SIGNIFICANT DEVELOPMENTS IN JAPAN-KAZAKHSTAN NUCLEAR ENERGY COOPERATION

On April 27th, Japan and Kazakhstan announced that they would jointly develop a light-water nuclear power station at a yet-undisclosed location in Kazakhstan. Tomorrow, METI Minister Akira Amari is scheduled to travel to Kazakhstan with over one hundred Japanese business executives to formally ink the pact. This major development caps a series of recent moves to strengthen the nuclear power link between Tokyo and Astana.

Apparently, the pact will also include other items such as the Japanese provision of US$4 million for monitoring systems to improve Kazakhstan’s nuclear security. According to a Kyodo News report, “The agreement to negotiate [a bilateral nuclear agreement] came after Kazakhstan accepted Japan's condition that it first agree to accept short-notice inspections of its nuclear facilities by the International Atomic Energy Agency.”

In related news, the Marubeni Corporation, the Tokyo Electric Power Company, and the Chubu Electric Power Company decided to participate in developing a uranium mine in association with Kazatomprom. The three companies will receive “indirect ownership interest” in the proportions of Marubeni 60%, TEPCO 30%, and Chubu 10%. The Tohoku Electric Power Company is expected to buy into the arrangement in the future as well.

The project is concerned with the Kharassan uranium mine in southern Kazakhstan, with the start of test production expected this year. The deal is credited in part to the visit of then-Prime Minister Junichiro Koizumi to Kazakhstan in August 2006.

“Kazakhstan is the Key”

As for the reasons why Japan is now courting Kazakhstan, a very clear view was offered by Hirofumi Kawachi, an energy analyst at Mizuho Investors Securities, in a recent Bloomberg interview: "Competition from China will intensify in the coming years… To boost energy security, what other option does Japan have except to approach other countries such as Kazakhstan?" Tadao Yanase of METI added: "Kazakhstan is the key to how much uranium Japan can obtain."

It is said that about 29% of Japan’s domestic electric energy is produced from its 55 nuclear reactors.

MIZUHO BANK IN TIE-UP WITH TWO KAZAKH BANKS

Last month, Mizuho Corporate Bank announced an agreement with two Kazakh banks that would allow it to expand its operations in Kazakhstan. The energy resources market -- especially oil and gas -- and the transportation industry were said to be the main targets of Mizuho’s efforts.

The two local banks in question were JSC Kazkommertsbank, the largest bank in Kazakhstan, and JSC Development Bank of Kazakhstan.