U.S. Efforts to Improve Nuclear Material Controls in Newly Independent States," GAO/NSIAD/RCED-96-89, March 1996, p. 14. 
[9] Elena Rubleva, " V Kazakhstane rossiyskaya FPG poluchila v upravleniye zavod po proisvodstvu yadernogo topliva," Finansovyye izvestiya, No. 60, 29 August 1995, p. 2. 
[10] Report done for NISNP, Kazakhstan Atomic Energy Agency, 7 July 1995. 
[11] "Kazatomprom poluchil kredit nemetskogo banka v razmere $25 mln," Interfax-Kazakhstan, 19 January 2000. 
[12] Kazakh Commercial Television, 17 December 1999; in "Russian-Kazakh Nuclear Fuel Cooperation," FBIS Document CEP19991220000020. 
[13] "Central Asia Investment Report," Interfax Investment Report of Central Asia and Caucasus for 20-26 December 1999, Vol. II, Issue 50 (57), 27 December 1999; in "Kazatomprom Intended to Swap Equity with TVEL Concern During the First Quarter of 2000," FBIS Document FTS19991227001322. 
[14] Nikolay Ivanov and Roman Zhuk, "Rossiyskiy yadernyy udar po amerikanskim interesam v Kazakhstane," Kommersant, 29 February 2000. 
[15] Oleg Khe, "'Kazatomprom' prokreditovan nemetskim bankom na $25 mln.," Panorama online edition, http://www.panorama.kz, 3 January 2000.
[16]Maria Golovnina, "Soviet nuke plant sheds secrets, thinks business," Reuters,23 August 2006.

Structure: The IAEA declared the Ulba plant to be one material balance area (MBA), divided into seven sub-MBAs: the VVER fuel processing line (the world's only production line dedicated to producing fuel for VVER -1000s); the RBMK fuel processing line; a laboratory; two storage areas; and a quality control area. All sub-MBAs housed uranium enriched to 4% U-235. Ulba also has a thorium storage area.
["Verification of Initial LEU Inventory Under Way at Ust-Kamenogorsk Plant," NuclearFuel, 31 July 1995, p. 6.]

MPC&A:
This site participates in the US Department of Energy MPC&A Program. Material accounting needs at the site were complicated by the introduction of IAEA safeguards at the site. Equipment installed in collaboration with US experts included scales, nondestructive assay systems, analytical chemistry equipment, an experimental barcoding system, and computers and software for inventory accounting.[1] Physical protection upgrades, including metal and nuclear material detectors, hardening of portals and access points, and installation of alarm and communications systems, were also performed.[2]

Sources:
[1] Boris Kuznetsov et al., "Implementation of Material Control and Accounting at the Nuclear Facilities in Kazakhstan," in Partnership For Nuclear Security: United States/Former Soviet Union Program of Cooperation on Nuclear Material Protection, Control, and Accounting (Washington, DC: Department of Energy, September 1998), pp. 237-242.
[2] "Department of Energy Nuclear Material Physical Protection Program in the Republic of Kazakhstan," in Partnership For Nuclear Security: United States/Former Soviet Union Program of Cooperation on Nuclear Material Protection, Control, and Accounting (Washington, DC: Department of Energy, September 1998), pp. 243-247.

Project Sapphire

On 21 November 1994, 581kg (1,278 pounds) of HEU was transferred from the Ulba Metallurgy Plant 20 miles outside of the northern Kazakhstani city of Ust-Kamenogorsk to the Y-12 plant at the Oak Ridge National Laboratory in Tennessee, in a highly secret project code-named "Sapphire." The project was initiated by President Nursultan Nazarbayev with the full knowledge of Russia, according to Kazakhstani Deputy Prime Minister Vitaliy Mette, in order to prevent the possibility of diversion by terrorists, or by any of the so-called nuclear threshold states near Kazakhstan. Government officials claimed that apart from the plutonium in missiles remaining on its territory, Kazakhstan no longer has any significant nuclear stockpiles. William H. Courtney, the US Ambassador to Kazakhstan, led the secret negotiations in cooperation with the Kazakhstani government and the US Departments of Defense and Energy.

The uranium, reportedly left over from the Soviet Union's secret Alfa submarine program, had been stored at Ulba in unsecured and unsafeguarded facilities, without electronic means of accounting. Instead, quantities were simply recorded by hand into books.

Experts estimate the uranium was sufficient to make 20-25 nuclear bombs, though it was said a "skilled bomb-maker" could have produced as many as 36. One estimate said the material was sufficient for up to 50 bombs. Kazakhstani experts maintained that only about 5 percent of the HEU was pure enough to be used for weapons, while the rest would have required further processing. Thirty-one technicians, led by Oak Ridge scientist Alex Riedy, went to Kazakhstan to repackage the uranium into 1,300 steel canisters for shipment by two C-5 transport planes from Kazakhstan to the United States. Empty canisters marked with Tehran addresses were reportedly found in the room next to the one where the uranium was stored.

