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Since its founding in 1982, NUKEM Inc., together with its Alzenau, Germany-based parent, NUKEM GmbH, has transitioned from playing a modest role in uranium brokerage to becoming one of the world's largest intermediaries in the international nuclear fuel market. NUKEM consistently ranks as one of the top five providers of uranium to nuclear power plants worldwide, one of the major suppliers to the uranium spot market, and a global trader not just of uranium but of conversion and enrichment services as well. |
| NUKEM sources its products primarily (but not exclusively) in the Central Asian states of the former Soviet Union, referred to as the Commonwealth of Independent States or CIS. Headquartered in Danbury, Connecticut since 1999, NUKEM markets nuclear fuel components to utilities in North and South America, Western Europe and the Far East. |
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“The nuclear fuel business has undergone such a colossal change over the last twenty-five years that it’s almost unrecognizable,” says NUKEM Inc. President and CEO Jeffrey R. (Jeff) Faul, citing the rising and falling prices, rising and falling trade barriers, deregulation, re-regulation, consolidation, the recent and dramatic uranium price increases, and the building momentum towards a global renaissance of nuclear power. “As a trading operation, NUKEM must anticipate these kinds of changes and position itself to take advantage of them,” Mr. Faul says. |
| After a decades-long bear market, the price of uranium soared and then corrected sharply in the past year. The higher prices have been attracting a new class of market participant – institutional investors – an unprecedented development in this particular market. “These are exciting times for both traditional market participants – the traders like NUKEM, utilities, and uranium
miners – as well as the financial market players,” says Mr. Faul. |
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Key milestones in NUKEM’s growth and development have been a series of agreements (first executed in the early 1990s and since renewed) that gave NUKEM access to the bulk of the uranium mined in the newly independent states of the former Soviet Union, in particular the nations of Uzbekistan and Kazakhstan. Ukrainian uranium also figured in the mix, as did some material from Russia itself. NUKEM’s positive track record in the CIS led directly to a close relationship with Kazakhstan’s Ulba Metallurgical Plant, a nuclear fuel processing facility with world-class capabilities. NUKEM continues to work with Ulba on a variety of high-value nuclear fuel services ventures.
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| Yet access to competitively-priced uranium would prove to be only half the battle. Access to customers was equally important, and necessitated a particularly adroit marketing effort. Breaking into the Far East market (Japan, Korea and Taiwan), where reactor fuel demand is still growing, has been one of the company’s signal achievements. Opening up these markets proved especially crucial when, in the mid-1990s, U.S.-based trade quotas were slapped on uranium emanating from the CIS. |
| The company’s longstanding experience in business transactions involving uranium have allowed it to participate in transactions at the highest level. Exemplary here was the U.S.-Russia HEU “uranium feed” deal, a part of the historic “Swords to Plowshares” HEU Agreement between the two world powers. Both the U.S. and the Russian Federation Governments explicitly endorsed NUKEM as a reliable partner because of that experience. Under this arrangement, signed in 1999, NUKEM joined with Canadian uranium producer Cameco and French nuclear conglomerate Cogema (now AREVA) to acquire and market a large part of the uranium component of fuel derived from Russian warheads. This deal runs through 2013, and represents uranium “output” on par with the world’s largest uranium mine (as well as embedded conversion services). |
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In addition to its involvement in the HEU Deal, the company has also been one of the major participants in a U.S. government-funded non-proliferation program called Initiatives for Proliferation Prevention (IPP). The program aims to enhance U.S. national security by engaging former Soviet weapons scientists in peaceful commercial pursuits. NUKEM’s IPP projects currently involve the uranium and beryllium operations at the Ulba Metallurgical Plant in Kazakhstan. |
| As a trading company, NUKEM is constantly alert to opportunities that are allied to its core business, leveraging its network of supply and customer contacts. Exemplary here are new lines of business marketing specialty materials such as light isotopes (used in reactor coolant water), and beryllium (used in consumer electronics applications) sourced in Kazakhstan. The company also has branched out in developing a significant business based on contracting processing services of its suppliers in the CIS. Several unique long-term arrangements provide for the conversion of uranium-bearing scrap materials into commercial nuclear fuel. |
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In the spring of 2006, the companies of RWE Solutions AG were purchased by Advent International, a leading global private equity company with managed assets amounting to Euro 4.8 billion and branches in 14 countries in Western and Central Europe, North America, Latin America and the Asian-Pacific region. Since its inception in 1980, Advent has invested in over 500 companies. In each of these, Advent dedicates its efforts to helping the target companies grow and develop.
Since its inception nearly a quarter of a century ago, NUKEM has sold something on the order of 150 million pounds of uranium equivalent, and generated gross revenues from all sources well in excess of $2 billion. It is the future that absorbs NUKEM, Inc.’s focus today as it looks forward to continuing its active status on the spot and long-term uranium markets for uranium, conversion, and enrichment.
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