Assessing Multilateral Cooperation Models for South Korea’s Energy Security amid Nuclear Fuel Price Volatility: The Case of Urenco

Peter Ward

Research Fellow

Sejong Institute

1. The Problem

A compounded crisis is emerging in the nuclear fuel cycle—most acutely in conversion and enrichment—driven by rapid price increases, a state-led oligopolistic supply structure, geopolitical instability, and mounting concern over medium- to long-term supply constraints. While uranium is often discussed as a commodity, the market behaves less like a conventional spot-driven system and more like a capacity- and contract-driven services market—especially once the fuel cycle moves beyond mining into conversion and enrichment. In such a market, sudden shifts in policy, sanctions, or geopolitical risk can translate quickly into higher prices and tighter availability, even when overall demand growth appears gradual.

These stresses are unfolding alongside a resurgence of nuclear power ambitions in major economies and a broader push toward electrification and decarbonization. Expansion in AI and data centers adds further pressure to the electricity system, strengthening the political and economic rationale for nuclear power in a growing number of countries. At the same time, the prospective deployment of small modular reactors (SMRs) could materially increase demand for new fuel types such as high-assay low-enriched uranium (HALEU). Because HALEU supply outside Russia remains limited, the emergence of a sizeable SMR market could create an additional bottleneck on top of existing conversion and enrichment constraints.

Long-range capacity projections underscore why market tightness is likely to persist rather than fade. Even under conservative assumptions, nuclear capacity is expected to rise in absolute terms through 2050 in many outlooks, while high-case pathways imply a far larger build-out. This matters because conversion and enrichment capacity expands slowly, requires heavy capital investment, and is closely regulated due to proliferation sensitivities.

Table 1. Global Total Generating Capacity and Nuclear Capacity Outlook (GW(e))

 (See the attached PDF for Table 1.)

For South Korea, the strategic implications are direct. As a country with a large nuclear generation base and strong reactor export ambitions, South Korea has an interest in ensuring resilient access to the full fuel cycle—not only fuel fabrication, where it has strong capabilities, but also the upstream stages where supply is concentrated and politically exposed. Conversion and enrichment are increasingly consequential for three reasons. First, they are the segments most prone to geopolitically driven disruption. Second, they shape the competitiveness and reliability of nuclear export packages, where fuel supply and service commitments can create “lock-in” dynamics over decades. Third, South Korea’s wider energy security challenge—stemming from limited domestic energy resources—makes upstream fuel-cycle resilience strategically valuable even when it cannot translate into full autonomy.

In this context, Urenco merits close attention. Beyond Russia and China, Urenco is among the most important providers of enrichment services in the global market. It is a long-standing multinational enterprise rooted in the United Kingdom, the Netherlands, and Germany, with significant operations in the United States. Its model combines large-scale commercial supply with strict governance and technology controls designed to limit proliferation risk.

South Korea’s policy challenge, however, is not primarily technical; it is institutional and political. Enrichment capacity is governed by nonproliferation norms and export controls, and South Korea’s operational latitude is shaped by the U.S.–ROK nuclear cooperation framework. A strategy centered on fully independent domestic enrichment capability—especially if pursued outside trusted multilateral arrangements—would likely raise proliferation-related concerns among partners and neighbors, invite political pressure, and risk reputational damage to South Korea’s nuclear export brand. It would also be exceptionally costly and slow, with uncertain economic viability in a volatile market.

For these reasons, multilateral cooperation models deserve systematic review. The Urenco case offers a practical reference point: multinational governance can help stabilize supply, share risk and cost, and maintain political acceptability through controlled access arrangements. For South Korea, the key question is not whether cooperation can reduce vulnerability—it can—but which cooperation model best balances energy security, commercial competitiveness, legal constraints, and long-term technology and industrial objectives.

2. Nuclear Fuel Market Structure and Price Volatility

The nuclear fuel cycle is a multi-stage chain with distinct market dynamics at each step. Uranium is mined and milled into uranium concentrate (yellowcake), then converted—typically into uranium hexafluoride (UF₆)—so that it can be enriched by increasing the concentration of uranium-235. After enrichment, material is converted into forms suitable for fuel fabrication and manufactured into fuel assemblies for reactor use. Some systems also involve deconversion and storage steps depending on operational and regulatory requirements.

To make the structure intuitive, the fuel cycle can be summarized as follows.

