Letter: Pricing Russia out of the uranium market

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The Independent Online
Sir: Your front-page report 'EC bars Russian uranium' (6 April) rightly exposed the aggressive protectionism practised by the Euratom Supply Agency on behalf of EC-based uranium producers; and it noted its damaging effect at a critical time on an important Russian hard-currency earner. However, it did not disclose how grossly the ESA is exceeding its powers - certainly in the spirit, probably in the letter - under the Euratom Treaty.

That treaty was drawn up in the Fifties, at a time of global shortage of uranium, to ensure 'a regular and equitable supply' for all users in the nuclear power industry. The monopoly purchasing powers then given to the ESA were never intended to be used to keep out cheap uranium (such as is produced in Russia, Kazakhstan or Uzbekistan), nor were they intended to be used other than in the user or consumer interest.

The emphasis was on 'favourable' prices. However, the ESA, under pressure from European (including French and British) mining companies, is now refusing to purchase natural uranium from the CIS for EC users except at nearly double the world spot price.

The ESA's argument that prices held artificially far above the world price ensure regularity and equity of supply is spurious for a number of reasons, technical and economic. But the policy certainly protects the position of suppliers who, unable to compete, cry 'dumping'. That, presumably, is why Euratom's proposed nuclear trade treaty with Russia seeks to expand the ESA's arbitrary monopoly control still further - turning much on what it judges to be 'fair market conditions'. Its present highly questionable pricing practices would thereby be legally entrenched.

The European Commission (of which the ESA is part) has argued that in blocking Russian uranium it is merely following the lead of the US Department of Commerce, whose anti-dumping action last year effectively froze CIS uranium out of the US market. It has now admitted, however, that European producers, who supply the bulk of US uranium needs, themselves played a major part in that exercise. For an institution that affects to believe in free trade, to support commerce with the CIS and to be the guardian of our consumer interests, this behaviour carries disingenuousness altogether too far.

Yours faithfully,

ADAM FERGUSSON

London, W14

7 April

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