ALMATY/EDINBURGH, U.K. - The world's first internationally managed nuclear fuel reserve is to set open on Aug. 29 in eastern Kazakhstan. Proponents have championed the reserve as a vital safety measure at a time of heightened international tensions over the spread of nuclear technology but others are questioning the value of the $150 million project.

It will take another year to fill the fuel bank, an unassuming blue and white warehouse at the Ulba Metallurgical Plant in Oksemen, near the Chinese border, with 90 tons of low-enriched uranium, enough to fuel one nuclear power station for about three years. But for its backers, the launch of the reserve, which will be run by the International Atomic Energy Agency, a U.N. organization based in Vienna, marks an important moment in nuclear history.

The IAEA Low Enriched Uranium Bank is to be opened Aug. 29 by Kazakh President Nursultan Nazarbayev.   © Reuters

"This really represents unprecedented cooperation by a number of countries, not only to reduce nuclear proliferation but also to make the world safer," said Andrew Bieniawski, vice-president of material security and minimization at the Nuclear Threat Initiative. With funding from Warren Buffett, the U.S. group jump-started the drive to open the IAEA Low Enriched Uranium Bank back in 2006.

For Kazakhstan and Nursultan Nazarbayev, its 77-year-old president, hosting the reserve is a chance to win international goodwill and bolster the country's critical role in nuclear energy. The mineral-rich Central Asian state is the world's biggest producer of raw uranium, accounting for 40% of global output. Nazarbayev earlier won praise for giving up the arsenal of nuclear weapons abandoned in the country when it became independent in the wake of the collapse of the Soviet Union in 1991.

There are already a number of nuclear fuel banks run by national governments, including one in neighboring Russia set up in 2010. Proponents though say that IAEA oversight of the Kazakh reserve will guarantee its neutrality, a vital element in the hypersensitive nuclear industry.

Kazakh President Nursultan Nazarbayev, right, in talks with IAEA Director General Yukiya Amano in 2015. (Courtesy IAEA/Government of Kazakhstan)

Mohamed ElBaradei, a Nobel Peace Prize winner and former head of the IAEA, said in a statement on Aug. 21 that the new fuel bank was "a bright spot in the international community's effort to lessen the nuclear danger and strive for a safer world."

Buffett originally pledged $50 million for the fuel bank on condition that donor countries raised $100 million. The U.S. eventually committed $49.5 million, the EU 24.4 million euros ($29.1 million), the United Arab Emirates $10 million, Kuwait $10 million, Norway $5 million and Kazakhstan $400,000.

Open door

Kazakhstan was the only nation to offer to host the reserve, and a deal was struck with the IAEA in 2015. Two transit routes have been negotiated with Russia and China, giving the nuclear fuel bank connections to seaports in Europe and East Asia to import and export low-enriched uranium.

Iran, identified by Sam Nunn, a former U.S. senator now serving as co-chairman of the Nuclear Threat Initiative, as a key potential user of the fuel reserve, can be reached directly via the Caspian Sea. The notion is that the reserve will remove the justification for Iran to enrich more uranium itself, even if it is unable to obtain fuel from the commercial market.

Bieniawski said that as world demand for energy increases, the NTI and the IAEA want to promote nuclear energy as a safe and reliable source of power. However, growth in the use of atomic energy also generates security concerns because facilities that produce low-enriched uranium for power plants can also be used to produce highly enriched uranium for nuclear weapons.

The commercial market in low-enriched uranium is highly politicized and dominated by state-owned and semi-private companies in China, Russia, the U.K., France and the U.S. India, Iran, North Korea, Pakistan and Japan also have their own uranium enrichment facilities.

Bieniawski said the fuel bank should take politics out of the development of civil nuclear power. "For countries to build very expensive enrichment facilities, they don't need to do this anymore because there is now an added resource and a guaranteed source of supply," he said. "It is not controlled by any country, it is not controlled by the U.S. or Russia or France, but instead by the most independent organization out there."

Uncertain impact

To skeptics, however, the IAEA fuel bank is a political exercise in headline-grabbing rather than a meaningful attempt to improve the market.

David Hess, spokesman for the World Nuclear Association, a London-based group that represents commercial nuclear businesses, questioned whether a country which has been rejected as a client by commercial vendors will really feel able to use the new reserve.

"Some people seem to think that having an international fuel bank means countries won't need or want to develop their own uranium mines, enrichment or reprocessing facilities," he said. "However, their rights to develop such facilities are not affected by it. The small scale of the current fuel bank is unlikely to change any country's long-term nuclear fuel cycle strategy."

There are 447 nuclear power reactors in the world, according to the World Nuclear Association. Another 58 are under construction and 162 more are planned. Bangladesh, Indonesia, Saudi Arabia, Jordan and the UAE have all said they intend to open their first nuclear power stations over the next few years.

Other concerns about the nuclear fuel bank are practical. Sharon Squassoni, director of the Proliferation Prevention Program at the Washington-based Center for Strategic and International Studies, said the new reserve is largely symbolic. It would reduce some proliferation concerns, but the complicated process of using low-enriched uranium to create nuclear fuel would make it difficult to deploy supplies.

"The uranium has to be the right quality, it has to be the right enrichment level," she said. "When it comes down to actually putting the fuel rods in the reactor, they have to be very specifically manufactured. It's not like putting gasoline in your automobile."