Kazakhstan sets 15% discount limit for nuclear plant supplies

Kazakhstan’s government has introduced new pricing rules that cap discounts on the purchase of key nuclear materials at 15%. The regulation applies to uranium hexafluoride — produced by converting uranium oxide, a finished product of Kazakhstan’s uranium industry — and enriched uranium products.

Under the new rules, the government will allow discounts of up to 15% when purchasing these materials. However, purchases related to international projects involving the Ulba Metallurgical Plant and transactions with the International Atomic Energy Agency (IAEA) are automatically considered market-based, regardless of how they align with the discount formula.

«The government of Kazakhstan hereby resolves to approve the rules (methodology) for pricing uranium hexafluoride and enriched uranium product,» states the draft resolution signed by Prime Minister Olzhas Bektenov.

The rules will take effect 10 calendar days after their first official publication, except for Chapter 6, which retroactively applies to transactions dating back to Jan. 1, 2019.

The pricing formula aims to curb tax base underreporting through transfer pricing, i.e. when affiliated companies conduct transactions at non-market rates. According to the new regulation, the discount (D) may range from 0% to 15% and applies to the cost of conversion (PUF6, PCONV) and enrichment (PSWU), all expressed as a percentage.

End users are defined as nuclear fuel manufacturers or nuclear power plant (NPP) operators purchasing uranium hexafluoride or enriched uranium for operational needs, including affiliated entities or authorized representatives.

The regulation specifies that enriched uranium may contain up to 5% of the U-235 isotope. Transaction prices must be calculated in U.S. dollars per kilogram (kg) of the product. Since uranium oxide is typically sold in pounds, it must be converted to kilograms. Kazatomprom, Kazakhstan’s national nuclear company, uses a standard conversion rate of 1 kg of uranium concentrate equaling 2.5998 pounds.

Kazakhstan-based end users can enter contracts factoring in the costs of conversion and enrichment services. Suppliers will be selected through competitive bidding and fuel prices under those contracts must be reviewed every five years from the date of first delivery.

The discount formula also accounts for uranium tails, a byproduct of processing uranium concentrate, which contain between 0.1% and 0.3% uranium. If a contract includes a discount, the transaction price is calculated without factoring in any margin added by a trader, broker or agent.

Kazakhstan’s new pricing regulations for nuclear fuel include key exceptions that recognize certain transactions as market-based, regardless of whether they follow the government’s discount formula.

Among the exceptions are fuel supplies for Ulba-TVS, a joint venture based in Ust-Kamenogorsk, which manufactures fuel assemblies for Chinese nuclear power plants. The company is 51% owned by the Ulba Metallurgical Plant, a subsidiary of Kazatomprom, and 49% owned by China’s CGNPC Uranium Resources Company (CGNPC-URC), a unit of China General Nuclear Power Corporation (CGNPC). This Kazakh-Chinese venture was established under an agreement between Kazatomprom, Ulba Metallurgical Plant, CGNPC-URC and Ulba-TVS.

Transactions involving the purchase or sale of enriched uranium products with the IAEA, the nuclear watchdog of the United Nations, are also classified as market transactions.

For all other cases, prices resulting from end-user bidding must not fall below those calculated using the official pricing formula outlined in the new rules.

In a background note accompanying the draft resolution, Kazakhstan’s Energy Minister Yerlan Akkenzhenov stated that the new methodology is designed to improve existing pricing mechanisms for uranium hexafluoride and enriched uranium products. He emphasized that the rules will not require state budget funding and will not lead to adverse legal or socio-economic consequences.

Meanwhile, Meirzhan Yussupov, CEO of Kazatomprom, a subsidiary of Samruk-Kazyna, noted that the company is in negotiations with international partners about potentially launching domestic conversion and enrichment operations. He estimated that the cost of building conversion facilities could range from $1 billion to $1.12 billion while establishing enrichment capabilities would cost several billion dollars.

International stakeholders have raised concerns about Kazakhstan acquiring uranium enrichment technology, which could theoretically be used to increase the U-235 isotope concentration from the standard 4.95% used in nuclear fuel to over 90%, a level suitable for weapons-grade uranium.

Following the collapse of the Soviet Union, Kazakhstan — home to the USSR’s primary nuclear test site — voluntarily renounced the world’s fourth-largest nuclear arsenal. In the 2021 documentary «Qazaq: History of the Golden Man,» directed by American filmmaker Oliver Stone, Kazakhstan’s first President Nursultan Nazarbayev recalled that Palestinian leader Yasser Arafat once conveyed an offer from then-Libyan leader Muammar Gaddafi: $20 billion in aid in exchange for Kazakhstan keeping Soviet nuclear weapons instead of transferring them to Russia.

According to Nazarbayev, he received a letter from Gaddafi in 1992 offering multi-billion-dollar aid to preserve Kazakhstan’s nuclear arsenal, but he declined the proposal.

What uranium enrichment means for Kazakhstan and where will its first NPP be built?

Developing domestic uranium conversion and enrichment capabilities would allow Kazakhstan to establish a full nuclear fuel cycle, enhancing the safety and security of nuclear fuel production within the country. With plans to build at least three NPPs, the push to localize these critical stages of the nuclear fuel cycle is gaining urgency.

Kazakhstan is already the world’s largest producer of uranium and holds approximately 15% of global reserves, second only to Australia. The country has also proposed a uranium mining and fuel supply agreement to support Turkey’s expanding nuclear energy program, according to Baurzhan Duisebayev, CEO of the Chemical Engineering Design Bureau.

Kazakhstan’s first NPP, with a planned capacity of 2.4 gigawatts, is slated to be built in the village of Ulken in the Zhambyl district of the Almaty region, near Lake Balkhash.

The potential technology suppliers are:

• CNNC (China), offering the HPR-1000 reactor.
• Rosatom (Russia), offering VVER-1000 and VVER-1200 reactors.
• KHNP (South Korea), offering the APR-1400 reactor.
• EDF (France), offering the EPR1200 reactor.

On Oct. 6, 2024, Kazakhstan held a national referendum on the NPP project. The proposal passed with 71.12% voting in favor. According to the Ministry of Energy, a final decision on the technology supplier is expected by late June 2025.

Notably, President Kassym-Jomart Tokayev said the project may be carried out by an international consortium. In late January, then-Energy Minister Almassadam Satkaliyev — now head of Kazakhstan’s newly established Nuclear Energy Agency — said that at least three nuclear power plants should form the foundation of the country’s future nuclear cluster.