The United States agreed to compensate Kazakhstan for the material, though the transaction was "not handled as a straight business deal." The US compensation to Kazakhstan, though undisclosed, was estimated at between $10 and $20 million, in both cash and in-kind assistance.[1-8] The compensation package was delivered by August 1997 and included the following: eight pursuit vehicles with radio and patrol lights; five mini-vans; eight light pick-up trucks; four buses with radios; 20 Nikon 35mm cameras plus lenses, flash assemblies and cases; 102 computers; 80 printers; 10 scanners; assorted software; 10 photocopiers; and medical supplies.[9] According to a 29 July 1996 Nuclear Fuel report, the US Enrichment Corp. (USEC) planned to sell LEU (on DOE's behalf) derived from the Kazakhstani HEU in mid-1997. After the material was shipped to DOE's plant, USEC hired Babcock & Wilcox Naval Nuclear Fuel Division to blend down the HEU. According to B&W, roughly 90% of the material was in the form of uranium mixed with beryllium and a binding agent; the rest was in the form of uranium oxide or metal. The average enrichment was 89-90%. Proceeds from the sale of the blended material were to go to the US Treasury.[10]

Defense Secretary William Perry said conditions for Project Sapphire may have been unique, and that there were no plans to carry out any further such transfers.[11]

At the time, Vitaliy Nasonov, then deputy chief of the Russian Ministry of Atomic Energy Information Department, indicated that the amount of HEU transferred to the United States from Kazakhstan could only have been about 167kg of tablets of uranium-235-beryllium alloy, and 27.4kg of uranium-235 dioxide powder-- which comes to a total of only 194.4kg. Possible military uses for the Kazakhstani uranium were dismissed, as Russian experts believe that only Russia and the United States are capable of producing a bomb from uranium-235 alloyed with beryllium. The 27.4kg of uranium-235 dioxide could only be converted into weapon-grade uranium after costly processing. Nasonov's claims are contradicted by both Kazakhstan and US reports.[12] For a US report on the material see "Sapphire Sampling Plan," Prepared by Oak Ridge Y-12 Plant (December 1994).

Sources:
[1] William C. Potter, "The 'Sapphire' File: Lessons For International Nonproliferation Cooperation," Transition, 17 November 1995, pp. 14-19.
[2] R. Jeffrey Smith, "Kazakhstan Site Had Lax Security," Washington Post, 24 November 1994, p. A52.
[3] "Kazakhstan Says Nuclear Deal Boosts Disarmament," Reuters, 24 November 1994.
[4] Jim Adams, "US-Kazakhstan Uranium Deal May Be One Of A Kind," Reuters, 24 November 1994.
[5] "Nuclear Bomb Fuel (sic) Cache Found In Kazakhstan," Reuters, 22 November 1994.
[6] Andrey Baganov, "Kazakhstan obogashchaet USA uranom," Nezavisimaya gazeta, 25 November 1994.
[7] Sergey Kozlov, "Uranovaya sdelka okazalas vesma vygodnoy," Nezavisimaya gazeta, 26 November 1994.
[8] Vladimir Nadein, "Besprimernaya uranovaya sdelka Kazakhstana i USA - kommertsiya ili POLITIKA?," Izvestiya, 25 November 1994.
[9] "Project Sapphire," Defense Threat Reduction Agency Web Site,http://www.dtra.mil/ctr/ctr_kazakhstan.html.
[10] Nuclear Fuel, "USEC Slated to Sell Sapphire Material Blended to 4% LEER, for DOE Next Summer," 19 July 1996, p. 4.
[11] Jim Adams, "US-Kazakhstan Uranium Deal May Be OneOf A Kind," Reuters, 24 November 1994.
[12] Kommersant-Daily, 25 November 1994, p. 4; in "US Version of Uranium Deal With Almaty Questioned," FBIS-SOV-94-228, 25 November 1994.

Archived Developments:

3/14/2003: ULBA BEGINS SUPPLYING BERYLLIUM TO CHINA
The first shipment of several "extremely large deliveries" of beryllium from the Ulba Metallurgical Plant to Chinese companies has been completed, according to an article on Kazatomprom's website. Beryllium is controlled as a dual-use item, because of its use in electronics and instrument-making, and possible use in nuclear weapons and reactors. The article did not specify what Chinese companies the beryllium was delivered to, how much or what type of beryllium was supplied, or what the end use of the supplied material would be. Ulba is the second largest producer of beryllium in the world, and production increased by 16% in 2002. New beryllium alloys are currently being developed in conjunction with US firms.

[Elena Butyrina, "UMP has delivered the first lot of beryllium to China," Kazatomprom Web Site, http://www.kazatomprom.kz, 14 March 2003.] {Entered 6/03/2003 AE}

7/2002: EU FUNDS UPGRADE OF MC&A SYSTEM
A project to upgrade the material control and accounting system at Ulba has been underway since 14 April 2000. The project, with a total budget of €2 million (approximately $2 million as of July 2002) is funded by the EU TACIS program, and is expected to end by December 2002. The newly upgraded system will track and account for nuclear materials in uranium-containing liquids at every stage of the production cycle. With such a capability the system will accomplish three objectives: prevent the possible theft of materials, obtain full information about the quantity of materials within the production cycle, and provide credible information to the International Atomic Energy Agency. This project has been implemented under the framework of the nuclear safety agreement signed by the European Atomic Energy Community and the Republic of Kazakhstan in July 1999.

[Alevtina Donskikh, "Uchest do milligramma," Kazakhstanskaya pravda, No. 237(23886), 11 July 2002, p. 2.] {Entered 4/18/2003 AD}

7/1/2002: DOE ANNOUNCES SECOND NONPROLIFERATION PROJECT AT ULBA
On 1 July 2002, US Department of Energy (DOE) Secretary Spencer Abraham announced the second nonproliferation project at the Ulba Metallurgical Plant. The new project, part of the Russian Transition Initiatives program, run by the National Nuclear Security Administration (NNSA), will expand and upgrade Ulba's capacity for the production of copper beryllium master alloy, which has commercial applications. The plant will earn an estimated $10 million per year from the project. At least 150 jobs are expected to be sustained for the next 8-10 years. Los Alamos National Laboratory will provide technical assistance and NNSA will provide funding and expertise. Brush Wellman, Inc. of Cleveland, Ohio and RWE Nukem, Inc. of Danbury, Connecticut will invest $4 million in the Ulba project. Ulba has committed over $4.5 million, and the NNSA will contribute at least $1.5 million.

