Kazakhstan Westinghouse coverage

Here are some recent news reports on the Westinghouse Kazakstan deal.

My recent blogs in the Huffington Post July 9, and July 13.

The July 7 AFP report on the July 7 Nikkei story is here:

TOKYO (AFP) – Kazakhstan is to pay 486.3 million dollars to buy a stake in US nuclear reactor firm Westinghouse from its majority owner Toshiba, news reports said Saturday.

The Japanese giant will sign an agreement this month to sell a 10-percent stake in Westinghouse to state-run uranium firm Kazatomprom for slightly more than 60 billion yen, the Nikkei newspaper said.

By forging ties with uranium-rich Kazakhstan Toshiba, which holds a 77-percent stake in Westinghouse, aims to secure stable supplies of the resource used by power plants, Jiji Press said.

Toshiba expects to win more orders to build power facilities from power companies in the United States and elsewhere by having Kazatomprom in its alliance and securing a long-term supply of uranium, the Nikkei added.

The tie-up will also help Kazatomprom expand its sales channels worldwide and accelerate mining projects, the Nikkei said.

Toshiba and Westinghouse are also expected to transfer uranium-processing technology to Kazatomprom, it said.

International energy firms are competing to secure nuclear fuel amid growing energy demand, particularly in emerging economies such as China and India.

Japan now procures uranium mainly from Australia and Canada.

Toshiba president Atsutoshi Nishida visited Kazakhstan in April with Japanese minister of economy, trade and industry Akira Amari, the Asahi Shimbun newspaper said.

Japan and Kazakhstan have agreed to cooperate in uranium-processing technology and trade.

US government approval is required for transactions in which a foreign entity takes a stake in an American business possessing nuclear technology, the Nikkei said.

US officials have indicated that the deal poses no problems, the newspaper added.

This was the KAZINFORM July 9, 2007 report on the transaction:

Japanese electronics company Toshiba Corp. (TOSBF.PK) confirmed on Friday that it is in talks with Kazatomprom, a Kazakh-based state run resources company to sell a part of its stake in U.S. nuclear power company Westinghouse Electric. However, the company said that it has not made any final decision on the sale. Reports indicate that Toshiba intends to sell a 10% stake in for about $527 million, or yen 65 billion. However, the sale of a stake in Westinghouse to a company in a third country requires the approval of the US government.
. . .

Toshiba also intends to secure more orders to build power facilities from power companies in the U.S. and other countries, by a partnership with Kazatomprom in addition to ensuring a long-term supply of uranium. The tie-up would also enable Kazatomprom expand its sales channels worldwide and accelerate mining projects.

Toshiba and Westinghouse are expected to transfer uranium-processing technology to Kazatomprom. With Westinghouse as a subsidiary, Toshiba has the technology to build both boiling water reactors and pressurized water reactors. The partnership with Kazatomprom would enable the companies to combine all parts of nuclear power generation process.

. . .

Toshiba paid $4.16 billion for a 77% stake in Westinghouse, which it acquired in October last year from British Nuclear Fuels plc. Shaw Group Inc. (SGR), a Louisiana-based provider of engineering construction and maintenance services, owns a 20% stake, while Japan-based Ishikawajima-Harima heavy Industries holds another 3% stake.

Toshiba originally hoped that Japanese trading houses Marubeni and Mitsui would take large stakes, which would have reduced Toshiba’s borrowing requirements considerably. In the event Kazatomprom acquires a 10% stake in Westinghouse, it would become Westinghouse’s third-largest shareholder.

In March, Westinghouse and Shaw Group revealed that they successfully negotiated a framework agreement with China’s State Nuclear power Technology Company to provide four AP100 nuclear power plants in China. Construction is expected to begin in 2009, with the first plant becoming operational in 2013.

This July 10, 2007 report from Russian news agency:

Kazakhstan to stop exporting uranium ore

The Japanese media has said that Kazatomprom, Kazakhstan’s state-owned nuclear holding company, was currently negotiating the purchase of a 10% stake, worth $488 million, in America’s Westinghouse Electric Corporation from electronics giant Toshiba, and that the deal could be closed in July.

Westinghouse Electric Corporation is the main rival of Atomenergoprom, the only holding company in Russia’s civilian nuclear industry.