Figure 1. Simplified Nuclear Fuel Cycle (Overview)

Uranium mining & milling → Conversion (to UF₆) → Enrichment (SWU services) → Fuel fabrication → Reactor use → Spent fuel management

What matters most for market outcomes is that each stage has very different entry barriers. Mining and milling are comparatively accessible, with many producers and jurisdictions involved; the market is relatively competitive and diversified. By contrast, conversion and especially enrichment sit behind far higher technological, financial, and regulatory barriers. Enrichment requires advanced centrifuge technology, high-precision manufacturing, specialized materials, strict security controls, and substantial upfront capital. These constraints naturally concentrate supply in a small set of firms operating in a heavily regulated environment, often with strong state involvement.

This structure explains why nuclear fuel markets do not behave like conventional spot commodity markets. While spot trading exists—particularly for uranium—most of the fuel market is anchored in medium- to long-term contracts. That is especially true for enrichment, where facilities require large fixed investment and stable demand commitments to be commercially viable. Conversion and enrichment are also best understood as capacity-constrained services. In such markets, disruptions can propagate quickly: when sanctions, policy restrictions, or geopolitical shocks reduce “available capacity” or increase demand for non-sanctioned supply, prices can rise sharply even if the physical uranium resource base is not immediately scarce.

The geopolitical dimension has become a central driver of instability. A key feature of recent years has been the push to diversify away from Russian supply in response to sanctions and strategic risk. Even where governments plan to increase domestic capability, conversion and enrichment cannot be scaled quickly. Project lead times are long, regulatory approval is slow, and supply chains for specialized components are tight. This means the market is prone to extended periods of tightness rather than short, easily corrected spikes.

Longer-run investment cycles compound the problem. After the Fukushima accident in 2011, many countries reduced nuclear plans or pursued phase-outs. Demand expectations weakened, investment in mines and fuel-cycle facilities slowed, and some capacity expansion was deferred. That investment shortfall is now colliding with renewed nuclear growth plans, leaving the market structurally less prepared for higher demand. New mines can take years from exploration to first production, and enrichment expansions require not only financing but also political permissions and compliance structures.

Figure 2. Uranium Price Dynamics Since 2010

 (See the attached PDF for Figure 2.)

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In the near term, the risk is that demand expands faster than feasible supply growth in conversion and enrichment. Even when major firms announce enrichment capacity additions, conversion capacity can lag—creating a chokepoint that raises costs across the chain. The prospect of SMR-driven HALEU demand adds another layer: it may create a fast-growing niche market with even tighter supply constraints than conventional low-enriched uranium markets. In that environment, resilience becomes less about marginal price optimization and more about strategic positioning—diversifying access, locking in contractual stability, and reducing exposure to politically volatile suppliers.

3. URENCO: Background and Technology Trends

Urenco’s significance lies not only in market share but also in its governance model, which offers a politically durable approach to multinational enrichment under strict nonproliferation constraints. The company emerged from Europe’s broader effort to institutionalize nuclear cooperation and secure fuel supplies under credible oversight. In 1970, the United Kingdom, the Netherlands, and West Germany concluded the Treaty of Almelo, creating Urenco as a multinational enrichment enterprise with shared governance and strong technology security provisions.

Urenco’s early development reflected complementary national strengths. The United Kingdom contributed an established industrial base and facilities; the Netherlands brought strong centrifuge research and development capabilities; and West Germany provided precision engineering and scalable industrial manufacturing. Over time, Urenco evolved from a model that was more commercially oriented and fragmented across national operations into a more integrated operator structure. A major reorganization in the early 1990s consolidated operational responsibility and aligned ownership arrangements across facilities, strengthening Urenco’s ability to manage capacity and contracts as a coherent enterprise rather than as loosely coordinated national units.

A defining feature of the Urenco system is the separation of sensitive centrifuge technology into a dedicated Enrichment Technology Company and the institutionalization of “black-box” operations. Under this approach, centrifuges are designed and manufactured under tightly controlled conditions and delivered as sealed systems. Enrichment plants can install and operate the equipment but do not gain access to sensitive design details. Maintenance and component replacement involving sensitive elements are handled under strict controls. This arrangement is best understood as a governance mechanism for proliferation risk management rather than merely a commercial preference for secrecy.

Urenco’s governance has also been shaped by a series of treaties and agreements that balance market participation with technology protection. These instruments enabled Urenco’s expansion into the United States while formalizing rules for oversight, access, and security arrangements.