["Abraham Announces Second Major Nuclear Nonproliferation Effort with Kazakhstan: Former Nuclear Weapons Facility to Produce Commercial Copper Beryllium," U.S. Department of Energy Press Release, 1 July 2002, DOE Web Site, http://www.nnsa.doe.gov/docs/.] {Entered 7/18/2002 YP}

1/30/2002: NEW NONPROLIFERATION PROJECT AT ULBA
On 30 January 2002, US Department of Energy (DOE) Secretary Spencer Abraham announced a new nonproliferation project with Kazakhstan. Under the project, two US companies, Global Nuclear Fuel-Americas (GNF) and RWE Nukem, and Brookhaven National Laboratory will assist the Ulba Metallurgical Plant in Kazakhstan to use its advanced solvent extraction technology to recover low-enriched uranium from uranium concentrates. According to Abraham, the project will immediately create 50 new civilian jobs for former nuclear weapons scientists in Kazakhstan. In the coming years, the project is expected to employ hundreds of former nuclear weapons workers. DOE's National Nuclear Security Administration (NNSA) has committed $1.2 million in IPP funds for joint work between Ulba and Brookhaven National Laboratory to design and install this technology. The recovered uranium will be available for commercial use in boiling water reactors. The US industry partners have matched NNSA's contribution.

["Energy Secretary Abraham Announces Nuclear Nonproliferation Effort with Kazakhstan for Former Soviet Nuclear Weapons Facility," U.S. Department of Energy Press Release, 30 January 2002, DOE website, http://www.nnsa.doe.gov/docs/.] {Entered 3/1/2002 YP}

11/29/2001: RUSSIA HAS YET TO SIGN TRILATERAL FUEL VENTURE AGREEMENT
According to Vitaliy Khadeyev, general director of Ulba, the plant has entered into a commercial venture, Joint Ukraine-Russia-Kazakhstan Fuel Enterprise, Ltd., to produce fuel pellets for Ukraine's nuclear power plants. Ukraine and Kazakhstan have both signed the agreement, which is yet to be signed by Russia. This contradicts earlier reports indicating that all the parties had signed the agreement (see the 7/5/2001 entry, below). Ukraine will supply uranium and zirconium, Kazakhstan will produce uranium fuel pellets, and Russia will use the pellets and zirconium to make fuel assemblies. According to Khadeyev, Ukraine will benefit from participating in the joint venture by using its own uranium and zirconium and by participating in the development of nuclear fuel for its power plants. Russia will preserve its uranium export market, and Kazakhstan will have guaranteed orders for its uranium pellets.

[Victoria Shevchenko, "Propisany tabletki ot urana," Kazakhstanskaya pravda online edition, http://www.kazpravda.kz/archive/29_11_2001/e.html, 29 November 2001.] {Entered 03/15/2002 YP}

7/5/2001: TRILATERAL AGREEMENT ON FUEL FABRICATION SIGNED
On 5 July 2001 Kommersant reported that Kazakhstan's Kazatomprom, Russia's TVEL, and Ukraine's Energoatom signed an agreement to establish a joint venture to produce nuclear fuel elements for Ukrainian nuclear power plants. The idea was first raised as early as 1996 (see 12/27/96 entry), and since then has been under discussion (see 7/12/2000 entry). In 1996, several companies including TVEL, Westinghouse, Totall-Framatom, Siemens, and ABB bid on the right to participate in the project. TVEL won the tender but was not able to finance the project at that time.Under the agreement, the three sides must each contribute 33.3% of $450,000 as start-up capital within 30 days.

["Bratya Nigmatulliny obyedinyayut energetiku," Kommersant, 5 July 2001; in Integrum-Techno, http://www.integrum.com.] {Entered 7/5/2001 NA}

7/12/2000: KAZAKHSTAN, RUSSIA, UKRAINE TO FORM JOINT VENTURE
During a news conference in Almaty on 12 July 2000, Ukrainian Ambassador to Kazakhstan Evhen Kartashov reported that Kazakhstan, Russia, and Ukraine plan to form a joint venture for nuclear fuel element production. Under the proposed venture, Kazakhstan's Ulba Metallurgical Plant (UMZ) will produce fuel pellets, which will be further processed by Russian enterprises, while Ukraine will produce zirconium cladding. The joint venture will also entail exchanging shares among the participating enterprises.[1] On 27 December 1999, a UMZ official announced the transfer of 34% of UMZ shares to the Russian company TVEL in exchange for shares in Russian nuclear enterprises.[2,3,4]

Sources:
[1] Interfax-Kazakhstan, 12 July 2000; in "Ukraine to take Part in Russo-Kazakh Nuclear Fuel Joint Venture," FBIS Document CEP200007130000192.
[2] Kazakh Commercial Television in Russian, 17 December 1999; in "Russian-Kazakh Nuclear Fuel Cooperation," FBIS Document CEP19991220000020.
[3] "Central Asia Investment Report," Interfax Investment Report of Central Asia and Caucasus for 20-26 December 1999, Vol. II, Issue 50 (57), 27 December 1999; in "Kazatomprom Intended to Swap Equity with TVEL Concern During the First Quarter of 2000," FBIS Document FTS19991227001322.
[4] Nikolai Ivanov and Roman Zhuk, "Rossiyskiy yadernyy udar po amerikanskim interesam v Kazakhstane," Kommersant, 29 February 2000. {Entered 8/9/2000 KB}

2/4/2000: KAZATOMPROM TO BEGIN HYDROFLUORIC ACID PRODUCTION
Kazatomprom plans to set up its own production of hydrofluoric acid, which is used for the production of uranium, tantalum, and beryllium at the Ulba Metallurgy Plant. For more information, please see the 5/19/00 entry in the mining developments section of the database.

