Warsaw, 6^th July 2023

 

Memorandum of the Union of Entrepreneurs and Employers:
SMR – Modular Atom for Business

 

• According to experts, small nuclear power reactors have the potential to give Polish economy leverage in the future.
• The first power plant in Poland with a BWRX300 reactor is to begin commercial operations in 2029.
• For Poland to have a chance to become a European incubator of SMR technology, it is necessary to implement a number of recommendations listed at the bottom of the document.

SMR, which stands for a Small Modular Reactor, is a type of modern nuclear technology that meets the needs of large energy-intensive enterprises as well as local communities. Such solutions may in the future determine their safety and energy independence. In recent months, this technology has been emerging from the shadow of large-scale nuclear facilities and attracting investors due to several advantages.

Nuclear power in Poland is no longer a question of “if”, but “how fast and how much”. Large-scale nuclear and SMR projects will therefore be developed in our country in parallel and will become complementary.

What do we know about small nuclear reactors today? What the technologies are available on the market? What is the stage of development of Polish projects? What legislative solutions do we need? How do Polish plans compare to European ones? Have we got a chance to become a leading force in the development of SMR technology on the so-called Old Continent? All of these questions were answered during the first Polish conference entirely dedicated to modular reactors.

On 12^th June 2023, the “SMR – Modular Atom for Business” conference took place organised in Warsaw by the Energy and Climate Forum of the Union of Entrepreneurs and Employers. Representatives of central administration, industry experts, technology providers, investors and scientists took part in the event. PKN ORLEN was the Main Partner of the conference, EDF was its Partner, and the Honorary Patrons included: the Ministry of Climate and Environment, the Ministry of Development and Technology, the Ministry of State Assets, as well as the National Atomic Energy Agency, the National Centre for Nuclear Research and the National Fund for Environmental Protection and Water Management.

Atomic Law and Nuclear Special Act in Poland

In the opinion of Adam Guibourgé-Czetwertyński, Undersecretary of State at the Ministry of Climate and Environment, who was one of the invited guests at the conference, the Polish Nuclear Special Act and Atomic Law were sufficient for SMR investments to be developed based on their provisions, while the national regulations were based on technological neutrality and the desire to streamline processes related to obtaining the necessary permits. In spite of this, seeing the growing interest in small nuclear reactors, the Ministry is currently working on making the regulations regarding smaller, modular atomic units more specific.

The Act of 9^th March 2023 amending the Act on the preparation and implementation of investments in nuclear power facilities and accompanying investments and certain other acts introduced directional provisions to five different legal acts: the Nuclear Special Act, the Atomic Law, the Special Act on strategic transmission networks, the Environmental Protection Act, and the Act on the structuring of the Agrarian System.

The amendment of the Nuclear Special Act and the Atomic Law entered into force on 13^th April 2023. The purpose of the changes was to streamline the investment process in the construction of nuclear power facilities at all stages, including decreasing the time necessary to obtain individual permits – most importantly, without departing from the nuclear safety standard.

Along with the amendment, the position of the fundamental decision was changed and now starts the licencing process, which is justified, since it is an expression of the state’s acceptance of a given facility. The basic decision entitles the holder to apply for a decision on location of an investment in the construction of a nuclear power facility and other decisions necessary for the nuclear power facility’s preparation, implementation, and operations.

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Source: Ministry of Climate and Environment

Amendments to the law introduced the possibility of parallel proceedings for issuing environmental and location decisions. The period of validity of a location decision was also extended from 5 to 10 years. Furthermore, before obtaining a permit for the construction of a nuclear power facility, the investor may apply for a permit for preparatory work, which should positively impact the pace of implementation of the investment. The new provisions also allow for the possibility of attaching selected documents and decisions during the process of obtaining a building permit, instead of having to submit them together with the motions for a decision as it used to be before. As a result, some of the permitting processes can be carried out simultaneously and in an overall shorter time.

Does the Polish legal framework, which does not provide for separate requirements for investments in large-scale nuclear energy and those in SMR, need a special act on modular nuclear reactors? It seems that while a dedicated legal act should not be expected, analytical work is underway at the Ministry of Climate and Environment related to possible further adaptation of the regulations to the specificity of investments in modular reactors.

Nuclear safety and supervision

The President of the National Atomic Energy Agency (NAEA) is the central authority of the government administration competent in matters of nuclear safety and radiological protection. Its activity is regulated by the Act of 29^th November 2000 – Atomic Law and executive acts to this Act. The minister responsible for climate issues supervises the NAEA President.

Numerous aspects of SMR projects were elaborated on during the conference, such as safety considerations and the important role of NAEA, which will evaluate the “small atom” on the same basis as full-scale nuclear investments. The National Atomic Energy Agency is involved in licencing the construction of a nuclear power plant at all stages of the investment, issuing permits for construction, commissioning, operation, and decommissioning. At the initial stage, the NAEA President issues a general opinion, an opinion on the preliminary site report, and participates in the evaluation of the Environmental Impact Assessment Report for a nuclear power plant.

It is obvious that the NAEA approached the new tasks related to investments in SMRs very seriously. The Polish nuclear regulator was already a party to about 10 agreements with international regulatory authorities, but on 13^th February 2023, the Polish and Canadian nuclear regulators signed an agreement regarding small modular reactors, particularly the BWRX-300. Polish and Canadian supervision authorities will exchange information on best practices and technical reviews in the field of this technology. The parties also agreed to share the results of independent analyses and assessments conducted as part of the licencing process. The memorandum also provides for joint operations in the above-mentioned areas and in the field of training and development of regulatory solutions to ensure the safety of this technology.

Financing investments in SMRs

Presently, it seems that the technology of light-water nuclear reactors, of which there are approx. 150 operating worldwide, is not really the main challenge, but their power and size need to be scaled up – otherwise, costs may prove to be a barrier. Experts agree that two aspects can aid investors in this respect. On the one hand, appropriate government guarantees and a refined financial model, so that the involvement in SMRs is associated with an acceptable risk for banks. On the other hand, the scale effect brought about by a fleet-oriented investment campaign and regional scope, which will allow to reduce unit costs and build local competencies, service facilities, and structures necessary for the new sector.

In accordance with the declarations of ORLEN Synthos Green Energy and basing on the example of the BWRX-300 SMRs, which are to be built in the largest number in Poland, it is the scale effect of the investment that is to contribute to the development of the market, services, and personnel available directly in our country. The agreement with the National Fund for Environmental Protection and Water Management signed in March this year, which provides that the parties – as part of a capital investment – will lead to the preparation, construction, and commercialisation of the BWRX300 fleet, will help in this matter. In the next steps, the parties to the agreement will agree on the environmental goals to be achieved, the economic model of the project and the schedule for its implementation, the business plan, and the provisions of the investment agreement.

It seems, however, that without external financial support, this undertaking may be difficult to carry out anyway. Therefore, OSGE assumed the involvement of EXIM Bank and U.S. International Development Finance Corporation (DFC). The aforementioned American government institutions announced the possibility of supporting the project of building the first BWRX-300 reactors in Poland with a total amount of up to USD 4 billion. An agreement in this regard had already been signed.

