TENEX Celebrates 50 Years in the Nuclear Energy Business
For many years, the brand name TENEX was not only synonymous with the Russian enrichment industry, but also as Russia’s sole representative in the global nuclear fuel markets. TENEX had indeed much to celebrate on Wednesday, July 17, 2013, when it gathered its customers, employees, and partners at its 50th anniversary gala celebration in Moscow.
It was fifty years ago, on July 17, 1963, that the All-Union Export/Import Bureau Techsnabexport (TENEX) was established by the secret order of the Soviet Union’s Council of Ministers. Boris K. Pushkin was appointed its first director. And so the company now known as TENEX was launched into the commercial nuclear industry.
Following its establishment in 1963, TENEX embarked on a long and successful tenure as one of the world’s largest nuclear energy companies. The company’s first milestone was in May 1971, when it signed its first contract to supply uranium enrichment services with the Atomic Energy Commission of France. This was quickly followed by additional enrichment services contracts with nuclear utilities in Western Europe, including Italy, Germany, UK, Spain, Sweden, Finland, Belgium, and Switzerland. Many of these commercial relationships continue to this day.
Although TENEX’s first contracts were in Europe, which remains the company’s primary export market to this day, TENEX expanded its business in the 1990s and 2000s by entering the fuel markets in South Africa and the Republic of Korea and by signing the historical twenty-year HEU Agreement with USEC in 1994. It also entered the Japanese market in 1999 with the signing of its first contract with Japanese nuclear utility, TEPCO. In 2008, TENEX resumed commercial exports of Russian uranium products to the U.S. under the 2008 Domenici Agreement and the amended Russian Suspension Agreement. In 2012, TENEX signed a major long-term enriched uranium contract with the United Arab Emirates for the UAE’s first nuclear power station.
At this time, TENEX also added the transport and logistics division, which enabled it to offer fuel delivery packages as part of its offers. Such assurances have been especially important to TENEX’s new target market in the U.S., where utilities have limited experience contracting directly with TENEX. In continuing to expand its customer base and international presence, affiliated marketing companies have been established in all key markets: Japan, the Republic of South Korea, Germany, the U.K., and most recently, the U.S.
Since its first delivery to France many decades ago, TENEX has proven to the global industry that it is a highly reliable supplier of quality uranium products. Four enrichment plants, under the management control of TVEL Fuel Company with a combined annual capacity of over 27 million SWU, support TENEX’s international marketing efforts. Today, TENEX has 32 energy customers in 16 countries and has a backlog of long-term contracts worth $28 billion, supplying uranium enrichment services to over one-third of the world’s western-type reactors.
To learn more about TENEX’s past and future plans, UxC went straight to the source, speaking with the company’s new General Director, Lyudmila Mikhailovna Zalimskaya.
Interview with the TENEX General Director, Lyudmila Zalimskaya
Ms. Zalimskaya, who has spent her distinguished 35-year career with TENEX, holds a degree in international economic relations from the Moscow State Institute of International Relations and an MBA from Russia’s State University of Management. Ms. Zalimskaya started her career in TENEX’s subsidiary, Uranservice, beginning as a junior administrator and eventually rising to become the firm’s General Director. Ms. Zalimskaya served as the company’s Acting General Director since October 2012. She previously held the post of the First Deputy Director General.
UxC: Lyudmila Mikhailovna, congratulations on your anniversary! The 50th anniversary is certainly a momentous occasion and we at UxC would like to offer our most heartfelt congratulations.
Many changes have certainly taken place over the past 50 years both for TENEX and for the global nuclear industry in general. What developments over the course of the past five decades do you consider most worthy of highlighting and revisiting?
Zalimskaya: Thank you for your congratulations. TENEX’s 50 year-long history features numerous milestones related to entering new segments of the world market, mastering new types of business, and undertaking large-scale institutional restructuring. Among the most outstanding events I would note are TENEX’s entry into the global uranium enrichment market in 1971 and the signing of the HEU Contract in 1994. Our first contract with France’s Atomic Energy Commission literally heralded a new era in the world’s trade in nuclear materials, put an end to the U.S. monopoly that had lasted many years, and launched the creation of a genuine market for uranium enrichment services, where TENEX was soon followed by two powerful players, URENCO and Eurodif. The HEU Contract, in my view, will remain unchallenged in terms of its scope and political importance.