Table 2. Key Treaties and Agreements Related to Urenco (Summary)

 (See the attached PDF for Table 2.)

​In ownership terms, Urenco’s structure is deliberately designed to remain politically anchored. Government-linked entities in the United Kingdom and the Netherlands hold a substantial share of the company, while German ownership is held through major utilities. The Enrichment Technology Company is structured to preserve strict controls over sensitive know-how, reinforcing the separation between commercial operations and the most proliferation-sensitive elements of the business.

Figure 3. URENCO Ownership structure

 (See the attached PDF for Figure 3.)

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Urenco’s market position remains strong, but its dominance should not be treated as permanent. A period of weaker demand and uncertainty in the 2010s led to downsizing and capacity adjustments that have had long-term consequences for expansion momentum. More recently, tightening markets have spurred new plans to expand capacity, including initiatives in the United States and the Netherlands and moves related to HALEU production in the United Kingdom. At the same time, the United States is seeking to strengthen domestic enrichment capability through its own industrial base, and alternative enrichment technologies—such as laser approaches—continue to attract interest. If these efforts mature, Urenco’s relative advantage may gradually narrow even if it remains central to the market in the near to medium term.

4. Comparing Cooperation Models involving Urenco

If South Korea seeks a consortium-style pathway to improve enrichment resilience, it must begin with a clear-eyed view of what Urenco’s governance model enables. Urenco’s system is built around controlled access and black-box operations, which are central to its legitimacy and political sustainability. A partnership can improve supply security and potentially reduce exposure to geopolitical disruption, but it is unlikely to provide open-ended access to centrifuge design knowledge or create full technological sovereignty.

The emphasis on black-box operation is rooted in the proliferation risks associated with enrichment. Historically, centrifuge technology has been a focus of illicit procurement efforts, and the Urenco model reflects a long-standing preference for compartmentalization, controlled access, and carefully managed interfaces between technology custodians and plant operators. For potential partners, this implies that cooperation must be evaluated not only by commercial metrics but also by whether the governance arrangements satisfy the political expectations of key stakeholders, particularly those with strong nonproliferation sensitivities.

Within the Urenco ecosystem and beyond it, several cooperation models are conceptually available. They differ in what they offer—supply security, investment exposure, domestic industrial development, operational experience, or technology access—and in how much political and regulatory resistance they are likely to trigger. These models can be summarized as follows.

Table 3. Enrichment Cooperation Models by Governance Structure

 (See the attached PDF for Table 3.)​

From a South Korean perspective, the contractor model is the most straightforward and politically low-risk, but it does little to reduce structural dependence or exposure to market tightening if non-Russian capacity remains constrained. The investment-only model can improve resilience by giving Korea a more durable commercial position—potentially including output allocation rights—without raising the same level of proliferation concern as technology transfer. However, investment does not create domestic operational capability and offers limited leverage over technology development.

The host-subsidiary model is attractive in theory because it brings services closer to the market, but in practice it is difficult to generalize to non-nuclear-weapon states due to regulatory and political barriers. Where it exists, it tends to be embedded in exceptionally robust legal and security frameworks. The deepest form of partnership—joint cooperation involving shared technology stewardship and joint operations—offers the most structural resilience but is also the hardest to achieve because it requires a level of trust and a legal architecture that are uncommon outside a small set of historical cases.

Finally, “technology cooperation leading to independent production” is often misunderstood. In practice, even where a partner holds a stake in a technology entity, black-box constraints may still prevent meaningful technology access, limiting the pathway to genuine national autonomy. The experience of black-box domestic operation in advanced states illustrates that investment and cooperation do not necessarily translate into technology sovereignty.

The strategic implication is that Urenco may be South Korea’s most commercially attractive partner in the near term because of cost competitiveness, scale, and institutional maturity. Yet Urenco’s political acceptability is inseparable from its controlled-access model, which limits what cooperation can achieve on technology security. A realistic policy approach therefore points toward a phased strategy: first, maximize feasible supply resilience through contracts and carefully structured investment that align with nonproliferation expectations; second, use those arrangements to reduce exposure during a period of market tightness; and third, keep open longer-term pathways that could emerge from next-generation technologies or new multilateral frameworks, provided they can be designed in a way that preserves South Korea’s credibility as a responsible nuclear exporter.