Almost at the same time, ORLEN Synthos Green Energy also concluded a cooperation agreement with the largest banks in Poland: PKO BP, Pekao SA, Santander Bank and BGK – a bank whose mission is to support domestic economic growth. The purpose of the agreement is to jointly develop a financial model for the project to build a fleet of BWRX-300 reactors, it also provides for the possible participation of banks in financing. And although it is difficult at this stage to provide details (even approximate cost estimates of investing in SMRs were not specified), the practice of executing nuclear investments shows that the greatest threat to them is exceeding the assumed deadline and schedule. This is certainly a key aspect that requires appropriate supervision and control, especially in a country that is just building its nuclear competence.

Available technologies

As specialists emphasise, there is no shortage of ideas for small nuclear reactors around the globe today, as there are already about 80 projects in the “early design” phase, including high-temperature reactors using other types of fuel or gas-cooled, i.e. HTRs (including a Polish concept!), or nuclear batteries that can work for 20 years without human intervention or the need for fuel supply (ARIS data, end of 2022).

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Source: Polish Economic Institute

Most projects are developed in the USA and Russia. The Polish Economic Institute estimates the value of the global SMR market in a positive scenario to come up to EUR 450 billion by 2035. Over 100 SMRs are planned in Poland, based on declarations of potential investors.

The most prominent SMR technologies include (in alphabetical order):

• BWRX-300 (GE-Hitachi, USA) – BWR, 300 MWe,
• Nuscale (Nuscale, USA) – PWR, 77 MWe x 4-12,
• Nuward (EDF, France) – PWR, 2x 170 MWe,
• SMART/iSMR (KHNP, South Korea) – PWR, 110=>170 MWe x 4,
• SMR-160 (Holtec, USA) – PWR, 160 MWe,
• UK SMR (Roll-Royce, UK) – PWR, 470 MWe,
• WEC SMR (Westinghouse, USA) – PWR, 300 MWe.

The first three designs were discussed during the conference “SMR – Modular Atom for Business” by direct representatives of technology suppliers and investors. We devoted an entire chapter of this memorandum to the BWRX-300 reactor concept, it is, however, worth outlining the concepts of EDF and Nuscale as well.

The French EDF technology is thus far the only SMR from a European country already in the pre-licensing process. It is also very promising in terms of use on the EU market due to EDF’s unparalleled experience in the design and operations of nuclear reactors compared to other countries of the so-called Old Continent. Moreover, EDF would not be solely responsible for the implementation of the SMR Nuward investment, but an entire consortium consisting of European cooperators with immense experience on the nuclear market:

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Source: EDF

As the suppliers of the SMR technology Nuward themselves emphasise, that project will constitute intellectual property belonging to the EU, will make use of the European supply chain and will be adapted to the needs of the European market – not to mention EDF’s plan to obtain a license valid all across the European Union, which would certainly speed up the investment process in individual Member States.

The nominal power of SMR Nuward is 340 MWe (consisting of two integrated reactors of 170 MWe each). The planned capacity utilisation factor is supposed to exceed 90%, it also guarantees compliance with the requirements of ENTSO-E (the European Network of Transmission System Operators for Electricity represents 39 electricity transmission system operators from 35 countries throughout Europe, including countries beyond the EU borders). SMR Nuward is expected to operate for 60 years. At the core of the assumptions for the French modular reactor are nuclear, radiological, and general safety as well as minimising the impact on the environment, including responsibly blending in with the landscape. EDF plans to build NOAK reactors, that is to say, the next ones after the prototype, in about 40 months. FOAK is in plans to be built in France, currently for the year 2030. Although the first SMR Nuward will be built in France, it is a technology designed with exports in mind and implementation at the client’s target location. Among the possible roles that SMR Nuward could play are H₂ production, district heating, water desalination, thermal cogeneration, electricity generation and CO₂ capture.

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Nuscale’s flagship SMR, distributed under the name VOYGR-12, is a pressurised water reactor in which all steam generation and heat exchange installations are integrated into one device capable of generating 77 MW of electrical power per generator. VOYGR-12 will consist of twelve NuScale modules with a total gross capacity of 924 MWe. NuScale also offers a four-module version VOYGR-4 with a net capacity of 308 MWe and a six-module version of the VOYGR-6 with a net capacity of 462 MWe.

In September 2020, VOYGR Nuscale became the first and so far only SMR for which the US Nuclear Regulatory Commission completed the technical evaluation and design approval process. In February 2023, the project was certified. Therefore, it seems to be the closest one to be physical completed. Especially since in April 2023, Doosan Enerbility began the process of forging the first modules for the VOYGR™ SMR. According to Nuscale’s declarations, the implementation of the investment in this case does not seem to be at risk, as the preparatory and decision-making processes in individual countries currently take longer than Nuscale’s ability to deliver the VOYGR installation to the agreed location. This makes it of interest to KGHM or Unimot. Currently, the company has signed nearly 20 Memoranda of Understanding with entities from 11 countries.

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An interesting concept was also presented by Andrzej Piotrowski, Vice-President for Strategic Relations in CEE, representing the American company Ultra Safe Nuclear (USN), who discussed the 4^th generation Modular Micro Reactor (MMR), which may turn out to be a breakthrough in how we look at nuclear energy. One of the most obvious uses for USN’s MMR is electricity generation, and depending on the model, an MMR can provide up to 15 MW of energy, enough to power around 15,000 homes locally. MMRs can also provide power to hotels, office and apartment complexes, or shopping malls with associated infrastructure such as lighting, elevators, refrigerators, video surveillance systems, telecommunications, air conditioning, water and sewage pumps, as well as spas and swimming pools. What is equally important, an MMR can provide enough energy to simultaneously charge several electric vehicles for apartment occupants, hotel guests and office workers, which is still a challenge in many places today. According to the presentation by the technology supplier, an MMR can also provide high-temperature heat for various industrial processes such as drying, sterilisation, baking, melting, and refining. Thanks to locating the source in the immediate vicinity of an energy-intensive industrial process, it is characterised by full availability, even in a crisis or emergency. Moreover, there are neither transmission losses nor emissions. Thanks to its molten salt heat storage system, an MMR can adapt to dynamic demand by storing excess heat for later use in power generation. By default, the heat buffer allows for a change in the use of energy for up to 12 hours. Among the potential uses of MMRs, USN also indicates seawater desalination, drinking water purification, electricity supply in the process of wastewater treatment, hydrogen production, heating and cooling, and stabilising the operations of a hybrid system or power grid. The assumption is that a Micro Modular Reactor will operate without human intervention for about 20 years – the fuel stored in the unit is sufficient for such a period. The container construction, in turn, is to enable easy transportation and location even in difficult terrain and urban conditions.

Case study: BWRX-300 – the largest Polish investment in SMRs

BWRX-300 was designed by GE Hitachi Nuclear Energy – a company from the US specialising in nuclear technology. This technology was chosen by Synthos Green Energy and PKN ORLEN, which established a joint venture “ORLEN Synthos Green Energy” with the goal to implement the BWRX-300 technology in Poland and develop other zero-emission energy sources.

Several analyses of SMR technologies developed worldwide preceded the choice of BWRX-300 technology by ORLEN Synthos Green Energy. Such arguments as the maturity of the project, adaptation to Polish needs, credibility of the supplier or basing the technology on already licenced solutions tipped the scales in favour of the BWRX-300 reactor.

