Russia gains foothold in Kazakhstan's largest uranium deposit

By Sultan Musayev | 2025-01-08

ALMATY -- Russia is shedding unneeded assets in Kazakhstan's uranium industry and selling them to China, a move that conceals a long-term strategy to consolidate control over Kazakhstan's largest uranium deposit, Budenovskoye.

The Russians acquired the deposit, a coveted prize holding up to 800,000 tons of uranium, through a dubious scheme.

On December 17, Kazatomprom, the Kazakh national nuclear operator and the world's biggest uranium producer, announced that Russia was pulling out of several joint ventures that produce uranium in Kazakhstan.

Uranium One Group, which is part of the Russian state-owned corporation Rosatom, sold its 49.979% stake in the Zarechnoye mine to a Chinese company called SNURDC Astana Mining Company Limited. Kazatomprom will retain its own 49.979%.

As of early 2024, the Zarechnoye deposit -- in Turkistan province, Kazakhstan, and mined since 1977 -- held 3,500 tons of uranium reserves, which are slated for extraction in the next three years, said Kazatomprom.

Russia is also selling its 30% stakes in the Khorasan-U joint venture and the Kyzylkum company to China Uranium Development Company Limited. Kazatomprom will keep its 50% stake in both companies.

Khorasan-U extracts uranium in the North Khorasan deposit in Kyzylorda province, Kazakhstan, said Kazatomprom.

At the beginning of 2024, the North Khorasan deposit had about 33,000 tons of uranium reserves with an expected maturity in 2038. The mined uranium is processed by Kyzylkum.

In 2023, Russia was the world's sixth-largest uranium producer, and Rosatom claimed to be the third-largest producing company, thanks to mining in Kazakhstan. Uranium One extracted 4,831 tons of uranium in Kazakhstan that year, Reuters reported.

Rosatom, a Russian state corporation that specializes in nuclear energy, nuclear non-energy goods and high-tech products, includes more than 350 enterprises, including a nuclear weapon complex.

Russia is looking for better deals

These deals show that Russia aspires to earn more money in Kazakhstan, say mining analysts.

Russia no longer wants to be involved with Zarechnoye, which is not a very profitable mine, and instead will focus on the much richer Budenovskoye deposit, Nurlan Zhumagulov, director of the Kazakh NGO Energy Monitor, told Global Watch.

The total proven uranium reserves in Budenovskoye, one of the largest in the world, amount to 800,000 tons, according to Kazatomprom's former leadership.

However, this treasure trove essentially belongs to Russia, which has spent many years gradually expanding its right to extract in this mine.

In late 2022, Rosatom bought a 49% stake in the Budenovskoye uranium field in Kazakhstan, with all output reserved for Russia's nuclear industry in 2024-2026.

Last August, Rosatom director general Alexey Likhachev publicly thanked Russian President Vladimir Putin for helping to acquire Budenovskoye.

"This makes us the second largest operator in terms of reserves and one of the top three companies in the nuclear fuel cycle overall, and we retain our leadership position," Likhachev said.

"The Russian state corporation secretly and incrementally bought up an enormous nugget to then immediately offer the world a faceted diamond. As far back as the early aughts, Rosatom's managers developed a strategy -- to gradually gain control of Budenovskoye -- and they ultimately brought this strategy to fruition," Profile, a Russian weekly magazine, wrote in April 2023.

The Kazakh government made the deal that gave Russia control over the strategic mine even as Kazatomprom vehemently opposed it, Bloomberg reported in May 2023.

Kazatomprom senior managers who disagreed with the decision staged a mass exodus.

Seizing national resources

The news that Russia had gained control of Budenovskoye angered the Kazakh public, which demanded disclosure of the terms of the transfer of the mine.

Russia took over Budenovskoye practically for free, Mukhtar Dzhakishev, the former CEO of Kazatomprom, told Armanzhan Baitassov of Forbes Kazakhstan in May 2023.

Kazatomprom had an agreement with Russia saying that Rosatom would receive five mine sections and in exchange would give Kazakhstan 50% in the enrichment plant, he said.

Kazakhstan fulfilled its obligations but Russia did not, Dzhakishev said. He described the occurrence as unprecedented and outrageous.

"How can it be that Russia took charge of our national resources at its discretion, while we just watched it happen from the sidelines?" Dzhakishev said.

Observers are concerned about risks connected to this transaction, including the possible imposition of secondary sanctions on Kazatomprom.

Now that Kazatomprom has transferred its uranium deposit to Russia for free, the West views the Kazakh nuclear operator as an appendage of Rosatom, Dzhakishev said, citing sources in the United States.

Last May, US President Joe Biden signed a law prohibiting imports of uranium produced by Russia or by a Russian entity, in response to the Russian invasion of Ukraine.

The restrictions could affect Kazakh uranium mined by Rosatom, specialists in Kazakhstan fear.

Moscow used its leverage over Astana to further expand its influence in the Central Asian republic, said Dimash Alzhanov, a political analyst.

"Now Russia controls our uranium industry too, while we depend more on the Kremlin," Alzhanov told Global Watch.

For Russia, controlling Kazakhstan's nuclear industry and its energy industry as a whole is a way to keep the Central Asian republic in its orbit of influence, said Alzhanov.

Astana is displaying obvious weakness in its relations with its northern neighbor, he added.

"Putin is getting everything he has been trying to get in Kazakhstan, without encountering any real resistance. I think we've essentially already partially lost our sovereignty," Alzhanov said.