Kazakhstan hopes to use U.S. technologies to stop uranium ore exports to Russia and to sell high value-added products instead, namely, heat assemblies made according to Western standards.

On Monday, Kazatomprom representatives said the company had acquired Westinghouse Electric Corp. shares, and that subsequent uranium sales on U.S., European and Asian markets were a long-term aspect of the Kazakh business strategy.

This year, Kazakhstan will produce 7,630 metric tons of uranium ore. It plans to boost production to 15,000 metric tons by 2010, outpacing Australia and Canada, which account for 24% and 28% of global uranium output, respectively.

Russia, which annually requires 17,000 metric tons of uranium ore, produces insufficient amounts. And Astana hopes to take advantage of the global resurgence of nuclear power, which will inevitably create uranium shortages.

Russian nuclear companies were dismayed to learn about Kazakhstan’s decision to discard Soviet-era technologies.

An anonymous expert close to the Federal Nuclear Power Agency said Westinghouse Electric Corp. still could not offer heat assemblies similar to hexagonal Russian-made versions, and that this was the reason why Czech and Finnish nuclear companies had to resume cooperation with Russian suppliers.

He said efforts by French companies to introduce their technologies at Hungarian nuclear power plants had resulted in nuclear contamination, and that Russian experts had been called in to rectify the situation.

According to the expert, Russian nuclear companies do not face any tough competition in Kazakhstan, which has rudimentary power-supply networks and which still cannot build high-capacity Westinghouse-type reactors.

He said the first Kazakh NPPs would be built according to Russian know-how and would generate 300 MW of electricity each.


A report on July 11 in the Pittsburgh Tribune Review was then the only U.S. reporting on the deal.

Ex-Soviet state eyes uranium primacy
By Bonnie Pfister
Wednesday, July 11, 2007

In its prospective deal with Toshiba Corp. to purchase a 10 percent stake in Westinghouse Electric Co., Kazakhstan is making its latest step in a quest to become the world’s top uranium producer by 2012.

Since May, state-run energy firm Kazatomprom has made a deal with a Canadian firm for construction of a new uranium-conversion facility, another to provide nuclear fuel to a key Chinese utility, and a third with its Russian counterpart for cooperative uranium exploration. A 2006 contract with two Japanese firms to develop a new uranium mine also is under way.

Those moves set the stage for the Central Asian nation’s negotiations to buy a piece of Westinghouse.

Published reports in Japan suggest the price for a 10 percent stake in the Monroeville-based firm could be $486.4 million. Such a deal reportedly would shore up supplies of reactor fuel in return for access to Toshiba technology and its sales channels. A spokesman for Toshiba would confirm only that talks are under way.

Growing concerns about the role of carbon emissions in global warming has utilities in the United States and abroad looking to nuclear power after two decades of ambivalence. The demand and extended weather-related closures at key uranium mines in Australia and Canada have tripled uranium prices in the past year to about $120 a pound.

Because Toshiba would keep a 67 percent interest, it is not clear whether a deal would be reviewed by the U.S. Treasury Department’s Committee on Foreign Investment in the United States. A spokeswoman for the committee — which approved such deals as Toshiba’s purchase last year of Westinghouse and the aborted attempt by Dubai Ports World to manage several U.S. seaports — neither would confirm nor deny if such a review would be merited.

Nuclear Regulatory Commission action would not be needed because there would be no change in licensing, an NRC spokeswoman said.

Kazakhstan is a place many Americans know only as the homeland of “Borat” — the title character of a hit film depicting a fictional journalist’s tour across the United States. But experts describe the sprawling country as among the most mature economies in Central Asia and a stable nuclear partner.

“Here we are talking about Iran, North Korea, Pakistan, India. This is the only country that had actual nuclear arms — not potentially nuclear arms — and gave them up,” said S. Frederick Starr, chairman of the Central Asia-Caucasus Institute at Johns Hopkins University. “In the moral sense, that gives them immense credibility.”

Kazakhstan — home to the Soviet Union’s nuclear-weapons program and nuclear-test sites — within four years of its 1991 independence had transferred its 1,400 nuclear warheads to Russia, according to the anti-proliferation group Nuclear Threat Initiative.

In 2002, Kazakhstan became the first of the former Soviet states to receive investment-level credit rating.