The first BWRX-300 in the world is under construction in Canada (the so-called FOAK which stands for “first of a kind”). OSGE claims the first power plant in Poland with a BWRX300 reactor will begin its commercial operations in 2029 (the so-called NOAK or “n^th of a kind”), and it will draw from Canadian experience. This technology is also planned to be implemented in other locations in North America and Europe.

The power capacity of BWRX-300 is similar to the majority of currently operating conventional units that must be phased out due to their age and emissivity. As a result, it will be possible to make use of the existing network infrastructure (in Poland, mainly PSE) in a fairly optimal way, but also to use SMRs in the heating sector, which as of today is largely based on coal.

GE Hitachi Nuclear Energy is an American company with 70 years of experience in nuclear energy and 67 reactors licenced in 10 countries in its portfolio. Furthermore, GE has experience in the global energy industry (both conventional and nuclear) and an extensive supply chain in which Polish entities can play a significant role.

BWRX-300 is a 3^rd+ generation reactor, based largely on solutions licenced by the American nuclear regulator (the ESBWR reactor). It will also use existing and licenced GNF2 fuel. The BWR is a boiling water reactor with an expected 60-year-long operational lifespan. Its power utilisation factor is 95%, and it is suitable for synchronisation with 50 or 60 Hz networks. The expected construction time comes up to 24-36 months, and the area necessary for the investment amounts to 10 ha. The BWRX-300 reactor should also be suitable for cooperation with RES, as it allows a 50%power change – 0.50% of power per minute (twice a day).

On 17^th April, ORLEN Synthos Green Energy announced seven optimal locations for the first power plants with BWRX-300 reactors. These include Włocławek, Ostrołęka, the vicinity of Warsaw, Stawy Monowskie, Kraków-Nowa Huta, Tarnobrzeg Special Economic Zone (Tarnobrzeg/Stalowa Wola) and Dąbrowa Górnicza.

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Source: OSGE

As reported by Nuclear.pl, in April 2023, companies whose names indicate planned but not yet announced locations where ORLEN Synthos Green Energy would build BWRX-300 reactors were entered into the Register of Entrepreneurs of the National Court Register. In addition to the initial 7 locations announced in April 2023, the following are also probable: Poznań, Bełchatów, Grudziądz, Łódź, Kozienice, Kujawy, Łaziska, Rybnik, Pomorze, Warta and Połaniec.

All selected sites are preliminary locations that have been pre-screened and require additional detailed environmental and location studies to confirm their suitability. The research will take about 2 years. Once their potential is confirmed, inviting local communities in each of these locations to dialogue will become a priority. Only after reaching an agreement, a decision regarding the implementation of an investment will be made in each location individually.

At the end of April, OSGE submitted motions to the Ministry of Climate and Environment for the issuance of basic decisions for the first six locations of nuclear power plants with BWRX-300 reactors. In June 2023, the General Director for Environmental Protection initiated proceedings to issue an environmental decision for the construction of BWRX-300 at the Stawy Monowskie location near the city of Oświęcim.

One could say that the first half of 2023 abounded in events related to the implementation of the SMR project by ORLEN and Synthos Green Energy. The latter, on 23^rd March in Washington, signed a Technical Collaboration Agreement (TCA) with GE Hitachi, Tennessee Valley Authority and Ontario Power Generation. This document assumes support for the development of the BWRX-300 technology. Thus, for the first time in history, a Polish company became a party to the contract for the development of a nuclear reactor. The contract is worth USD 400 million. Thanks to the agreement, a project of a power plant with a BWRX-300 reactor is already being prepared, taking into account European and Polish requirements. The project will enable a more efficient and cheaper implementation of OSGE’s plans to build a fleet of BWRX-300 reactors in Poland. At the same time, it is presumed that the project can be used for the implementation of investments in numerous locations.

On 23^rd May, ORLEN Synthos Green Energy received a general opinion from the NAEA President on the technological solutions used in the BWRX-300 reactor. The National Atomic Energy Agency confirmed compliance with the legal provisions in force in Poland in this field.

More than two months earlier, on 15^th March 2023, the Canadian Nuclear Safety Commission (CNSC) submitted the final report on BWRX-300 as part of the Vendor Design Review process. The BWRX-300 reactor is the first SMR in the world to successfully pass this process. CNSC also cooperates with the American supervision authority Nuclear Regulatory Commission by implementing joint assessment procedures. Evaluation processes for the BWRX-300 reactor have also begun in the US and UK.

Unveiling of the concept of a Polish high-temperature reactor

HTGR-POLA will be the name of the research reactor, the conceptual design of which was developed by a team headed by Mariusz Dąbrowski, Ph.D. at the National Centre for Nuclear Research. The project was prepared in cooperation with the Japan Atomic Energy Agency (JAEA), which has its own HTGR gas-cooled high-temperature reactor. The concept was presented publicly for the first time on 12^th June 2023 at our conference “SMR – Modular Atom for Business” by Józef Sobolewski, Ph.D., the plenipotentiary of the NCBJ Director for the Development of High Temperature Reactors.

NCBJ’s work on the high-temperature reactor is financed by the Ministry of Education and Science under the project to be implemented in the years 2021-2024 “Technical description of the High-Temperature Gas-cooled Reactor (HTGR) for research purposes”. Total funding amounts to PLN 60 million gross (contract No. 1/HTGR/2021/14).

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Fig.: Cross-section of the designed reactor; Source: National Centre for Nuclear Research (NCBJ)

Research and development, and education

There will be no Polish technological thought, there will be no conscious participation in the value chain, and there will be no appropriate staff for the sector without research and development. In January 2023, at the initiative of OSGE, the Ministry of Education and Science along with six Polish universities of technology signed a letter of intent for the creation of the “nuclear energy” field of study. The agreement provides for the training of nuclear engineers. At the end of May, three more universities joined the agreement. This is an important step, but consistent follow-up action will be required.

One of them is certainly the concept of launching the European Personnel Training Centre for Nuclear Energy jointly by OSGE and the Łukasiewicz Research Network. The cooperation would cover both the launch of the Centre itself and its further development, including by means of support from research and development institutes that are part of the Łukasiewicz Research Network. The project assumes that a full-scale reactor model will be created within the training space, with the only difference from the real one being the lack of nuclear fuel. This would allow for personnel training in real conditions – an initiative that ought to be commended.

Regional and European contexts

During the conference, Adam Guibourgé-Czetwertyński, Undersecretary of State at the Ministry of Climate and Environment, also encouraged joint efforts on the international arena to promote nuclear technologies from a secondary player to the avant-garde of energy transformation activities as complementary solutions to investments in RES and hydrogen.