["Kazakhstan upped uranium production 16.3% in 1999," Interfax, 4 February 2000.] {entered 5/19/00 NA}

1/19/2000: KAZATOMPROM RECEIVES GERMAN LOAN TO MODERNIZE PRODUCTION
At a 19 January 2000 press conference, Kazatomprom President Mukhtar Dzhakishev announced that Kazatomprom had received a $25 million loan from Westdeutsche Landesbank Girozentrale of Germany. The money will augment the company's working capital, as well as fund investments in uranium mining, the opening of two new mines, and the modernization of the Ulba Metallurgy Plant.
["Kazatomprom poluchil kredit nemetskogo banka v razmere $25 mln," Interfax-Kazakhstan, 19 January 2000.] {Entered 1/24/2000 CC}

1/2000: ULBA PRESIDENT SIGNS TWO CONTRACTS IN THE US
During a visit to the United States, Ulba President Vitaliy Khadeyev signed a contract with General Electric to process "uranium-containing materials" at Ulba. Khadeyev stressed that Ulba does not process radioactive waste from nuclear reactors. He also signed a contract with Brush Wellman for the sale of beryllium products.[1] The amount of the Brush Wellman contract, $120 million over 10 years, was disclosed after Kazatomprom President Mukhtar Dzhakishev signed a contract in September 2000.[2] The new contracts will lead to the creation of 300 jobs at Ulba, according to Khadeyev.[1]

Sources:
[1] Ekspress-K, 6 January 2000; in "Kazakh Metal Plant Head Comments on Accords With US GE," FBIS Document CEP20000117000018.
[2] "Kazatomprom to Supply $120 million in beryllium products to Brush Wellman," Interfax-CIS Daily News Briefs Volume II, Issue 172 (193), 11 September 2000. {Entered 2/19/2001 NA}

12/27/99: ULBA ISSUES "GOLDEN SHARES" TO TVEL
Based on a draft agreement signed in Astana in June 1999 between Russia and Kazakhstan, the Ulba Metallurgy Plant will issue golden shares to TVEL in January 2000. These shares will be held by TVEL for one year and will not have par value nor earn dividends, but will give the Russian entity veto power over any decisions made by Ulba management. Issuance of golden shares is an interim step towards integration of Ulba and TVEL, at which point, the golden shares will be exchanged for a 34% share of Ulba.[1,2] Ulba, in turn, will obtain approximately 7%-10% of shares in Chepetsk Mechanical Plant, Novosibirsk Chemical Concentrate Plant, and Priargunskiy Mining and Chemical Combine.[3]

Sources:
[1] Kazakh Commercial Television, 17 December 1999; in "Russian-Kazakh Nuclear Fuel Cooperation," FBIS Document CEP19991220000020.
[2] Interfax Investment Report of Central Asia and Caucasus for 20-26 December 1999, Vol. II, Issue 50 (57), 27 December 1999; in "Kazatomprom Intended to Swap Equity with TVEL Concern During the First Quarter of 2000," FBIS Document FTS19991227001322.
[3] Nikolay Ivanov and Roman Zhuk, "Rossiyskiy yadernyy udar po amerikanskim interesam v Kazakhstane," Kommersant, 29 February 2000.{Entered 8/15/2000 KB}

12/99: PRODUCTION OF URANIUM AND BERYLLIUM TO INCREASE
In December 1999 Kazatomprom signed agreements with Brush Wellman and General Electric regarding international sales of uranium and beryllium. By 2002 Kazatomprom intends to resume beryllium production, after refurbishing the country's beryllium production facilities. Kazakhstani beryllium production ceased in 1992.

["Kazatomprom poluchil kredit nemetskogo banka v razmere $25 mln," Interfax-Kazakhstan, 19 January 2000.] {Entered 1/24/2000 CC}

11/99: ULBA RESTARTS TANTALUM PRODUCTION
In the beginning of November 1999, Ulba restarted tantalum processing. It plans to import raw tantalum and export 10 MT of processed tantalum to the West each month.
[Interfax, 6 November 1999; in "Central Asia Investment Report 06 Nov 99," FTS19991115001612.]{Entered 1/31/2000 CC}

8/13/99: DRAFT AGREEMENT ON UKRAINIAN-RUSSIAN-KAZAKHSTANI JOINT VENTURE NUCLEAR FUEL PRODUCTION APPROVED
With Resolution No. 1474, on 13 August 1999, the Ukrainian Cabinet of Ministers approved a draft agreement on the creation of a Ukrainian-Russian-Kazakhstani joint venture VVER fuel plant in Ukraine. A 1996 Ukrainian tender commission awarded the construction of the nuclear fuel plant to the Russian company TVEL. For more information on joint venture efforts, see the 4/97 entry.

[Interfax, "Ukraine Business Panorama," 23 August 1999; in "Ukraine Business Panorama," FBIS Document FTS19990823000971.]{entered 10/15/99 CC}

6/12/99: KAZATOMPROM AND TVEL AGREE TO SWAP SHARES
On 12 June 1999 Russian First Deputy Prime Minister Nikolay Aksenenko and Kazatomprom Chief Mukhtar Dzhakishev reached an agreement to exchange shares between Ulba Metallurgy Plant and TVEL. Dzhakishev indicated that talks on the proposed exchange had been in progress for a year (see entry for 7/6/98). TVEL had asked for 51% of Ulba, but Dzhakishev was opposed to giving the Russian enterprise majority ownership. The two sides have yet to work out the exact number of shares to be exchanged and which Russian enterprises will be involved in the deal. According to Dzhakishev, Russia is interested in preserving the integrated fuel cycle that existed during the Soviet era and retaining Ulba as a source of fuel pellets.

