India asks Russia for reliable supply of uranium

Indian Prime Minister Narendra Modi paid an official visit to Russia for the first time in five years on Monday and met with President Vladimir Putin. President Modi wants to conclude a long-term uranium supply agreement with Russia in order to secure a stable and reliable source of uranium for India's expanding nuclear power sector.

This is a big score for both India and Russia, and Washington is watching closely. This is because India is an important element in the US plan to contain China first and Russia second. Modi can influence both. India has already escaped Russian oil and gas sanctions, and Washington would have no choice but to accept the same for Russian uranium.

The two allies are likely to agree on a long-term uranium supply agreement for a nuclear power plant operating in Tamil Nadu, senior officials familiar with the matter say. Cooperation in the field of civil nuclear energy does not fall under the sanctions regime imposed by the United States and its Western allies against Russia's war in Ukraine. Russia's state-owned nuclear power company Rosatom has supplied nuclear fuel to India's Kudankulam nuclear power plant in 2022 and 2023.

“Units 1 and 2 of the Kudankulam nuclear power plant are already in operation, and work is underway on units 3 and 6,” India's Foreign Minister Binai Kwatra said on Friday, adding that Moscow “will continue to be an important partner for India's energy security and defense.”

Currently, India procures most of its uranium from mines in northern Jharkhand. Unfortunately, the state's uranium reserves are rapidly being depleted, and efforts to develop reserves in other states such as Andhra Pradesh and Meghalaya have not met expectations, and India is increasingly forced to rely on imports. India currently relies on spot deals with countries such as Kazakhstan, France, Russia, Canada, and Uzbekistan to procure fuel.

The global nuclear sector is at a new dawn, and the US, Europe, and now India are increasingly accepting nuclear power as a low-carbon energy source. However, there is a high possibility that the Indian economy will continue to rely on fossil fuels for major energy sources for decades to come.

China has been responsible for most of the increase in global oil demand for decades. Since Beijing began economic reforms in 1978, the Chinese economy has grown at an average annual pace of 10%, and GDP has expanded from 1.2 trillion dollars in 2000 to close to 18.5 trillion dollars in 2024. However, the law of large numbers is already in effect, and economists currently predict that China's economic growth rate will slow to 2 to 5% in the next few years due to population decline and slowing productivity.

More importantly, analysts' predictions that India will replace China will drive the growth in global oil demand. Over the past 10 years, the Asia-Pacific region accounted for 79% of the increase in global oil demand, with China alone accounting for 58%.

Emma Richards, a senior analyst at London-based Fitch Solutions, told the “Times of India” newspaper: According to the analyst, over the next 10 years, China's share of rising oil demand in emerging markets will drop from close to 50% to just 15%, and India's share will double to 24%. India's rapid population growth is likely to surpass China's, and is expected to be the main driving force behind India's consumption trends. In fact, oil consumption in India increased 3.7 million tons (4.8%) in the 2024 January-April fiscal year compared to the same period last year, and consumers rather than industry are driving growth.

Meanwhile, the transition from conventional means of transportation using gasoline or diesel as fuel is lagging behind other regions, in contrast to China, where the introduction of electric vehicles and clean energy in general is rapidly increasing.

Mr. Persley Ong, who is in charge of Asian energy and chemicals research at JPMorgan Chase & Company (Hong Kong), told Bloomberg that “it was certain that India would surpass China in a matter of time as a driving force for global demand expansion due to demographic factors such as population growth.”

India is also doubling its investment in coal. Last year, India's coal minister declared that coal would not be immediately thrown out of the energy mix. Coal Minister Pralhad Joshi told a parliamentary committee that coal will continue to play an important role in India until at least 2040.

“Therefore, a shift away from coal will not happen in India for the time being,” Joshi said, adding that coal will continue to play a major role after 2040.

This astonishing declaration was a rebellion against calling on countries to phase out fossil fuels, which emit large amounts of carbon dioxide. At COP27 last year, UN Secretary General António Guterres called for urgent actions to reduce emissions, such as abolishing coal worldwide by 2040.