The coalition of countries interested in extending the role of nuclear power in Europe is becoming stronger, and Poland is naturally among them. The activity in the topic of dissemination of SMRs on the part of France, Finland and the Czech Republic should be appreciated. The French Nuclear Safety Authority (ASN), the Czech State Nuclear Safety Authority (SÚJB) and the Finnish Radiation and Nuclear Safety Authority (STUK) chose the design of the French NUWARD Small Modular Reactor as a test model for a joint regulatory project dedicated to SMRs. The goal is to standardise practices and to harmonise licensing processes along with SMR regulations across the region. These three national nuclear regulators will together analyse the current sets of national regulations, international safety regulations, and knowledge, and recommend on that basis relevant good practices. It can be said that this process is a kind of pre-licencing dialogue, thanks to which it will be easier for SMR Nuward suppliers to anticipate the challenges of international licencing processes and to meet future market needs. It seems important that Poland also engages in the process of harmonisation of European regulations, so that they also address the requirements and specificity of our market. Even more so because the Czech example shows that although the local government had adopted a roadmap for the development of SMRs and declared interest in this technology (mainly from the state-owned entity CEZ), Poland is acting so quickly in this area that in a few months it will definitely have overtaken its neighbours and has a real chance to become the first country where modular reactors will actually be built.

For industry, for heating, for the environment – for everyone

As Jarosław Dybowski, Executive Director for Energy at PKN ORLEN and Vice-President of the Management Board at ORLEN Synthos Green Energy, pointed out during the conference “SMR – Modular Atom for Business”: “We cannot nowadays think of atomic facilities as classically understood power plants, which in the past were only supposed to provide electricity. The use of SMRs in domestic conditions naturally means replacing worn-out coal-fired units, but modular reactors will also work in combined heat and power economics as well as will be used in numerous industrial processes”. Heating and energy-intensive industries are indicated as the main beneficiaries of SMR technologies, and the number of entities declaring interest in these solutions is growing.

This is directly linked to the transformation of the Polish economy towards zero-emissions, and at the same time to the specificity of energy consumption in the industry, which needs stable sources. Concurrently, there are plans to phase out Polish coal-fired power plants in the years to come:

• 2 GW in the years 2022-2025,
• 0 GW in the years 2026-2030,
• 8 GW in the years 2031-2035,
• 0 GW in the years 2036-2040.

In total, approx. 20 GW of the capacity installed in large-scale coal-fired power plants will be shut down by 2040, which could be replaced at least in part by SMRs located in places of former coal units. It would also be optimal for a power system that is designed for flows from existing conventional generation units.

On the other hand, more than 16 million Poles (40% of the population) are connected to heating networks. Warsaw has the largest heating network in the EU (3 SMR units with a capacity of approx. 300 MWe could in the cogeneration model satisfy up to 81% of Warsaw’s forecast demand for heat in 2040 – 14 TWh). The installed capacity for heat production in our country amounts to 55,200 MW. Heating in Poland is produced by 399 companies, out of which 11 are responsible for 33% of total production. Approx. 51% of units working for the heating sector have a capacity of over 100 MW. Unfortunately, about 82% of the heat generated in Poland still comes from coal. In the nearest future, the heating sector will face a deep transformation towards zero emissions. It seems that natural gas has ceased to be considered as a full-fledged alternative – because prior to Russia’s aggression against Ukraine, it was perceived as a fuel that would bridge the gap, a transitional solution on the way to sources that are fully CO₂-free. Then again, the announcement of the PEP2040 update clearly shows a lower assumed share of gas in the generation mix and the assumption that only those gas investments are to be completed that are already underway. It seems, therefore, that SMRs may be the solution that will answer the unfulfilled hopes that a few years ago were associated with gas.

According to Kamila Król, Undersecretary of State at the Ministry of Development and Technology, who was present at the conference “SMR – Modular Atom for Business”, small nuclear power reactors have the potential to give Polish economy leverage in the future. SMRs can be a remedy for the growing costs related to CO₂ emission allowances and provide Poland with an appropriate mix of a low-emission energy on the one hand, and on the other hand guarantee stable and secure energy supplies. Achieving these goals should translate into environmental benefits as well as lower electricity bills for end users.

Supply chain and local content

Another topic raised by the participants of the discussion was the possibility of involving Polish companies in the development of the European sector of small nuclear reactors, in which experts see significant potential due to the pace of development of SMR projects in our country.

The supply chain for the BWRX-300 technology was presented by ORLEN Synthos Green Energy, noting at the same time that the existing supply chain will be used in the initial phase of the programme to maximise the Polish potential in the future.

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Source: OSGE

There are currently about 3,000 Polish suppliers in the GE Power Supplier Database. GE Hitachi has declared that it has identified 300 Polish suppliers as potential partners for the construction of nuclear power plants. The expected outlays incurred for Polish companies are related to industries such as construction / site preparation, engineering services, mechanical equipment (heat exchangers), structural modules, and craft works.

In turn, the French EDF has indicates that as part of the implementation of existing nuclear projects, it has relations with 46 subcontractors from Poland, which are ready to smoothly engage in investments in SMRs. EDF estimates its entire subcontracting chain in Europe at around 2,700 entities, the majority of which are British and French companies:

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Source: EDF

Certainly, Polish experience in creating a value chain for the newly emerging industry of offshore wind energy can be an invaluable clue as to how the share of the so-called local content in nuclear projects can be animated directly by investors – for whom, in turn, the regional supply and service chain increases the likelihood of project implementation on schedule and on budget.

Social perception

According to experts, despite the already clear support for nuclear power in Poland today, properly conducted communication will be an extremely important aspect determining the success of SMR investments due to a unique social perception of risks arising from nuclear facilities.

According to a survey carried out by IBRiS for PKN ORLEN, conducted on 4^th May 2023 on a sample of more than 2,000 respondents, more than half of the respondents support nuclear investments, even if they were to be implemented in their town, commune, or province.

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Source: ORLEN

The authors of the study probably wanted to assess how strong the effects of the NIMBY (Not In My Backyard) syndrome can be, that is, the paradox according to which we generally support some activity, provided it is not carried out in the immediate vicinity of our home. Importantly, as the study has shown, on average, every fifth inhabitant of locations selected by ORLEN Synthos Green Energy as of potential value for SMRs would oppose locating such an investment in their neighbourhood.

Social resistance at this level should certainly not be underestimated. While the thesis about the majority of Poles supporting nuclear power plants is legitimate and true, investors should pay special attention to social dialogue in order to convince the unconvinced by the time SMRs are created.

A similar recommendation was presented during the conference by Adam Juszczak, an expert of the Polish Economic Institute, who presented during the conference the results of a study conducted using the Delphi method on several dozen market experts. According to 67% of them, SMRs will in the future satisfy at least 20% demand of the 10 largest Polish agglomerations for heat. Furthermore, 42% of experts were of the opinion that the capacity installed in SMRs in Poland would exceed 5 GWe only between 2041 and 2045. In turn, 88% believe that social acceptance for SMR installations will be at a similar or higher level compared to large-scale nuclear energy. The biggest challenges of investing in SMRs that experts point to are potential project delays, regulatory issues, and rising prices.

Summary and recommendations

Rising energy prices, restrictions on access to its sources, the need to decarbonise the global energy sector have all resulted in a growing interest in new technologies, such as SMR, in recent years. Energy transformation and decarbonisation are a huge investment and development project, which is why they are on the agenda of both politicians and management boards of the largest companies. In July 2022, the European Union classified nuclear energy as sustainable. Also in Poland, nuclear energy is nowadays treated as complementary to RES.

