Mining showed up on the front page of the New York Times last week, in the form of an obscure, formerly Canadian uranium mining company caught in the web of the Hillary and Bill Clinton campaign cash controversy. The story was already maddeningly complex: A Canadian businessman allegedly persuaded a former American president to meet with the leader of Kazakhstan and engineer a deal that would ultimately put Wyoming uranium into the hands of Russian owners.Within hours, that tale was spun into the vortex of the 2016 U.S. presidential campaign. The issue belonged to the spin doctors who parse speech fees, foundation firewalls, and arcane disclosure rules, and figure out how all of this might affect the Iowa straw poll.
As for American uranium, the object of Russian affection, it swiftly receded from public view, nothing more than a political McGuffin - Alfred Hitchcock's droll term for whatever plot device is needed to get the drama going.
And that's too bad, because the question of why uranium (and not just any uranium, but U.S. uranium) would be bought by a foreign entity (and not just any foreign entity, but an entity that is an arm of the Russian government) is worth a deeper look.
Russia is already a significant uranium producer in its own right. So what was Russia up to in their effort to use a Canadian-domiciled company to lock down significant uranium assets in Kazakhstan, South Africa, Tanzania, Australia, Canada, and the western United States? And "Russia" is the appropriate term here. First, consider that the buyer of Uranium One, ARMZ, is a wholly-owned subsidiary of Rosatom, the Russian government agency that oversees not only nuclear energy but also nuclear weapons production. More than that, though, Russian President Vladimir Putin spoke openly about the acquisition of Uranium One as long ago as 2011.
The occasion was a December 2011 discussion with Rosatom chief Sergei Kiriyenko about the state of Russia's nuclear sector. A former prime minister and the son of a high-ranking KGB official, this is the very same Kiriyenko who would go on to sign the deal providing Russian nuclear fuel for Iranian nuclear reactors in November 2014.
The transcript, helpfully available in English, is posted at the official government site for the Russian Premier:
Sergei Kiriyenko: "...Here is our breakdown, Mr Putin. Few could have imagined in the past that we would own 20 percent of U.S. [uranium] reserves. We have very good deposits in Africa, Australia and, of course, in Kazakhstan, which is our strategic partner. Uranium One, a company we bought, leads the global market. It is outperforming all the others."
Vladimir Putin: "Is it Canadian-based?"
Sergei Kiryenko: "Yes, it operates under Canadian law. Today we have a controlling stake in it, with 49 percent held by private investors. Uranium One has the lowest production costs of all public companies around the world, to say nothing of its capitalisation, output and earnings."
At the time of purchase in mid-2010, Rosatom promised not to take Uranium One private. They broke that promise in 2013.
Will Rosatom ship U.S. uranium to Russia or Iran, as some American pundits are now hyperventilating? Not likely - not now, at any rate, with public eyes upon them. But there are other, simpler ways to deprive the U.S. nuclear industry of domestic uranium feedstock. Uranium One's Russian owners can simply elect to leave U.S. uranium in the ground, exacerbating our already-strong foreign dependency, at a time when Russia is increasing its control of global uranium supply. After all, Rosatom cannot be compelled to mine Wyoming uranium at the U.S. government's command.
But is turnabout not fair play? This is after all a global economy: Can U.S. resource companies not simply invest in Russian uranium deposits, and meet demand that way?
Not under Russia's Strategic Sector Law, instituted by Putin in 2008. Under the terms of this legislation, an acquisition by a so-called foreign interest of more than 5 percent in a natural resource company requires notification of the Russian government. Interested in exploring in Russia for new metals deposits? You can, but the Russian state reserves the right to expropriate whatever you find - reimbursing you for your costs, plus a reward to be determined by the Russian government. As for specific minerals, "any deposit of nickel, cobalt, tantalum, beryllium, lithium, platinum, niobium, uranium, diamonds, rare earths or high-purity quartz, regardless of size, is considered strategic," with foreign investment banned altogether, or limited to minority interests.
With the exception of beryllium, the United States is import-dependent for each one of the metals and minerals on the Russian strategic list - in some cases for 100 percent of what the United States consumes each year.
In a global economy, that's economic leverage that can be used against American interests. In times of crisis - especially when many of the same metals and minerals are used in advanced weaponry - the American metals gap is potentially far more dangerous than JFK's missile gap ever was.
And that's the problem with the resource wars: They're asymmetric, to pluck a phrase from military strategists, with one combatant pitting its strength against another's weakness. The resource race features state-owned enterprises in China, and Kremlin-connected oligarchs in Russia, competing against private mining companies in the West, which have no government in their corner. It's the megaliths versus the micro-caps. Operating one deal at a time, Russian and Chinese entities pick off the best deposits around the world, all the while protecting their domestic resource base.
That's the real story of Uranium One, and of the Resource War the United States refuses to wage.
(AP photo)