Among the most recent events, I would mention the conclusion in 2012 of a long-term contract with the UAE’s Atomic Energy Corporation for enriched uranium supplies for this country’s first nuclear power plant in Barakah, which is currently under construction. This is a good starting ground for further advances in this new and promising market for nuclear fuel cycle products and services.
UxC: Your anniversary coincides with the end of the historical Megatons to Megawatts Program, in many ways a defining program for TENEX. Furthermore, the Russian nuclear industry has been through numerous restructuring efforts as well. How does TENEX view its current role in the Russian and global nuclear industries?
Zalimskaya: TENEX is the primary company promoting enriched uranium products, uranium enrichment and conversion services to the world market within the Rosatom system. Over the past decade, along with exports of uranium products, TENEX has been actively consolidating the industry’s production assets, creating new types of business, and gathering production enterprises that are important for sustainable operation of the nuclear fuel cycle. According to a decision by the State Corporation Rosatom, these projects, alongside uranium mining and isotope production assets previously owned by TENEX, were handed over to other companies for further development. Last autumn, Rosatom’s management decided to transfer TENEX to the International Business Development Unit, headed by Kirill Komarov, who is currently the Chairman of TENEX’s Board of Directors.
As for TENEX’s position in the global nuclear industry, it has remained stable – nearly one third of the total needs of Western-design reactors for uranium enrichment services are met by our deliveries. Over the forty plus years of our operation, we have increased Russia’s share in the global uranium market nearly fourfold – from 9% in 1975 to 33% in 2012, with a considerable share in all of its key geographical segments.
UxC: Connected with the end of the HEU deal are the persisting questions about what may come next, such as the follow-on to the HEU deal or perhaps the resumption of foreign depleted uranium re-enrichment. Could you please provide a comment on the likelihood of such a supply-side initiative?
Zalimskaya: The issue of extending the Megatons to Megawatts program in one way or another was raised by the American side long before it was nearing its end, but as a popular saying goes, “all in good time.” The company’s management made repeated statements that there were no plans to extend the program. However, this doesn’t mean there is no possibility for further reducing the nuclear threat through cost-efficient disposition of the nuclear materials believed excessive for defense purposes. In conformity with the Russian-U.S. Strategic Offensive Arms Reduction Treaty of 2010, the United States and Russia continue reducing their nuclear stockpiles. Using a certain part of nuclear materials made available as a result of this process for civilian uses is possible in principle, but on a parity basis. The issue comes down to reaching appropriate political agreements. Rosatom State Corporation possesses the technologies necessary for cost-efficient conversion of these materials to nuclear fuel.
UxC: Just a few years ago, TENEX began direct contracting with U.S. utilities. How successful have you been in filling the quota allotted by the amended Russian Suspension Agreement? Have you begun contracting with any U.S. utilities for the time period beyond 2020, when the RSA ends?
Zalimskaya: TENEX has a long record of product deliveries to U.S. utilities. The first direct contracts were made in the late 1980’s. Then, the early 1990’s witnessed the well-known story with the antidumping investigation regarding uranium deliveries from Russia, which ended with an agreement on its suspension and actual curtailing for many years of “commercial” exports to the United States. The conclusion of contracts with utilities and renewal of direct deliveries to the United States began only with the signing of the Amendment to this Russian Suspension Agreement in 2008. For the past five years, TENEX has been waging an active contracting campaign in the U.S. market that resulted in our contract portfolio consisting of thirteen direct and one TENAM-mediated (this is our U.S. subsidiary) long and mid-term contracts with ten U.S. utilities worth nearly $6 billion overall. This means that nearly 70% of the quota allotted under the Amendment to the RSA for supplies to U.S. utilities in 2014-2020 has already been filled. There are, of course, contracts stretching beyond 2020, but there aren’t many of them yet.