The need to build energy sovereignty has gained additional importance in connection with the Russian aggression against Ukraine. This has prompted decision-makers and investors to look for new energy sources, with the objective of independence from eastern sources, but also with stabilisation and predictability of energy prices over time in mind. The dissemination of SMR technology can be the perfect bonus to the green energy mix. On 3^rd April, the Ministry of Climate and Environment presented the assumptions for updating Poland’s Energy Policy until 2040. The draft is currently awaiting adoption by the Council of Ministers. According to the announcements of Minister Anna Moskwa, generation from nuclear power plants (both large-scale and SMR) is to cover 23% of electricity demand in 2040, with an installed capacity of 7.8 GW.

However, in order to implement these assumptions, what is required is consistency. The organisers of the conference diagnosed several areas for which recommendations were made. “Having listened to the participants of the discussion, several recommendations come to mind, such as the involvement of Polish regulators in the work on harmonisation of regulations in the field of nuclear power and standardisation of SMR certification in Europe, the need to consider establishing a TSO unit (Technical Support Organization) within the structured of the National Centre for Nuclear Research, or finally, starting a debate on the European forum regarding the future of the atom in the EU taxonomy, which assumes support for nuclear investments only until 2045,” thus Jakub Bińkowski, Member of the Management Board of the Union of Entrepreneurs and Employers, summarised the discussion.

It also seems necessary to strengthen the staff and systematically improve the competences of employees of the National Atomic Energy Agency and Office of Technical Inspection in the scope of the specificity of investments in SMRs. An extremely important aspect in this context is the pre-licensing dialogue with investors, but also amendments of selected regulations to the latest IAEA standards and the exchange of experience with foreign nuclear regulators.

When it comes to provisions of the law, one ought to remember that not only national regulations, but also international ones, such as conventions on liability for nuclear damage, must be taken into account. The challenge here is the lack of structuring legal norms over time – basically, regulations on nuclear investments were basically being “added” to existing regulations.

Investors will also need to be active in the area of encouraging the process of value chain creation for the industry and building a constructive and reliable social dialogue so that support for nuclear investments is sustainable.

More than 150 participants attended the event. The conference organised by the Energy and Climate Forum of the Union of Entrepreneurs and Employers gathered in one place both legislators and regulators responsible for atomic law, several American and European SMR manufacturers, recipients declaring interest in small reactors of various power, as well as nuclear specialists who tried to sum up and structure the current state of knowledge about modular nuclear power plants and outline the prospects for the development of this type of investments in Poland and the CEE region, which we have presented in this memorandum.

Link to the event page: https://zpp.net.pl/events/event/konferencja-pt-smr-modulowy-atom-dla-biznesu.

Below are the links to all presentations displayed by speakers during the “SMR – MODULAR ATOM FOR BUSINESS (Poland as an incubator of SMR technology in Europe?)” conference:

Kamil Adamczyk, Chief legislation specialist, Department of Nuclear Energy, Ministry of Climate and Environment: Nowelizacja tzw. specustawy jądrowej oraz ustawy – Prawo atomowe. Procedury administracyjne związane z budową elektrowni jądrowych (The amendment of the Nuclear Special Act and the Atomic Law. Administrative procedures related to the construction of nuclear power plants)

Ernest Staroń, Ph.D. Eng. & Joanna Furtak, National Atomic Energy Agency (NAEA), Department of Nuclear Safety: Ocena technologii SMR (SMR technology assessment)

Patrycja Wysocka, Attorney-at-law, Partner and Co-leader of the Energy & Natural Resources Practice, & Partycja Nowakowska, Attorney-at-law, Senior Associate, Expert of the Energy & Natural Resources Practice: Otoczenie regulacyjne dla SMR – Aktualne wyzwania i wizja przyszłości (Regulatory environment for SMR – Current challenges and vision for the future)

Dawid Jackiewicz, Vice President of the Board at OSGE: BWRX-300 – najlepszy SMR dla Polski Technologia | Zaawansowanie projektu (BWRX-300 – the best SMR for Poland Technology | Project progress)

Scott Rasmussen, Director of Sales, NuScale Power: Small Reactors for Business Conference – Is Poland the SMR Technology Incubator in Europe?

Sandro Baldi, NUWARD Commercial Director: SMR – The Modular Atom For Business

Józef Sobolewski, Ph.D., Plenipotentiary of the Director of the National Centre for Nuclear Research for the Development of High Temperature Reactors: Research and development in SMR technologies – HTGR, a promising technology

Adam Juszczak, Advisor, Polish Economic Institute: Perspektywy wykorzystania reaktorów SMR w polskiej transformacji energetycznej (Prospects for the use of SMR reactors in the Polish energy transformation)

Michal Mareš, Energy Consulting: Czech national plan for the development of SMR technologies

Andrzej J. Piotrowski, Vice President for Strategic Relations in CEE, Ultra Safe Nuclear Corporation: Znacznie więcej niż energia elektryczna. Modularny Mikro Reaktor – IV generacji przełom w koncepcji energetyki (Much more than just electricity. Modular Micro Reactor – 4^th generation breakthrough in power engineering)

We hope that these presentations will provide you with valuable additional information on the prospects for the use of SMR technology in Poland and the region.

The entire recorded event can be found on our YouTube channel: https://www.youtube.com/playlist?list=PLcUoUDPRMlSXe4wROjpe-PNGnY_UFSf-L

 

See more: 06.07.2023 Memorandum of the Union of Entrepreneurs and Employers: SMR – Modular Atom for Business

Warsaw, 17 July, 2023

 

Memorandum ZPP: “Ukraine’s Resource Policy – Strategic Resources and Rare Earth Metals”

 

• Without strategic resources, it will be difficult to achieve the climate goals of EU countries, as they are essential for the production of photovoltaic panels, wind turbines, and electric vehicles.
• China supplies 98% of rare earth metals.
• 21 out of the 34 critical elements (identified by the EU) are found in Ukraine, where, simultaneously, 117 out of the 120 globally used materials are being extracted.
• The World Bank predicts a 500% increase in demand for rare earth metals by 2050.
• In 2021, the EU and Ukraine entered into an alliance to enhance technological and industrial cooperation in the field of rare earth metal extraction.
• It is assumed that the rare earth resources were one of the reasons for Russia’s aggression against Ukraine.

We present a memorandum summarizing the discussion during the IV roundtable of the ZPP Energy and Climate Forum, dedicated to Ukrainian energy, and conducted within the EUROPE-POLAND-UKRAINE REBUILT TOGETHER 2023 project in collaboration with the Embassy of Ukraine in Poland.

