By Melissa Pistilli-Exclusive to Uranium Investing News

On Tuesday, Russia’s Techsnabexport (Tenex) signed a landmark agreement with US utilities firm Fuelco worth a reported $1 billion.  Tenex is the export branch of Russia’s Federal Nuclear Energy Agency (Rosatom) and Fuelco is a conglomeration made up of Pacific Gas and Electric Co, Luminant and Ameren UE.

The deal will allow Tenex to supply uranium to US companies from 2014 to 2020 in the first solely commercial uranium contract between Russia and the US; it also follows a negotiated settlement in February 2008 between the two nations authorizing Russian uranium imports to the US civil nuclear power industry.

The agreement represents a change in US policy regarding Russia and nuclear proliferation, as well as signals Washington’s readiness to accept its Cold War rival’s role in the nuclear power market. Prior to this agreement, Russian uranium came into the US under the “megatons to megawatts program” first enacted in 1993, which allowed Russia to sell surplus weapons grade uranium for US civilian reactors.

Previous Washington legislation had prohibited Russia from dealing directly with US utilities and forced Moscow to sell to the United States Enrichment Corporation (USEC). The USEC was once the import arm of the United States Department of Energy with a monopoly on Russian uranium; however, Washington sold the USEC to a private company. Since then, Russia has been voicing their discontent over being purportedly underpaid by USEC.

Now, Russia can deal directly with US uranium suppliers and utilities companies while taking advantage of improving spot prices. “This is a revolutionary breakthrough,” said Sergei Kiriyenko, the head of Rosatom. “We have broken through the wall forbidding us to sell Russian fuel to the American market. After the contracts signed today, we will start new contracts. This is only the beginning.”

The deal has been in the works for several years now and its closing is welcomed by US utilities. “We worked for over 5 years to make this happen. This fuel will provide energy for 5 million American homes,” said Fuelco President Bruce Hamilton.

Russia holds nearly 40 per cent of the world’s uranium enrichment capacity and for decades now it has dreamed of garnering direct access to US utilities markets. The new agreement will grant Moscow the opportunity to become a leading supplier to a nation whose demand for clean energy is expected to rise significantly.

The US already depends upon 104 nuclear power plants to supply 70 per cent of its non-carbon-generated electricity. Electricity demand in the US is forecasted to climb 50 per cent by 2030 and applications to build over 30 new reactors are reportedly being considered. The Electric Power Research Institute has reported that as much as 42 new reactors could be built over the next 20 years.

Although the US government is ready to get serious about combating climate change with renewable energy sources, there are those in Washington who say we are still decades away from developing the necessary technology and infrastructure.

To politicians like US Senator Lamar Alexander (R. Tenn), nuclear power is presently the only viable alternative to fossil fuels. “If we’re serious about clean air, if we’re serious about climate change, if we’re serious about having enough low-cost, reliable electricity to keep our jobs from going overseas, we don’t have any other option,” said Alexander, who has recently called for the construction of 100 new nuclear power plants over the next 20 years.

Russia Looking to be the World’s Nuclear Industry Leader

“The Russians do it all. They mine it, they convert it and they enrich it,” said Fuelco President Bruce Hamilton, speaking about Russia’s diverse role in the uranium market.

And if Moscow’s recent activities around the world are any indication, Russia is set on securing the position of top uranium supplier to the world.

For years, Russia has already had purchase deals with France and the Netherlands and has recently signed agreements with Japan’s Toshiba and Germany’s Siemens.

This month, Jordan signed an agreement with Russia to help develop a civilian nuclear energy program. Russia is also currently awaiting a decision from the Rudd government in Australia, which accounts for the world’s largest known recoverable resources of U308, to allow Russia to purchase Australian-mined uranium.

“Moscow is seeking to increase its clout by expanding into developed markets such as the United States, European Union and Japan while adding sales in India, Turkey and China,” said Reuters reporter James Pethokoukis.

Anatoly Gregoryev, Tenex CEO, says the company’s goal is to corner 30 per cent of the world’s uranium-enrichment market. If Russia wants to fulfill its goals, it will have to compete with industry giants like Areva and GE Hitachi.

“The financial crisis is a unique window of opportunity,” said Rosatum’s head, Kiriyenko. “The demand is still there… The challenge now is to make use of this demand. That means building the capacity that has not been built, mainly with the help of global alliances.”