A $1.6 billion uranium mining deal between France and Mongolia, aimed at diversifying France’s nuclear reactor fuel supplies, likely won’t be finalized until after June’s elections, according to Bloomberg which cited two people familiar with the matter.
The delay, according to these sources, stems from an ongoing debate over the protection of Mongolia’s strategic resources. The deal may also need to be redrafted after the deal’s chief negotiator from Mongolia resigned.
Initially outlined in October during Mongolian President Khurelsukh Ukhnaa’s visit to Paris, the deal involves state-controlled French uranium producer Orano SA developing and operating the Zuuvch-Ovoo mine in Mongolia. It was originally expected to be finalized and signed by the end of last year, with production slated to begin in 2028.
The recent developments, which could mean not just delays but potentially the cancellation of the project altogether, poses challenges for Orano, which views the project as crucial amid rising global uranium demand. The uranium producer currently has mining operations in Canada, Kazakhstan, and Niger. Operations had to be halted in the facilities in Niger following the sanctions against the military junta last year.
Such setbacks, coupled with a surge in nuclear power interest for decarbonization, have propelled uranium prices to 15-year highs.
But the jitters may have more to do with Mongolia being stuck between a rock and a hard place: Russia and China. The country relies on Russia for 80% of its petroleum products while China buys a majority of its exports. Shortly after Ukhnaa’s visit to Paris in October, Russia’s Deputy Prime Minister Viktoria Abramchenko paid him a visit.
Similar to what it did to Europe in the early days of the war in Ukraine in 2022, Russia cut energy supplies to Mongolia in December, citing an issue at a hydro power plant, causing the country to limit daily power consumption. Within the same month, Mongolian Energy Minister Battogtokh Choijilsuren visited Moscow to discuss the disruptions. Earlier his month, Russia said that it will have preferential treatment for Mongolia on oil-product prices.
Since Russia invaded Ukraine, it has become “more hostile to any Western influence on its neighbors, including Central Asian nations and Mongolia,” Bloomberg reports. Moscow has also sidelined Paris as leading trade partner in a number of African countries following military coups like in Niger.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