The participants of the debate were:

Anna Burkowicz, Specialist at the Department of Mineral Resource Management, Raw Materials Policy Laboratory, Polish Academy of Sciences
Roman Dryps, Chief Operating Officer, Center for Business Consulting, Polish-Ukrainian Chamber of Commerce
Roman Opimakh, President, State Geological and Subsoil Survey of Ukraine
Dr. Jarosław Szlugaj, Assistant Professor at the Department of Mineral Resource Management, Raw Materials Policy Laboratory, Polish Academy of Sciences
Seweryn Szwarocki, Director of Strategy and Sustainable Development, LW Bogdanka SA

Moderator:

Dominika Taranko, Director of the ZPP Energy and Climate Forum

Rare Earth Metal Resources in Ukraine

Roman Opimakh, President of the State Geological and Subsoil Survey of Ukraine, pointed out that Ukraine signed a memorandum of strategic partnership regarding rare earth metals with the European Union in 2021. At the same time, the EU outlined the EU Critical Raw Material Act until 2030, defining joint actions of the member states and necessary regulations that need to be implemented under EU law. Ukraine is currently a candidate for EU membership, and Ukrainians perceive themselves as Europeans, adhering to the same principles, values, and strategic goals. Therefore, Ukraine’s objectives in the field of rare earth metals align with the goals of the European Union’s policy. Ukrainians intend to remain a reliable and stable trading partner in terms of extraction, processing, and supply of rare earth metals, as well as components for the battery industry, as well as the disposal of used equipment with recovery of raw materials. Consequently, a concept of establishing an entire value chain within Ukraine for supplying the EU is being developed.

Extraction and production potential of Ukraine regarding critical raw materials is among the highest in the world. Ukraine is among the top 10 global producers of titanium, kaolin, manganese, iron ore, graphite, zirconium, uranium, as well as raw materials essential for modern technologies such as beryllium, aluminum, nickel, and cobalt. Ukraine holds resources for 21 out of the 34 minerals identified by the EU as critical. Therefore, the Ukrainian government has implemented an open-door policy for foreign investments, preparing a list of 100 regions in which licensing and acquisition of exploration and production concessions will be available. Another way to enter the Ukrainian market today could be through acquiring existing concessions through agreements with local companies, thus fostering cooperation within consortia. Cooperation within greenfield and brownfield investment types is being considered. For future investment needs, 1,200 deposits of rare earth minerals have been identified, and conceptual maps have been developed. There are locations where operations can already be conducted.

Titanium – Ukraine is among the top 10 countries with documented titanium deposits worldwide and provides 7% of global production (data from 2021). Currently, titanium is extracted in Ukraine along with ilmenite, rutile, and zirconium in six deposits, yielding 900,000 tons of concentrate containing 350,000 tons of titanium annually. Currently, the largest producer and processor of titanium in Europe, JSC United Mining & Chemical Company, is being privatized.

Lithium – Currently not mined in Ukraine, but its resources constitute 1/3 of Europe’s deposits. Three lithium oxide deposits have been identified for future development. One of the deposits is already under the concession of UkrLithiumMining LLC.

Other metals such as tantalum, niobium, and beryllium – have been identified in six deposits, with tantalum and niobium also occurring as by-products of titanium deposits. Beryllium is found in the Perzhanske deposit, where 15.3 thousand tons of beryllium oxide are located, along with tantalum, niobium, zirconium, tin, molybdenum, lithium, and zinc, among others. The concession for this deposit has been held by BGV Group since 2019.

Cobalt – It is found in 12 deposits containing 9 thousand tons of this element. Ukraine processes significant amounts of imported cobalt and nickel, which is handled by Pobuzhsky Ferronickel company.

Graphite – Ukraine possesses some of the world’s five largest graphite deposits, amounting to 19 million tons of ore with concentrations ranging from 5% to 8%. Currently, 5 thousand tons of graphite concentrate are extracted annually from six deposits. The concession for these deposits is currently held by the Australian company Volt Resources.

Ukraine has favorable geological conditions for the occurrence of rare earth metals. As part of the mentioned strategic partnership with the EU, a Roadmap for 2023-2024 has been defined, which incorporates environmental protection and “green mining” (low emissions in the mining industry) as priorities in the envisioned methods of resource extraction. Ukraine has also been involved in the process of creating EU regulations regarding the use of rare earth metals until 2030. In terms of cooperation, the Ukrainian Geological Survey has developed a geological map highlighting the extraction potential and has devised incentives for investors interested in the mining industry, including the extraction of rare earth metals.

Abundance of Rare Earth Metals in Poland

Dr. Eng. Jarosław Szlugaj, Assistant Professor at the Department of Mineral Resource Management in the Laboratory of Raw Materials Policy at the Polish Academy of Sciences, emphasized that his unit has been monitoring the management process of mineral resources for almost 30 years. They oversee all mineral resources located in Poland that are subject to trade and are simultaneously produced or consumed. A thematic publication titled “Balance of Poland’s Mineral Resource Management,” which covers over 100 types of resources, is being issued on the topic. The list of critical resources for the European Union continues to expand. Over the past 10 to 20 years, their utilization has become widespread, and today we are facing a new situation in which Poland, the European Union, and the world consume vast amounts of resources, many times greater than in past decades and centuries.

Poland consumes significant amounts of rare earth metals imported from abroad. Unfortunately, it does not have its own sources or deposits of rare earth metals, so reliance must be placed solely on imports. However, there is resource potential, especially in terms of resource recovery. With the dismantling of the Wizów Chemical Plants (where phosphoric acid was produced from apatite from the Kola Peninsula, enriched with rare earth elements), there is a repository of post-production waste from which rare earth metals can still be extracted. Currently, no recovery is being carried out because none of the tested technologies allow for it on an industrial scale.

As a result, Poland imports increasing amounts of rare earth metals (mostly in the form of oxides, not necessarily in separated form). They are mainly used as glass colorants, polishing agents, but also in batteries, electric motors, or permanent magnets. Poland only imports finished products, especially when it comes to permanent magnets.

The situation is similar with lithium. Thanks to foreign investments, Poland has become a significant producer of lithium-ion batteries, primarily used in the automotive industry. The entire process involves importing raw materials, processed in the source country of imported product. Semi-finished products reach Poland, where they are assembled to create finished batteries. Currently, Poland does not have domestic facilities utilizing these advanced technological processes and production methods. Everything relies on enterprises owned by foreign investors.

Strategic resources (according to the list of 34 identified by the EU) possessed by Poland.

Poland essentially possesses only two strategic resources that it independently processes on a larger scale. The first is coking coal, which is used to produce coke, a crucial component in steel production processes. The second is copper, recently added to the list.

On March 16, 2023, the European Commission published the announced draft regulation on critical and strategic raw materials for the European Union’s economy. The document also includes a new, updated list of critical raw materials (CRM). The CRM Act aims to stimulate the production of strategic resources by intensifying new activities related to extraction and recycling within the European Union. Furthermore, it seeks to increase awareness of potential threats related to raw material supplies, supply chains, and related opportunities among EU countries, enterprises, and investors.

The published new list of critical raw materials (CRM) in the document COM(2023) 160 final titled “Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations” expands the list of critical raw materials for the EU (available in Annex II, Section 1).

Antimony	Fluorite	Helium	Nickel	Strontium
Arsenic	Phosphorites	Cobalt	Niobium	Tantalum
Bauxite / Aluminum	Phosphorus	Silicon metal	PGM – platinoids	Titanium
Barite	Gallium	Lithium	Heavy REE	Vanadium
Beryllium	Germanium	Magnesium	Light REE	Coke coal
Bismuth	Graphite	Manganese	Spodumene	Tungsten
Boron / Borates	Hafnium	Copper	Scandium

Table description: Critical raw materials for the European Union according to the European Commission (2023). New CRMs compared to the 2020 list are marked in red. Strategic raw materials for the European Union are indicated in italics.

Source of compilation: PIG-BIP.