["Kazakh, Russian Nuclear Concerns to Swap Shares," Interfax Mining and Metals Report, No. 26 (380), 25 June 1999; in FBIS Document FTS19990624001327.]{Entered 8/11/2000 KB}

1/14/99: KAZATOMPROM CONTRACT WITH TVEL TO ENSURE ORDERS FOR ULBA PLANT
In Moscow on 14 January 1999, Mukhtar Dzhakishev, President of Kazatomprom, signed a contract with the Russian nuclear fuel company TVEL. The contract is intended to ensure orders for the Ulba Metallurgical Plant. The talks also ensure further cooperation between Russia and Kazakhstan. Dzhakishev said in an interview that Kazatomprom's goal is to make Kazakhstan a world leader in the mining and production of uranium by the year 2005. Kazatomprom predicts that the sale of world stockpiles of uranium will continue until 2010, with a peak in sales occurring in 2001. This will be followed by a decline, and prices will accordingly begin to rise. While the rest of the world reduces its production of uranium, Kazakhstan will increase the scope of its mining by four to five times. Other plans include the sale of more highly enriched uranium products, the manufacture of new types of fuel for nuclear reactors, and the joint manufacture of fuel assemblies with Russian ventures. Kazatomprom is also moving toward privatization, but has not yet been privatized due to its current financial difficulties. To make Kazatomprom an attractive investment, talks are being conducted to get credit from western banks, and there are now several proposals for credit in amounts from $25 to $70 million. Once received, the credit is to be used in the creation of new jobs, new mines, and new production at the Ulba Metallurgical Plant. Kazatomprom expects to turn a profit this year after a long period of operating at a loss.

[Oleg Khe, "Mukhtar Dzhakishev, NAK Kazatomprom: V 2005 godu Kazakhstan dolzhen stat odnim iz liderov v mire po dobyche i proizvodstvu urana," Panorama, No.2, 15 January 1999.] {Entered 5/10/99 RC}

7/6/98: JOINT RUSSIAN-KAZAKHSTANI OWNERSHIP OF ULBA PLANT PROPOSED
On 6 July 1998, the Russian government approved the draft of an agreement with Kazakhstan on the integration of nuclear fuel cycle facilities. Under the draft agreement, the two countries would guarantee joint financial and technical projects directed at the development of fuel cycle facilities for nuclear power plants in both countries. In particular, Russia and Kazakhstan would establish long-term cooperation in nuclear fuel production through the joint contributions of the Russian firm TVEL and the Kazakhstani state-owned company Kazatomprom to the charter capital of OAO Ulba Metallurgy Plant. Both states similarly plan to cooperate in the establishment and operation of a joint venture for uranium mining.

["Rossiya odobrila proyekt soglasheniya s Kazakhstanom ob integratsii yadernykh predpriyatiy," Interfax, 6 July 1998.] {entered 9/18/98 FW}

12/97: SCIENTIFIC CONFERENCE HELD AT ULBA METALLURGY PLANT
In December 1997, a scientific conference on nuclear engineering development issues was held at the Ulba Metallurgy Plant. Leading Russian and Kazakstani nuclear experts attended the conference to discuss the prospects for the production of fuel used at nuclear power plants. Vitaliy Konovalov, the president of the Russian company TVEL, noted that nuclear power consumption in Kazakhstan is projected to increase, on average, by 50 to 300 percent over the next fifty years. He argued that South Kazakhstan will require nuclear power plants. During the conference, some advised that Russia and Kazakhstan should cooperate in the world market for equipment and fuel for nuclear power plants. The participants of the conference discussed the advantages of nuclear power for Kazakhstan, supporting their position by citing the negative effect of fossil fuel power plants on the environment and the strict safety system at existing reactors in Kazakhstan.

Sources:
[1] Andrey Kratyenko, "Is hell in store for us without the atom?" Almaty Express, 18 December 1997, p. 2; in "Kazakhstan Needs Power to Avoid Ecological Disaster," FBIS-SOV-97-355. {Entered 4/10/98, EB}
[2] Viktoriya Shevchenko, "Odnoimyonnye prityagivayutsya. K yadru v Ust-Kamenogorskye," Kazakhstanskaya pravda, no. 265, 19 December 1997, p. 1. {Entered 4/10/98, EB}
[3] Viktoriya Shevchenko, "Alternativy atomnoy energetike v Kazakhstane net," Kazakhstanskaya pravda, no. 2, 6 January 1998, p. 3. {Entered 4/10/98, EB}

7/97: NONDESTRUCTIVE ASSAY ENHANCES MPC&A AT ULBA
The United States Department of Energy (DOE) has provided nondestructive assay techniques and systems to upgrade materials protection, control, and accounting (MPC&A) at the Ulba Metallurgy Plant. The nuclear MPC&A enhancement program for Ulba is essentially complete, though some follow-up is expected to ensure a smooth transition to self-sufficiency. The site still requires calibration materials, which will be provided by New Brunswick Laboratory after Kazakhstani regulatory approval.

