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Nuclear fuel bank seen winning backing at U.N. body

VIENNA (Reuters) – Member states of the U.N. nuclear watchdog are expected to approve next month a U.S.-backed fuel supply plan seen as a way to help prevent the spread of atom bombs, despite misgivings among some developing countries.

Western diplomats said the stalled proposal to set up a $150 million nuclear fuel bank run by the International Atomic Energy Agency (IAEA), which countries could turn to if their regular supplies were cut, was still being discussed.

But several European diplomats said it was now likely to be adopted at a Dec 2-3 meeting of the 35-nation governing board of the Vienna-based body, which has a mandate to promote peaceful uses of the atom.

"I expect a vote and I expect it to be passed," one said.

Proponents say the fuel bank plan could help meet growing demand from dozens of countries, some in the conflict-prone Middle East, for technical help in launching atomic energy without increasing the risk of weapons proliferation.

The uranium needed to fuel nuclear reactors can also be enriched to high levels and provide material for bombs, making such fuel cycle technology especially sensitive.

Guaranteed fuel supply "is one tool that allows states entry into the nuclear arena without requiring investment in extensive infrastructure development," said one Western envoy.

"It certainly contributes positively toward preventing the proliferation of nuclear material," he said.

Iran's disputed enrichment program, which the West fears is aimed at developing nuclear weapons, has also helped the idea up the agenda after decades on the political back-burner.

But some developing states are concerned that it may limit their right to sovereign nuclear energy capabilities, even if Western diplomats say the proposal makes clear that this would not be the case.

PRIORITY FOR OBAMA

"Everybody knows that this is a proliferation initiative, that it is being done for the explicit purpose of making sure that some countries do not develop the fuel cycle," said one diplomat from a developing country.

"Why push through something which people are not sure about?"

But a European official said the fuel bank was a "positive way to reduce the risks of weapons proliferation" which did not restrict any country's right to pursue civilian fuel technology.

The proposal by former IAEA head Mohamed ElBaradei for a fuel bank, possibly located in Kazakhstan, proposes buying 60-80 tonnes of low-enriched uranium (LEU) using $150 million in member donations and offering it to states at market prices.

U.S. President Barack Obama has backed the idea and the U.S.-based Nuclear Threat Initiative has pledged $50 million to help make it reality.

"This proposed LEU bank is a key priority for President Obama as part of his overall effort to increase to countries around the world access to peaceful nuclear energy," said Robert Wood, deputy head of the U.S. mission to the IAEA.

"We view fuel assurances as an important confidence building measure," he said.

The IAEA has been mulling several plans under which states would be provided with enriched uranium for their civilian nuclear programs if their deliveries were halted for political reasons and they can show a perfect non-proliferation record.

Its board in November 2009 backed a complementary offer by major uranium producer Russia to host such a facility.

One European diplomat stressed that the fuel reserve would only be used if necessary and it would not replace commercial suppliers. Some analysts forecast a uranium shortage in 2013 due to increased demand from China, India and elsewhere.

"It may not be used at all for many years," he said.

(Editing by Ralph Boulton)