In the process of preparing the document, 70 different substances were analyzed, assessing their economic importance and estimating supply risks. Ultimately, the number of identified elements was increased from 30 to 34. Although the document refers to “34 critical raw materials,” there are actually more, as rare earth metals are presented as two resources: HREE (heavy rare earth elements) and LREE (light rare earth elements), aside from which, PGM (platinum group metals) account for an additional 5 noble metals. The highest level of supply risk applies to heavy rare earth metals.

It is also worth comparing the proposed European list (2023) with the American list, which includes 50 items (2022 – https://www.usgs.gov/news/national-news-release/us-geological-survey-releases-2022-list-critical-minerals ).

In 2023, helium reappeared in the European register after being absent for the past three years, and the newly designated critical raw materials are copper, nickel, spodumene and arsenic. An interesting case is copper and nickel, which, although they do not meet the CRM thresholds, are included in the list according to the Critical Raw Materials Act. Conversely, indium and natural rubber have been removed from this year’s compilation. A novelty is the identification of several strategic raw materials within the critical raw materials (16 out of 34). The list is updated every 3 years. The strategic importance is determined based on the material’s significance for green transformation, digital technologies, defense applications and space exploration.

Among the newly added CRMs, Poland has mineral deposits and prospects for further documentation for the following resources:

• Raw spodumene materials (mostly in Lower Silesia, but also in Lesser Poland)
• Helium (Wielkopolska) – recovery from natural gas
• Polymetallic deposits, primarily copper (Lower Silesia and Lubusz Land)
• Arsenic (Lower Silesia and as a co-occurring element in other deposits in Upper Silesia)
• Nickel (Lower Silesia)

The CRM Act document should help develop activities in the field of scientific research and innovation, negotiate trade agreements, and implement new projects related to the exploration and exploitation of critical raw materials.

Unfortunately, Poland does not possess resources for most strategic raw materials necessary for the production of devices related to “new energy,” such as wind turbines or photovoltaics. In the past, crystalline silicon, which is the basis for every photovoltaic cell, was produced in the country. However, production ceased after privatization and foreign acquisition.

Participation of foreign investors in the mining industry of Ukraine

In Europe today, the mining industry is no longer common, which is why Ukraine’s focus on the development of this sector has attracted the interest of foreign investors. Ukraine invites foreign investors to increase extraction activities on its territory due to its rich mineral deposits and the industry’s long-standing history. The State Geological Survey conducts concession procedures, concludes cooperation agreements, and possesses other instruments to encourage investors. Several major Polish companies operate in Ukraine, including Cersanit, which mines kaolin and conducts wide-scale market sales of ceramic products. Before the war, there were discussions with KGHM Polska Miedź SA regarding investments, and the Ukrainian authorities are ready to resume these discussions. The Ukrainian government seeks to provide comprehensive assistance to investors by conducting webinars, providing maps, mostly in an online format today. Additionally, a memorandum has been signed with the Polish Geological Institute, which is evidence of the development of a strategic Polish-Ukrainian partnership.

Ukraine can prove to be an attractive market for LW Bogdanka SA, which is seeking future directions for business diversification. Seweryn Szwarocki, Director of Strategy and Sustainable Development at LW Bogdanka SA, emphasized that Lubelski Węgiel Bogdanka SA is the most efficient coal mine in Poland. In the face of the armed conflict in Ukraine, the demand for coal has increased, but the Management Board of LW Bogdanka SA, aware of the need for energy transformation associated with the new climate goals set by the European Union, has committed to phasing out coal production by 2049. The company is preparing for these plans to ensure the continuity of its operations.

As a result of conducted analyses regarding the possibility of mining other resources, on May 17th, the company published a new strategy. Its main objectives are to maintain production capacity, sustain high profitability indicators, selectively extract type 34 coal, diversify revenues by expanding the areas of operation, and identify, assess and document new reserves of type 35 coking coal.

The main goal of LW Bogdanka’s new strategy for the years 2023-2030 is to create an innovative multi-commodity corporation that drives green transformation and secures the economic development of the Lublin region and, more broadly, central-eastern Poland. Through business diversification, LW Bogdanka can potentially engage in the extraction of selected critical resources for the EU, including possibly in the Ukrainian market.

Given that the mining industry is capital-intensive and involves complex processes, Bogdanka SA has an advantage over its competitors due to its extensive mining experience. While the company’s current activities are focused on the Lublin region, new mining projects are being sought. The western lands of Ukraine stand out as a potential area, considering their rich mineral deposits, especially those utilized in the energy transformation process. However, due to the ongoing armed conflict on Poland’s eastern border, the current opportunities for cooperation are limited. Investments in a war-torn country carry the risk of uncontrolled destruction in the areas where the company operates.

Nevertheless, Bogdanka SA confirms that it is conducting analyses regarding the extraction of several potential resources, with the criterion being their inclusion on the list of critical raw materials for the European Union. LW Bogdanka also sees the prospect of cooperation with the existing mining industry in Ukraine, given the lower level of digitalization compared to its Ukrainian counterparts. The Polish company is also willing to engage in technological exchange. However, due to the nature of the company as a publicly traded entity, all planned investments have a long-term perspective, and the process of selecting investment locations can be time-consuming.

Considering the existing legislative difficulties related to the mining  of critical resources, there is a need for legal acceleration of investment processes. Additionally, an important aspect for deciding on the exploration, assessment and mining of a specific resource is the size of the deposit and the estimated level of extraction difficulty.

Adapting Ukrainian Geological Law for Mining Investments

Recently, the Ukrainian government has introduced a package of numerous legal changes regarding the regulation of the mining industry. The practices of European countries served as a model for the legislative amendments. The experts knowledgeable in this field were also consulted. Many outdated regulations have been removed from Ukraine’s legal system, which should facilitate business operations. In some cases, it will no longer be necessary to participate in tenders to start activities. The mining process can commence as early as one and a half years after obtaining an environmental impact assessment. Investment opportunities have been increased, among other things, by introducing electronic deposit maps. Upon selecting an area for investment, all necessary information about the area of interest can be obtained both online and in person.

The State Service of Geology and Subsoil of Ukraine expects increased international cooperation, especially with the EU, regarding planned initiatives. A cooperation agreement has been signed within the framework of a memorandum with the European Bank for Reconstruction and Development regarding a three-year program for the digitalization of services, particularly those related to geological information. Another important task for the project is to adapt Ukrainian counterparts of government portals to the English language version, aiming to professionalize international cooperation (as all information desired by investors is currently available only in Ukrainian).

Goals of the Industrial Alliance between Ukraine and the European Union

Anna Burkowicz, an expert from the Department of Mineral Resources Economy at the State Academy of Sciences’ Policy Laboratory, explained that Ukraine’s plans for cooperation with the European Union also involve rare earth metals, which have extensive potential applications. Rare earth metals, also called rare earth elements (REE) are a family of 17 chemical elements, including two scandium group elements (scandium and yttrium) and all lanthanides (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium). They occur in minerals and possess similar chemical properties. Due to their catalytic properties, they have numerous applications, including the petrochemical industry. Lanthanum and cerium, in particular, are widely used in the refining of crude oil for gasoline production.

