Putin’s uranium ban threat would deprive Russia’s war machine of billions

Russian president admits any retaliation to Western sanctions must not ‘harm ourselves’

Vladimir Putin’s threat to curb exports of nuclear fuel risks igniting a global supply crunch that could also cut off billions of dollars to the Russian war machine, experts have warned.
The Russian president on Wednesday suggested the Kremlin should consider halting supplies of uranium, nickel and titanium to the West in retaliation for sanctions imposed over his ongoing war on Ukraine.
However, he also expressed caution about doing anything that would “harm ourselves”.
Russia currently generates about $3.1bn (£2.4bn) a year from nuclear exports, including $905m sent to the US, according to trade data previously reported by Tortoise.
Meanwhile, Russia’s state nuclear company, Rosatom, has so far mostly escaped sanctions and currently accounts for 5pc of raw uranium production, 30pc of conversion and almost 50pc of enrichment capacity.
But Mr Putin’s comments sent shares in uranium mining companies surging on Thursday while analysts said they would spook power suppliers that relied on a stable flow of enriched uranium.
The US depends on Russia for one-quarter of the enriched uranium needed to fuel its 93 nuclear reactors. Lawmakers voted to ban imports from August but electricity providers with existing contracts can obtain exemptions until the end of 2027.
Although the UK, Canada, France, Japan and the US have announced plans to jointly develop a fully independent uranium supply chain, much of what has been proposed is yet to come online and new facilities take years to develop.
Nick Lawson, chief executive of Ocean Wall, a London-based brokerage, likened Mr Putin’s threat to the nuclear equivalent of “the OPEC cartel threatening to stop selling oil to the West”.
He added: “It takes time to build [enrichment facilities] and, for the last 30 years, the US has developed a dependency on Russia.
“There’s been a lot of excitement about this idea that we are about to have a nuclear renaissance but the fuel, which is the most critical component, is now going to have to largely come from the West. 
“And the West does not have the capability to mine the ore and to be able to enrich it in the quantities that are needed to supply our reactors.
“So we’re now getting to a point where something’s going to give.”
Arkady Gevorkyan, a Citi analyst, warned Reuters that Russian supplies would be “really hard to replace, especially in the short term, the next two to three years”.
He added: “Western enrichers are only making plans to build additional enrichment capacity, which would require at least three years to be completed.
“We anticipate that utilities in the US might be able to partially replace it by importing low enriched uranium from China.”
Urenco, the British-German-Dutch nuclear fuel consortium that controls about one third of global enrichment capacity, is in the process of expanding its facility in New Mexico.
However, this is only expected to add an extra 700 tonnes of separative work units per year, the equivalent of 1pc of global capacity today.
Foreign policy analysts said Mr Putin’s threat, though potentially costly for Russia as well, was likely a reaction to US and UK discussions about authorising Ukraine to use long-range missiles to strike deep into Russian territory. 
Theresa Fallon, founder of the Brussels-based Center for Russia Europe Asia Studies, said: “I think this is in response to the meetings in Kyiv [about US and UK permission to make long-range missile strikes into Russia]. 
“It’s also worth noting that it’s been made ahead of the scheduled meeting between Joe Biden and Keir Starmer.
“Perhaps Putin feels at this stage that, after two and a half years, his threats to use nuclear weapons are getting tired and he instead needs to remind everybody that their nuclear reactors also depend on Russian uranium.
“Frankly, it’s a far more credible threat that will make people pause.
“It’s also not something the Biden administration will want to be worrying about with the US elections coming up in November.”
John Lough, an associate fellow of the Russia and Eurasia Programme at Chatham House, said cutting off uranium supplies would not be done lightly as it would likely destroy Rosatom’s commercial relationships with western customers for good.
He pointed to the pariah status of  Russian state gas giant Gazprom as an example after Mr Putin’s decision to “use energy as a weapon” and throttle supplies to Europe.
Mr Lough added: “There are a lot of factors at play. Rosatom is important to Russia but it is also regarded as a company with global influence, and I am sure they’d like to keep it that way.
“Before the war, [Russian state gas company] Gazprom had a reputation for being a reliable supplier but now there is no way it will recover that business in Europe, precisely because they spooked all the customers.
“The Russians will also be thinking about the possible retaliatory measures the US could take – these decisions are always finely balanced because there will be a reaction.”