[J.K. Sprinkle et al., "Application of Nondestructive Assay Techniques in Kazakhstan," paper presented at the Institute of Nuclear Materials Management 38th Annual Meeting, Phoenix, Arizona, 20-24 July 1997.]{entered 9/15/98 fw}

7/97: THEFT OF HIGHLY TOXIC WASTE
In July 1997, 80 containers with highly toxic beryllium dioxide were stolen from the Ulba Metallurgy plant's storage facilities. According to the Office of Environmental Control, after being emptied (the beryllium dioxide was dumped right onto the ground), the containers were sold at a local market. The Maslikhat (local government) was the only government body that was notified about the incident. According to the article, Ulba authorities did not report the incident to the Emergency Situations Committee or to the Office of Environmental Control, thus violating the Law on Emergency Situations. As of 5 July 1997, only 28 out of 80 stolen containers had been recovered.

[Viktoriya Shevchenko, "Yadu ne izvolitye?" Kazakhstanskaya pravda, 5 July 1997, p. 1.] {Entered 4/10/98, EB}

4/97: RUSSIA, KAZAKHSTAN, AND UKRAINE TO CONSTRUCT FUEL PLANT
The governments of Russia, Kazakhstan, and Ukraine have agreed to create a joint venture to construct a nuclear fuel production plant and storage facilities in Ukraine.[1, 2] The plant will produce fuel for Ukraine’s 11 VVER-1000 reactors. (The Russian company TVEL, which currently supplies Ukraine with VVER-1000 reactor fuel, will continue to supply fuel for Ukraine’s one RBMK and two VVER-440 reactors.[2]) In addition, the joint venture will enable Ukraine to store spent nuclear fuel on-site in special containers for up to fifty years, rather than sending it to Russia for reprocessing, Ukraine’s current practice. A storage facility with three experimental containers holding a total of 72 spent fuel rods will be constructed at Zaporizhzhya nuclear power plant by the firm Energodar. Following trial use of this facility, storage facilities will be constructed to house 9000 spent fuel rods.[1] The Ukrainian cabinet approved a deadline of April 1997 for the completion of the final text of the agreement.[2] The Kiev-based joint venture is to be established in June 1997.[1] The Ukrainian firms Pridneprovskiy Chemical Plant in Dneprodzerzhinsk, Vostochnyy Mining and Metallurgical Combine in Zholtiye Vody, and the State Pipe Institute in Dnepropetrovsk will participate in the project.[1, 2] Russia, Kazakhstan, and Ukraine will have equal shares in the project.[2] While much of the project has been planned out, the problem of funding remains.[1]

Sources:
[1] Oleg Kilnitskiy, Intelnews, 28 April 1997; in "Joint Venture To Establish Nuclear Fuel Processing Company," FBIS-SOV-97-118.
[2] "Ukraine, Russia, Kazakhstan to Build Nuclear Fuel Plant," The Russian, April 1997, p. 7. {entered 8/20/97 djw}

1/30/97: THEFT OF URANIUM PELLETS
The Kazakhstani National Security Committee (KNB) department for the Semipalatinsk oblast detained a group of people trying to sell a kilogram of uranium pellets. A KNB spokesman said that the pellets were most likely stolen from the Ulba Metallurgy plant in Ust-Kamenogorsk, which produces uranium pellets for nuclear power plants. (For more information on nuclear smuggling, please see the NIS Nuclear Trafficking Database.)

[Interfax; in "Kazakhstan: Four People Detained Trying To Sell Nuclear Materials," FBIS-SOV-97-021, 30 January 1997, ] {Entered 2/20/97 GB} {Cleared 3/28/97 AB}

12/27/96: TRILATERAL AGREEMENT ON FUEL FABRICATION FACILITIES
In a few months a trilateral agreement between Kazakhstan, Russia, and Ukraine will be signed. The agreement will concern the creation of fuel fabrication facilities, which will supply fuel to Ukrainian nuclear power plants. Kazakhstan will be represented by Ulba Metallurgy Plant, which produces fuel pellets; Ukraine will be represented by Eastern Mining and Conversion Combine and the Pridniproviye Chemical Plant; and Russia will be represented by TVEL. Building the fuel rod assembly line on Russian territory would cost about $50 million. It is assumed that the parties would have equal shares in the joint venture's capital.

["Budet sozdano SP po proizvodstvu yadernogo topliva dlya AES Ukrainy," Segodnya, 17 December 1996, no. 242, p. 1,.] {Entered 1/31/97, EB} {Cleared 3/28/97 AB}

9/96: SAFEGUARD TRAINING FOR ULBA PERSONNEL
In September 1996, a training course was held in Sweden on practical material accounting and safeguards techniques for Ulba personnel. The course was arranged by ABB Atom, Safetech Engineering, and SKI (the Swedish Nuclear Power Inspectorate.) This course was the third support activity sponsored by ABB Atom in the safeguards field. Previous courses were designed to create an accounting system for uranium at the Ulba plant and a safeguards manual. The twelve participants in the course learned about material accountancy and safeguards activities at ABB Atom. The training included both theoretical and practical lessons.

["Safeguards Training for Kazakhs," ABB Atom Progress Report No. 3, November 1996.] {Entered 4/7/98, EB}

10/26/96: ULBA PLANT TO RECEIVE ISTC GRANTS
The Ulba Metallurgy plant has received grants of more than $4 million from the International Science and Technology Center (ISTC) for the conversion of nuclear industry. The grants were designated to develop technologies for the production of magnets made of rare-earth elements and for making super-conductive coils. David Guibnik, ITSC project manager, said that Kazakhstani enterprises under conversion have prepared 13 projects for ITSC funding, including the production of the following materials: lithium carbonate and lithium hydroxide (capacity 3,000 MT/year), magnesium oxide (1,500 MT/year), and tantalum-containing materials(200 MT/year of tantalum). The ISTC board has approved 44 new projects, raising the financing of all ISTC projects to $121 million, which makes its possible for some 15,400 scientists from Russia, Kazakhstan, Belarus, Armenia, Georgia, and Kyrgyzstan to participate in civilian projects.

