In an attempt to convince the world in its non-proliferation commitments and Russian public in the fact that spent nuclear fuel is a valuable resource, Russian Minister for Nuclear Energy says Russia will pay Iran for the return of spent fuel from Bushehr nuclear power plant.

Russia's Ministry for Nuclear Energy, or Minatom, is going to pay Iran for the return of the fuel burnt in Bushehr Nuclear Power Plant, which Russia is constructing in the Islamic republic.

"The Iranians believe — and we support them on it — that the fact they buy the fuel from Russia means it becomes Iranian property, and Russia will have to pay for the irradiated fuel," Aleksandr Rumyantsev, Russian Nuclear Energy Minister, was quoted by ITAR-TASS as saying at the recent press briefing.

Russia's supply of nuclear fuel for Bushehr nuclear power plant will begin after completion of the plant and finalization of export agreements. The plant is expected to be ready for loading of the fuel by the end of 2003, although some experts believe this date is too optimistic.

Bushehr remains hot in Russia-US relations

The construction of Bushehr plant by Russia angers the United States, whose officials say Iran is pursuing a nuclear weapons programme. Russia has long denied these allegations, insisting that the nuclear programme in Iran is entirely peaceful. During the past few months, however, Minatom being confronted with hard facts of Iranian nuclear activities, started to admit that there might be a problem.

Pointing at press reports that Iran has built a pilot cascade of 150 to 200 centrifuges as well as premises for several thousand such centrifuges at one of its nuclear facilities, Mr Rumyantsev said: "If true, those centrifuges may help enrich uranium to weapons-grade conditions, in which case the situation cannot but cause concern." But Mr Rumyantsev also fought back the US by saying that Iran was using technologies of a certain US-based company. "On one hand, the US is criticizing Iran and Russia for cooperation at a nuclear plant project, but on the other, a US company is helping Iranians build a powerful uranium-enrichment facility," Rumyantsev was quoted by ITAR-TASS as saying.

Russia's project in Iran undermines spent fuel import plans

The brief statement by Mr Rumyantsev that Russia will pay Iran to take back spent nuclear fuel indicates that in addition to all the trouble with the United States, there are other problems looming.

Minatom has long advocated for the project to import foreign spent nuclear fuel to Russia for storage and reprocessing, claming that it may bring a profit of up to $20bn, given 20,000 tonnes of fuel is shipped in. The President of the Russian Federation approved the highly controversial legislation package, which favours foreign spent fuel imports, in July 2001.

By since the approval of the package, there was no flow of cash earned on the importation. There have been indeed a couple of shipments from the Eastern European countries, which operate Soviet design reactors. But the charge for the shipments was much lower than suggested by Minatom during the PR-campaign to ensure the passage of the importation legislation in the Russian State Duma. Countries like Ukraine had troubles covering even these low priced services. Earlier this year, Ukraine had debt of $9m to Russia for spent fuel shipment for storage at Zheleznogorsk, Krasnoyarsk county, situated in western Siberia.

Other countries, which Minatom considered as attractive markets for these services, in particular Asian countries, could not send any spent fuel to Russia without the consent of the United States.

The USA holds rights over an approximate 80% of the world's spent fuel according to various estimates. Until now the United States did not show any particular interest in granting Russia the right to import this fuel. There were some statements, however, coming from the States Department, which said that the US administration might consider such option, given Moscow drops its nuclear cooperation with Iran. Minatom has so far rejected such proposal, but at the same time has become more cautious in blatantly denying nuclear weapons ambitions of Iran as the ministry did before.

Leasing of spent fuel may malfunction as well

Seeing the planned earning of $20bn not materialising, Minatom complained — for domestic public consumption — about the high competition at the "international spent nuclear fuel market", where "Russia is not welcomed" and started to work on a more realistic approach. That was to lease nuclear fuel to nuclear power plants in other countries and — after the fuel is burnt — take it back for storage or reprocessing.

Such a deal could be very lucrative to many countries, which operate nuclear power plants. The current practice suggests that once a country buys nuclear fuel, it will stay in this country, and this country also has to ensure its safe storage. The management of spent nuclear fuel is a very expensive, headache-causing venture and, should Russia agree just to take it back for good, everyone will be happy about it. It is even a better option for a particular country than sending spent nuclear fuel for reprocessing in Great Britain or France — the two countries which unsuccessfully try make business by providing such services. Firstly, it will be more expensive and, secondly, the waste generated during reprocessing will be shipped back to the country of origin. Russia agrees in its leasing scheme to take care of the waste as well.

For some reason, however, Minatom's scheme is malfunctioning in the case of Iran. Russia will have to pay Iran for its own fuel to be returned. One may wonder what are the reason for Iran's stance and Russia's readiness to bow to such a demand. It can either be a bad management of the contracts from Minatom's side, which did not work out the leasing option properly. It can also be the understanding from Iran's side, that Minatom will simply have no choice but to accept such conditions.

Minatom stated earlier that the spent fuel would not remain in Iran after contractual documents between the two parties were made public by Greenpeace, where the return of spent nuclear fuel was not stipulated. This reveal gave more arguments to the USA in criticizing Russia's nuclear cooperation and Minatom was forced to give a firm promise that Iran will not keep the material, which can be potentially used to create weapons of mass destruction. Iranians from their side decided to either take advantage of this situation, or to make it more difficult for Minatom to take the fuel back.

On the other hand, the whole argument about the fuel return is becoming obsolete as Iran declared its intentions to develop its own fuel cycle. "Entirely for peaceful purposes," Iranian officials say, but the US is not convinced.

The spent fuel details of other Minatom's projects, such as in China or in India, are not known. But looking at Iranian example even the leasing option does not seem to be easier than the original importation scheme advertised earlier by Minatom.