Examples of applications for rare-earth elements (according to Wikipedia):

Scandium: alloys for aerospace and space industry

Yttrium: phosphors, ceramics, alloys

Lanthanum: batteries, X-ray films, catalysts in oil refining processes

Cerium: catalysts, alloys

Praseodymium: minor component in alloys used for magnets (corrosion prevention)

Neodymium: strong neodymium magnets, lasers

Promethium: beta radiation source

Samarium: magnets for high-temperature operation, control rods in reactors

Europium: liquid crystal displays, fluorescent lighting

Gadolinium: production of green phosphors in CRT screens and scintillators in X-ray imaging

Terbium: phosphors for lamps and displays

Dysprosium: strong magnets, lasers

Holmium: strong magnets

Erbium: lasers, optical amplifiers

Thulium: ceramic magnetic materials

Ytterbium: optical fibers, solar cell plates

Lutetium: x-ray-luminophores

In the United States, approximately 60% of lanthanides are used in refining, but REEs are utilized in a wide range of industries. These include ceramics, glazes, metallurgical alloys, rocketry, aviation, modern technologies, the IT sector, screens, lasers, diodes, the energy industry, and permanent magnets. The People’s Republic of China is responsible for 93% of the world’s production of all permanent magnets using rare earth metals, while Japan accounts for 6%, and the European Union for 1%.

The possibility of ending China’s monopoly for the moment is not realistic. According to participants in the roundtable discussion, unfortunately, the world’s economies themselves are responsible for the current state of the raw material market division, since the Chinese have built their current advantage de facto over the past several years. China naturally also has a huge raw material potential. In this context, the chance to return to European production may be provided by the very beginning of exploration of deposits in Ukraine.

Polish-Ukrainian Cooperation in the mining industry?

According to the opinion of Roman Dryps, the Chief Operating Officer of the Business Advisory Center of the Polish-Ukrainian Chamber of Commerce, which has been operating as a bilateral chamber for 30 years, the Polish government or Polish companies are unlikely to be Ukraine’s partners in the mining and processing of rare earth metals. Poland lacks the technology and the deposits themselves. There are only a few domestic enterprises that could be significant players in this area, including the already mentioned KGHM Polska Miedź SA and LW Bogdanka. According to the expert, Polish entrepreneurs working in the mining industry have had success in the field of new technologies, but mainly in the market of coal, liquid fuels, or gas extraction. Two main minerals, that were extracted in Ukraine until 2014 are coal and iron ore. The cycle of operation was simple – they were used for steel production or for energy purposes. At that time, most coal mines operated on a concession basis. The concessionaires of these mines were mostly owners of private machinery industry plants for mining machinery construction. Profit was simply the absolute priority at that time, and new technologies in the mining industry were not developed. The Polish-Ukrainian Chamber of Commerce actively collaborates with the Ukrainian Ministry of Energy, and based on unofficial information from “first-hand sources,” it is known that the coal mining industry will not be restored in the classic sense after the war. Furthermore, based on data presenting the resources on the territory of Ukraine, it can be learned that as of spring 2023, 63% of coal deposits, 11% of oil deposits, 20% of natural gas, 42% of metals, and 33% of rare earth metals were under the occupation of the Russian aggressor. Their overall value, according to geological studies, is estimated at 12.5 trillion US dollars. Therefore, it is difficult to avoid the impression that Ukraine’s natural resources could be a dominant factor that prompted Russia to launch a military attack.

Sources of financing of mining industry in Ukraine

The European Union (EU) has only recently begun working on support programs for investors to encourage them to invest capital in the development of advanced extractive and processing industries, particularly in the context of critical raw materials. So far, only recommendations have been issued at the EU level, regarding environmental decision-making related to the assessment of projects and concessions for the mining of rare earth metals. At the same time, it is likely that whether with the participation of EU programs, or even if there were none, or if they were insufficient, (assuming that the demand for these raw materials will grow, and thus, in the absence of supply), the price of these raw materials will increase and the profitability of these projects will also increase exponentially. This opens up the opportunity to obtain bank financing from European institutions in a situation where the elements in question are identified by the EU as key in the green transition and fit in with the requirements of sustainable development, or ESG strategies.

The Ukrainian public administration is currently undergoing a period of increased digitization, with a significant portion of public affairs being handled electronically. This will undoubtedly facilitate dialogue regarding potential financing and project cooperation as well.

Collaboration with the world of science

Scientists from the Polish Academy of Sciences utilize a wide range of literature in their studies on rare earth metals and stay up to date with the geopolitical situation regarding mineral resource economy worldwide. There is a possibility of assisting entrepreneurs in market research and identifying potential avenues of operation. So far, no Polish company has applied for a concession to operate in the Ukrainian market, which holds immense potential. In Poland, there are universities that educate mining engineers, metallurgists, and technologists.

By observing the specific nature of the mineral resource market, one can notice a decline in the trade of low-processed raw materials. For example, in the case of iron ore, concentrates are produced, and there are also technological changes occurring, with developed sintering and granulation processes for these ores. It is no longer bulk ore that would be transported over significant distances. With the next generation of resources, processing is increasingly concentrated in one place. In the case of rare earth metals, Chinese companies generate approximately 60% of global production, but their real advantage lies in processing, specifically separation. The ore is complex, consisting of several coexisting elements, usually around 7 to 8 types. China has specialized in individually extracting 7 to 8 minerals, rather than processing them comprehensively. In this situation, China has a monopoly in production, offering separated oxides and specific metals in the form of powders or semi-finished products worldwide. Recognizing the potential associated with deposit extraction in Ukraine, it can be observed that its owner, the State, should endeavor to establish comprehensive processing and ore extraction plants. However, this would not have significant implications due to China’s dominant position in the market. In Europe, at best, a concentrate could be produced, which would still need to be sent to China for further processing. China also holds a monopoly in battery and photovoltaic production due to low production costs. This has been the main reason for relocating facilities from the United States and Western Europe to China. Twenty years ago, the People’s Republic of China specialized in only a few resources. Now there are dozens, including those considered critical. Therefore, Ukraine certainly has potential, but parallel planning for the local processing and production market should be considered. In this context, collaboration with research and development is necessary.

Would synthetic elements be a solution?

Synthetic crystals such as silicon, sapphires, or synthetic diamonds are produced using the method developed by the Polish scientist, Professor Jan Czochralski. Synthetic products can serve as substitutes for natural ones. Synthetic diamonds, for example, are widely used in the abrasive and drilling industries. Materials engineering is rapidly advancing, and in this field, there is a vast potential for collaborative research that can contribute to the future reduction in the use of natural resources. Mining production may be minimized in the future. New composite materials are being discovered that have comparable strength to steel, but do not contain metal in their structure. One such example is the indium tin oxide alloy (ITO) used in touch screens. Indium used in production is not sourced from its own deposits. Therefore, if there is a forecasted increase in demand for this material, the mining process will need to be accelerated and expanded from the ore it is derived from. Forecasts related to the implementation of the Fit for 55 program suggest that demand for certain minerals may increase 50-fold. Some deposits will be depleted, making it impossible to meet the demand for certain elements. This opens up opportunities for the development of alternatives.

 

See more: 17.07.2023 Memorandum ZPP: “Ukraine’s Resource Policy – Strategic Resources and Rare Earth Metals”