["Kazakhstan: Article Views Nuclear Industry 'Crisis,'' FBIS-SOV-97-025, 6 February 1997.] {Entered 2/20/97 GB}{Cleared 3/28/97 AB}

9/27/96: IAEA TO COMPLETE MC&A AT ULBA PLANT
It was reported that an IAEA commission completed material control and accounting (MC&A) and physical protection verification measures at the Ulba plant.

[Anatoliy Serebryanikov, "Pod kolpakom u MAGATE," Kazakhstanskaya pravda, 27 September 1996, p.2] {Entered 12/8/96 GB}

9/10/96: AUDIT OF KATEP'S FINANCIAL ACTIVITY
It was reported that Kazakhstani Prime Minister Akezhan Kazhegeldin initiated an audit of the financial activity of the Kazakhstani National Joint Stock Atomic Power Engineering and Industry Company (KATEP). The reason for the audit was the filing of criminal charges against officials of the joint stock company Ulba (the company manages the Ulba Metallurgy Plant), which is a member of the joint stock company KATEP. KATEP was granted the right to possess, use, and manage the state's package of shares at Ulba. In connection with the audit, the press source mentioned the voluntary resignation of former deputy prime minister Vitaliy Mette, Ulba's former manager, and the firing of the Akim of the Eastern Kazakhstan oblast, Leonid Desyatnik, due to criminal charges filed against him.

[Andrey Zhdanov, "Blitz-Commentary": "Strangers Are Respected, Neighbors Are Suspected," 10 September 1996, p.3; in "Kazakhstan: NAK KATEP, Ulba Control Issues Noted," FBIS-SOV-96-2-9-S.] {Entered 12/8/96 GB}

4/4/96: THEFT OF FISSILE MATERIAL FROM ULBA PLANT REPORTED
A number of thefts of fissile material from the Ulba metallurgical plant were reported in a Karavan-Blitz newspaper article. One hundred kg of uranium was reportedly stolen from the site in 11/95; 150 kg of uranium and 400 kg of thorium were taken in 12/95. According to an official from the State Investigative Committee on Combating Crime, the thefts were carried out by plant workers with the complicity of guards. The official went on to say that thefts of uranium materials have become "commonplace" at the plant. For the most part, uranium stolen from Ulba is sold to Russian firms.[1,2,3] According to Director General of the Kazakhstani Atomic Energy Agency Timur Zhantikin, agency specialists have not been able to go to Ust-Kamenogorsk to participate in the investigation of the theft at the Ulba plant, due to the lack of funds for business trips. [4]

Sources:
[1] Bhavna Dave, "Alarming Number Of Uranium Thefts In Kazakhstan," OMRI Daily Digest, 9 April 1996, Vol. 2, No. 70 pp. 3-4.
[2] Spaseniye, No.7-8, April 1996, p. 1.
[3] Post-Soviet Nuclear and Defense Monitor, "Theft of Nuke Materials 'Common' in Kazakhstan," 9 April 1996, p. 4.
[4] Kazakhstanskaya pravda, "Pri vybore reaktora my budem rukovodstvovatsya dvumya printsipami: bezopasnostyu i ekonomichnostyu," 15 May 1996, p. 7.{Entered 7/96 GB, Updated 8/23/96 GB}

8/95: RUSSIAN FIRM TO MANAGE ULBA
The Kazakhstan government decided to transfer the rights of ownership, use, and management of the Ulba state holding company to the Russian financial group Interros. The transfer was concluded by selling an undisclosed amount of shares in the corporation according to the government resolution "On Measures for the Financial Improvement of the Government Holding Company 'Ulba.'" Two reasons have been cited for the move: 1) the need for better financing of the company and 2) the wish to develop the Kazakhstani nuclear industry jointly with the Russian Federation. Kazakhstani Vice-Prime Minister stated in an interview to Interfax that Ulba is joining in a unified technological cycle of nuclear fuel production jointly with a Russian enterprise.

[Elena Rubleva, "In Kazakhstan A Russian Firm Receives Partial Management In A Factory Producing Nuclear Fuel," Finansovye izvestiya, 29 August 1995, p. 2. {Entered 1/20/97 GB}

7/31/95: DOE ASSISTS IN UPGRADING UST-KAMENOGORSK FACILITY
Since mid-1993, the US DOE has been spending about $5 million/year under the CTR program to assist in upgrading security at the Ust-Kamenogorsk (Ulba) facility and to help take an materials inventory. Because the UO2 fuel pellets produced in Kazakhstan generally, and at Ust-Kamenogorsk specifically, make use of UF6, which is enriched in Russia, their existence represents a potential proliferation risk.

Sources:
[1] "Verification Of Initial LEU Inventory Under Way At Ust-Kamenogorsk," NuclearFuel, 31 July 1995, p. 5.
[2] William C. Potter, "An Overview Of The Nuclear Potential Of Select Non-Russian Soviet Successor States," unpublished paper presented to the Carnegie Endowment for International Peace, 20 August 1992, p. 3.

5/6/95: NUCLEAR WASTE PROBLEMS AT ULBA PLANT
Zhenis Sadykov, chairman of the Nevada-Semipalatinsk Problem-Solving Scientific Committee, stated that nuclear waste from the Ulba uranium plant in Ust-Kamenogorsk has been stored in the center of the city. He claimed that two artificial radioactive lakes have arisen in which children bathe and from which local inhabitants drink. He also indicated that a waste burial site in Kurchatov (Semipalatinsk) has already been prepared, but not advertised.

