In Kazakhstan, the race for uranium goes nuclear

TAIKONUR, KAZAKHSTAN -- The dry steppe stretches to the horizon in all directions from this remote outpost in southern Kazakhstan. But peeking out of the sandy soil, amid the sagebrush and desert shrub, are thousands of wells arranged in geometric patterns, each extracting radioactive treasure.

These desolate fields sit above one of the world's largest deposits of uranium, and with nuclear energy in a renaissance, a rough-and-tumble battle is underway for access to them.

The race echoes the geopolitical jockeying to control Central Asia's rich reserves of oil and natural gas -- a variation on Rudyard Kipling's Great Game, complete with corporate intrigue, a disgraced spy chief and an alleged plot by the Kremlin to keep this former Soviet republic under its thumb.

Leading energy and mining firms from Russia, China, Japan, France and Canada have already invested billions here. Kazakhstan, meanwhile, is seeking to leverage its ore into a larger role in the global nuclear industry and has taken a stake in the U.S.-based nuclear giant Westinghouse.

Long obscured by the country's opaque political system, the maneuvering for uranium burst into the open last year with the arrest of Mukhtar Dzhakishev, the highflying chief executive of the state nuclear firm Kazatomprom. The KNB, local successor to the KGB, accused him of transferring the rights to 60 percent of the nation's uranium deposits -- worth billions of dollars -- to offshore companies under his control.

Dzhakishev, 45, denied the charge and remains in prison. But in a remarkable breach of security, somebody leaked a 64-minute video of him speaking to KNB investigators. In footage posted on YouTube, he offered a rare look at the shifting global alliances behind Kazakhstan's efforts to transform itself from a mere producer of raw uranium to a nuclear powerhouse involved in every aspect of the industry.

He also dropped a bombshell: Russia, he alleged, had engineered his arrest to scuttle a series of pending deals and prevent Kazakhstan from becoming a more independent and formidable competitor.

"I've had plenty of time to think over the situation, and I've been trying to figure out who benefits from it," he said, addressing an unseen interrogator. "I came to the conclusion that it plays into the hands of the Russians."

Russian officials dismissed the allegation as nonsense. But Dzhakishev's words carry weight because he was one of Kazakhstan's most respected and dynamic businessmen, part of a younger generation recruited into government by the country's autocratic president, Nursultan Nazarbayev, to modernize a flagging post-Soviet economy. For more than a decade, he stood at the center of the Kazakh uranium rush, turning a near-bankrupt state firm paying employees with food rations into the world's top uranium producer, with annual profit of more than $300 million.

His success positioned Kazakhstan to take advantage of surging international interest in atomic energy as an alternative to fossil fuels linked to global warming. With 53 nuclear plants under construction worldwide and nearly 500 others planned or proposed to be operating by 2030, demand for uranium to fuel reactors has soared. Available stockpiles from dismantled weapons are dwindling, analysts say, and nobody can ramp up production as quickly as Kazakhstan.

Nazarbayev calls uranium a strategic asset as important to Kazakhstan as its $35 billion oil industry. Only the nation's fledgling environmental movement has dared object, pointing out that Kazakhstan has yet to recover from its days as the Soviet Union's main atomic test site.

The Soviets conducted 456 nuclear blasts in northeastern Kazakhstan, more than anyone else anywhere in the world. Much of the region remains contaminated, residents suffer elevated rates of cancer and other radiation-related illnesses, and babies continue to be born with deformities.