IAEA Assurance of Nuclear Fuel Supply

IAEA Board of Governors Meeting
December 2-3, 2010

Agenda Item Number 7

Assurance of Nuclear Fuel Supply

U.S. Statement

Ambassador Glyn Davies

Permanent U.S. Representative to the International Atomic Energy Agency

Mr. Chairman,

Since 2003, Member States have discussed concepts and proposals for an IAEA-administered, multilateral fuel assurance mechanism to assure fuel supplies for nuclear power plants.  The most recent proposal is before you in  document GOV/2010/67, put forward by the United States and the governments of the Member States of the European Union, Japan, Kazakhstan, the Republic of Korea, Kuwait, Norway, the Russian Federation, and the United Arab Emirates.  It draws on the many discussions on the subject that have occurred both here in the Board of Governors, and in other fora, in order to address the questions and concerns raised about the fuel bank as a concept and about various other proposals.  The Board also has before it GOV/2010/68, a resolution by which the Board Member States of Belgium, Czech Republic, Denmark, France, Germany, Italy, Japan, the Republic of Korea, the Netherlands, Portugal, the Russian Federation, the United Arab Emirates, the United Kingdom and the United States call for the Board to adopt the proposal in GOV/2010/67.

The United States believes that, if adopted, this proposal would encourage and support the expansion of peaceful nuclear energy without increasing the risk of nuclear weapons proliferation, while at the same time respecting the rights of all Member States.  I want to reinforce that final point.  Nothing in this proposal would alter in any way the sovereign right of Member States to develop peaceful nuclear energy.  As President Obama said, “no approach will succeed if it’s based on the denial of rights to nations that play by the rules.”  Rather, the aim is to support and enhance sovereign choice in weighing the practicality of civil nuclear power in countries whose programs will not be scaled to a size to justify the expensive development of an enrichment capability.

There is general agreement that the international uranium market is working efficiently and well today, and will likely work efficiently and well into the future.  However, unforeseen circumstances might disrupt a Member States’ supply of LEU in a situation that the market could not remedy, for whatever reason.

In September 2006, the Nuclear Threat Initiative, a non-governmental organization with its headquarters in the United States, proposed to contribute $50 million to the IAEA to help create a stockpile of low-enriched uranium, owned and managed by the IAEA, to serve as a last-resort fuel reserve for Member States facing such a crisis.  This generous offer was made subject to two conditions.  First, that other donors would contribute $100 million in matching funds, and second, that the IAEA Board of Governors set up a mechanism to administer the LEU bank.  The first condition was met over a year ago through separate pledges from the European Union, Kuwait, Norway, the United Arab Emirates, and my own government.  The Board should now act to fulfill the second condition for this generous offer by approving the Recommended Actions contained in GOV/2010/67.

Some have expressed concerns that this LEU bank would impact the regular budget of the Agency.  The United States sees no reason why the regular budget would need to be used to fund this project.  The Agency has decades of experience administering projects that rely on voluntary contributions.  With over $150 million in voluntary funds to start up the LEU bank, we are confident that all direct and indirect costs can be met through the voluntary contribution of money, material, or services.  Of course, additional contributions are encouraged, as these would further add to the value of an LEU Bank to IAEA Member States.

Others have expressed concern that the LEU bank could itself disrupt the uranium market.  The United States does not share this concern; rather, we judge the design, scale, and operating principles of the proposed LEU bank are suitable to be of assistance in any extraordinary circumstance.  In the context of a fuel market that supplies over 400 nuclear power plants worldwide, purchases of LEU sufficient for three reactor core re-loads cannot have any significant effect on the market price of LEU.  Moreover, transfers of material from the bank will occur only in the exceptional circumstance that neither the market nor a bilateral partner is able to fulfill a Member State’s supply need; given that LEU transfers overwhelmingly occur under long-term contracts, the IAEA LEU bank would be a mechanism of last resort to fill a gap that is foreseen and unable to be solved.  By definition, the market would not be affected because market supply would not be available.  And states will not be able to “game” the market since they will still have to pay market prices for procurement from the LEU reserve.

In 2009, the Board approved the Russian Federation’s proposal for an LEU reserve at Angarsk, Russia.  The current proposal would not conflict with the Angarsk reserve.  Rather, each reserve would reinforce the other.  Both reserves are intended to help one or more Member States facing a fuel crisis.  A diversity of fuel assurance mechanisms  helps build confidence in the reliability of fuel supply.

Mr. Chairman,

In May of this year the parties to the Nuclear Non-Proliferation Treaty, including the vast majority of IAEA Member States, held a successful Review Conference in New York.  Action 58 of the Review Conference Final Document recommendations for follow-on actions called for Parties to continue to discuss further, in a non-discriminatory and transparent manner:
• the development of multilateral approaches to the fuel cycle, including mechanisms for assurance of nuclear fuel supply;
• without affecting the rights of NPT Parties;
• without prejudice to national fuel cycle policies; and
• considering full-scope safeguards requirements.

We believe that the proposal in GOV/2010/67 answers the call of the Review Conference.  It is being offered after years of discussion in the Board and on the margins of the Board.  It would not discriminate based on a Member State’s fuel cycle policies.  It would not alter the rights of Member States to develop nuclear energy, and would in fact help guarantee those benefits.  And it requires full-scope safeguards as a condition of supply.

Mr. Chairman, we have discussed the issue of fuel assurance mechanisms for a long time.  Over the past few years, thoughtful contributions from IAEA Member States, both on and off the Board, have allowed us to refine together the design of an IAEA LEU Bank.  We are grateful for these efforts, and equally appreciative of the Secretariat’s provision of technical advice – as requested by Member States – along the way.

We believe that the time for debate of this matter is now behind us, and that the time for action has arrived.  The Board is now in a position to accept the $150 million in pledged funds, and to approve this proposal for an IAEA Low Enriched Uranium Bank.   Since we have reached this point after years of collective effort, we now look to our counterparts on the Board of Governors to join us in adopting the resolution before us in GOV/2010/68.  My delegation has the honor to move that the Board do so.

Thank you Mr. Chairman.