["Problem Committee Officer on Atomic Energy," in FBIS-SOV-95-091, 6 May 1995.]

Archived Sapphire Developments:

11/2/96: KAZAKHSTAN'S COMMENT ON SHORTFALL IN HEU SHIPMENT
Responding to a 24 October 1996 Washington Times report that the amount of Kazakhstani highly enriched uranium (HEU) was 120 pounds (54.5 kg) short of the initially declared weight of 1,278 lb. (581 kg), Kazakhstani Ambassador to the United States Bolat Nurgaliyev stated that no material was diverted before the United States shipped away the HEU purchased from Kazakhstan. He underscored that the Kazakhstani HEU weight declaration was an approximation subject to verification of the United States. Nurgaliyev also described that in 1992, Iranian representatives made contact with the Ust-Kamenogorsk facility (where the HEU was stored), "but what they were trying to buy was not HEU." He added that there was "absolutely no indication Iran was interested in HEU." Kazakhstan renounced its possession of nuclear weapons in 1993, signed the NPT, shipped all warheads to Russia and signed the HEU deal with the United States. Nurgaliyev said that the United States compensated Kazakhstan for the HEU, providing between $20 million and $30 million in cash and goods in kind.

Sources:
[1] Rowan Scarborough, "Tale told of how Iran nearly got nuke gear," Washington Times, 2 November 1996, p. 3.
[2] Kazakhstanskaya pravda, "So storony Kazakhstana 'nedovesa' yadernykh materialov net," 31 October 1996.

10/24/96: SHORTFALL IN KAZAKHSTANI HEU URANIUM SHIPMENT REPORTED
The Washington Times reported that a 120-pound (54.5 kg) shortage has been discovered in the process of blending down the Kazakhstani HEU shipped to the United States on 11/21/94 under Project Sapphire. The initially declared amount of the HEU was 1,278 lb. (581 kg). A US Department of Energy (DOE) spokesman commented that there was difficulty in obtaining precise measurements of the HEU contained among 2.4 tons of discarded metals, oxides, and uranium-beryllium alloys shipped from Kazakhstan. DOE issued a statement that said, "both governments clearly understood that the quantities of highly enriched uranium were imprecise. The point was to secure the material first and perform precise characterization of the material later." In response to a question of whether it was possible that the HEU could have been diverted between the time the HEU was inspected in Kazakhstan and the time the material was put on US planes, Assistant Secretary of Defense Kenneth Bacon said that there was adequate security during all parts of the shipment of the Kazakhstani HEU. He added that there was no indication that any of the Kazakhstani HEU may have been ended up in Iran. The DOE's statement specifically denied that any of the material is missing or stolen. According to a 30 August 1996 memo of the US Oak Ridge National Laboratory, the estimated cost for Project Sapphire "will be approximately $3.5 million inclusive of the first year of storage costs." On 27 October 1996, the Iranian Atomic Energy Agency issued a statement that Iran reserves the right to file a complaint to the International Atomic Energy Agency regarding some "US officials' claim" that the missing portion of the Kazakhstani HEU shipped to the United States under Project Sapphire could have been stolen by Iran.

Sources:
[1] Rowan Scarborough, "Kazakh Uranium Shipment Is Shy Enough For Two Bombs," Washington Times, 24 October 1996, p. 3;
[2] Rowan Scarborough, "Tale Told Of How Iran Nearly Got Nuke Gear," Washington Times, 2 November 1996, p. 3.
[3] Kenneth M. Bacon, DOD News Briefing, 24 October 1996, US Department of Defense Website, http://www.dtic.mil/defenselink/.../t102496_t1024asd.html.
[4] Nucleonics Week, "Sapphire HEU Is Less Than DOE First Claimed, Government Admits," 7 November 1996, p. 15.
[5] Tehran Voice of the Islamic Republic of Iran, "Iran's Rejection of the New United States Claim," 28 October 1996; in "Iran: Commentary Views Disagreement With U.S. on Kazak Uranium," FBIS-TAC-96-010.]

11/25/94: MINATOM ACCOUNTED ONLY FOR ONE-THIRD OF HEU
Izvestiya reported that Russia's Minatom could only account for one-third of the HEU that the United States removed under agreement from Kazakhstan's Ulba fuel reprocessing facility in Ust-Kamenogorsk. Minatom believed that only 200 kg of HEU were at the facility; however the United States airlifted 600 kg back to the United States.

[Mark Hibbs, "Report Suggests Minatom Doesn't Know How Much HEU It Has, Officials Say," NuclearFuel, 5 December 1994, p. 12.]

11/21/94: HEU HAS BEEN UNSECURED
The uranium that was transferred from the Ulba Metallurgical plant in Ust-Kamenogorsk to the Oakridge Lab in the United States in Project Sapphire had been in unsecured and unsafeguarded facilities, without electronic means of accounting. The amounts of radioactive materials present were physically recorded by hand into books. Reportedly, this was not an isolated case of inadequate MC&A in Kazakhstan.

Sources:
[1] William C. Potter, "The 'Sapphire' File: Lessons For International Nonproliferation Cooperation," Transition, 17 November 1995, pp. 14-19.
[2] R. Jeffrey Smith, "Kazakhstan Site Had Lax Security," Washington Post, 24 November 1994, p. A52.

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This material is produced independently for NTI by the James Martin Center for Nonproliferation Studies at the Monterey Institute of International Studies and does not necessarily reflect the opinions of and has not been independently verified by NTI or its directors, officers, employees, or agents.

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