Kazatomprom, founded in 1997, reported assets of $1.6 billion last year. In April it announced plans to increase its uranium output sixfold to 18,000 tons per year by 2012.

Greg Vojack, a managing partner with law firm Bracewell & Giuliani in Kazakhstan, said the Westinghouse interest shows that Kazakh companies are coming of age and expanding globally. It’s also a way to shore up partners other than Russia for its nuclear-related industry.

“President (Nursultan Nazarbayev) has done a very good job in terms of balancing East-West,” Vojack said. “Having the resources that it does have, it must balance all interests to get the best deal for Kazakhstan.”

Bonnie Pfister can be reached at bpfister@tribweb.com or 412-320-7886.

Interestingly, the story quotes Greg Vojack, a managing partner with law firm Bracewell & Giuliani in Kazakhstan. This is Rudy Giuliani’s law firm.

Note that S. Frederick Starr, the chairman of the Central Asia-Caucasus Institute at Johns Hopkins University, is quoted supporting the deal. Starr recently defended Kazakhstan in this Washington Post guest editorial. Starr was called the The Professor of Repression in Ken Silverstein’s May 24, 2006 article in Harpers.

Plus one blogger who looks for a business opportunity for him in the deal.

//// some relevant earlier reporting ///

According to this June 1, 2007 report, originally from Bloomberg:

Kazakhstan’s state-owned uranium miner will start selling nuclear fuel to China by 2013, bypassing integrated nuclear companies such as France’s Areva SA. Kazakh nuclear fuel will also be exported to Japan and Europe.

“Kazatomprom plans to start exporting the made-in- Kazakhstan nuclear fuel in about five or six years,’’ Mukhtar Dzhakishev, the Almaty-based company’s head, said yesterday in phone interview. “The fuel will be sold to China, Japan, Europe and, possibly, to U.S.,’’ he said, Kazinform quotes Bloomberg.

Kazakhstan, the world’s third-biggest uranium miner, plans to overtake Canada and Australia in 2010, as demand and prices for the radioactive metal surge. The nation wants to exploit its uranium reserves, which may account for a fifth of the world’s resources of the metal, and obtain stakes in every stage of the nuclear power cycle, from production of uranium to output of nuclear power stations.

“We need a license to set up nuclear fuel production here,’’ Dzhakishev said. “The company has already made steps to get access to the nuclear power cycle.’’

China Guangdong Nuclear Power Holding Co., or CGNPC, agreed to provide Kazatomprom with “certain nuclear fuel products,’’ Kazatomprom said May 24, citing an accord, signed in Beijing, without saying when the deal took place. China National Nuclear Corp., the country’s largest producer of atomic power, own 45 percent of CGNPC.

Kazatomprom wasn’t able to agree a joint venture with any South Korean companies, Dzhakishev said.

Conversion Facility

Canada’s Cameco Corp., the world’s largest uranium producer, and Kazatomprom agreed to build a conversion facility in the Central Asian country to process uranium oxide into gaseous uranium hexafluoride, a step toward turning the radioactive material into reactor fuel. The Canadian company would provide the technology and plans to sign binding agreements with Kazatomprom this year, the Kazakh company said May 29.

Russia, the world’s largest enricher of uranium, signed on May 10 an agreement with Kazakhstan to strengthen cooperation in nuclear power and expand into exploration for the metal. The accord provides political backing to five ventures that will see Russia and Kazakhstan work together to explore for uranium, mine and enrich the metal, design and build small-sized nuclear reactors, and cooperate on logistics. Uranium is enriched as part of the process to produce fuel for reactors.

Prices Doubled

“We expect the enrichment facility to be built in Russia by 2014,’’ Dzhakishev said. Prices for uranium more than doubled in the past year to USD122 a pound, according to data from London- based publisher Metal Bulletin. China and India are turning to nuclear power generation after prices

Uranium demand will more than double to 160,000 metric tons by 2030, from 65,000 tons this year, with use of the nuclear fuel spreading to Malaysia, Indonesia and Vietnam, the World Nuclear Association, said at a Mining Journal uranium conference in London yesterday. . . .

To contact the reporter on this story: Nariman Gizitdinov in Almaty, Kazakhstan, via ngizitdinov@bloomberg.net