UxC: Connected to the issue of TENEX’s efforts in the U.S. is the fate of TENEX’s U.S. partner, USEC. The company, which serves as the executive agent of the U.S. government in the HEU Deal and is a contracting party in the Transitional Supply Agreement (TSA), finds itself in a difficult situation. To what extent do these developments with USEC impact TENEX? TENEX and USEC announced in the past that they were pursuing a possible U.S. enrichment plant using Russian centrifuge technology. A committee was formed to study this idea. Is this still under active consideration by TENEX and USEC?
Zalimskaya: USEC is a long-standing and reliable partner of TENEX. The positive interaction experience that we have accumulated over the nearly two decades that we’ve been jointly performing the HEU Contract provides a solid foundation for further cooperation. In 2011, TENEX and USEC signed a long-term contract for the provision of enrichment services to the United States (Transitional Supply Agreement – TSA) that could see annual deliveries after 2015 reaching a level of around half the annual supply volume under the HEU Deal. A number of new business ideas aimed at strengthening cooperation in the nuclear fuel cycle are being considered at the expert level. We hope that USEC will be able to overcome its current difficulties and our contacts will not be limited to merely carrying out the TSA, which we are jointly working to stabilize at the moment.
UxC: There is no doubt that the nuclear fuel suppliers have found themselves operating in a much more difficult market environment than previously anticipated post-Fukushima. Many enrichers have announced changes in their expansion plans and marketing strategies. Has TENEX adjusted its market position and outlook?
Zalimskaya: As I see it, it isn’t just about Fukushima’s impact. The defining feature of today’s situation is that the gas diffusion plants have been suspended, so the suppliers that rely on the gas centrifuge process are losing their process-based and, subsequently, economic advantages. Another factor fueling competition is the increasing number of suppliers, which forces the usual market players to actively develop marketing tools not related to production processes and pricing. On this front, we are also pushing forward: we are developing our transport and logistics infrastructure and overseas sales network – we already have five subsidiaries operating in the key sales markets. However, since the gaseous diffusion plants have been suspended and the HEU Program is drawing to a close, a huge amount of material from a rather reliable source is leaving the market. Obviously, it is important for consumers that the emerging void is filled with offerings from more or less equally reliable sources. This is where, in my opinion, Russia, with its powerful technological and production potential, should play a sizeable role.
UxC: Most recently, TENEX concluded an agreement with Kazatomprom regarding transfer of material via book transfers. Is this agreement a precursor of establishing western-style material accounts in Russia?
Zalimskaya: The signing of the Material Account Agreement with Kazakhstan’s National Atomic Company Kazatomprom – which allows our partners to deliver natural uranium to Russia via book transfer – is clearly just the first step towards creating a full-fledged material accounts system in Russia, a tool widely used internationally for supplying uranium product. I’d also like to specifically note that a number of our partners have already voiced their interest in possibly opening material accounts in Russia, and I believe it is a very promising area of cooperation.
UxC: And, finally, my last and, if I may, more personal question. It has been 35 years now that you’ve worked in this industry, in this company, having moved up the career ladder from a rank-and-file position to CEO. What is your impression: has the woman’s role in the Russian nuclear industry changed over that period, and if yes, then how?
Zalimskaya: Frankly speaking, I expected a question like this, especially because in our industry, in general, and in Russia, in particular, the number of female executives is not high; although, to be fair, I have to say that the situation has been changing recently, especially within the State Corporation – quite a number of women are actually top managers there. I am trying to recall something of the kind in the Ministry thirty years ago – but alas…
I would refrain from adding a gender connotation to the issue of a management style – the management may be poor or good regardless of gender. A woman might be more scrupulous about details, where, as we know, “the devil is”, and move methodically, in a focused way, towards the assigned goal, without her attention being distracted every second to formulating and addressing the ‘global’ tasks, which is often typical of men. I’m joking, of course.
To give you some specifics, I will refer to statistics on our company: two out of ten top managers are women, and there’s a stable trend towards a growing share of women in the company – today this figure is as high as 60%. Not bad, I think.
UxC: Thank you very much for your time and, once again, congratulations on your anniversary. We at UxC have no doubt that the next fifty years will bring for TENEX many more milestones to be celebrated.