Canada is home to the world headquarters of Russia’s largest uranium producer, owned by Vladimir Putin‘s government. And because of its close ties to Moscow, the company risks facing US sanctions related to the invasion of Ukraine.

The Canadian Uranium One belongs to the Russian state company Rosatom, itself founded by Vladimir Putin to bring together the country’s nuclear industry.

So far, Washington and Ottawa have excluded nuclear from reprisals against the Russian energy sector. The White House would, however, consult with the industry on whether to include Rosatom in the list of sanctioned companies, according to Bloomberg. The Moscow company is a major supplier of nuclear fuel to the United States through Uranium One.

This Canadian subsidiary of Rosatom is the third-largest producer of uranium in the world. It operates six deposits in Kazakhstan and is preparing to operate a new mine in Tanzania. It has started the process of selling a mine in the US state of Wyoming.

Uranium One Inc. is registered in British Columbia, although it has no mines in Canada. In his official communications, his addresses correspond to the offices of the law firm Fasken in Vancouver and Toronto.

The sanctions affect almost all sectors of the Russian economy, from the banking industry to energy, including aviation and electronics. Rosatom still escapes it, even if 91,280 people work in its nuclear weapons division, that is to say, a third of its employees, according to its financial statements.

Uranium One is also very profitable for Moscow. In 2020, the company paid the equivalent of CAN 373 million in dividends to its shareholder. A fragmented structure intended to minimize its tax bills oversees its assets, worth 3.1 billion (see other text).

“It makes no sense,” says the judge, the deputy leader of the New Democratic Party, Alexandre Boulerice. According to him, Ottawa must apply the sanctions “in a coherent way”, especially against the entities linked directly to the Putin regime.

In the Conservative Party, the defense critic, Pierre-Paul Hus, believes that the federal government must examine this type of strategic file. According to him, it is “not only in the interest of Canada but also in the interest of our national security and that of our NATO allies”.

The absence of Russian nuclear sanctions surprises Jennifer Quaid, a specialist in corporate criminal law at the University of Ottawa. “I’m amazed, both because it’s controlled by a state corporation, and also because of the strategic nature of the resource,” she says.

Global Affairs Canada (the Department of Foreign Affairs) declined any interviews. Ottawa did not explain why Uranium One and Rosatom escaped sanctions and only sent La Presse general comments.

“Due to the Government of Canada’s obligation to protect confidential company information, we are unable to provide further comment,” spokesperson Jason Kung wrote in an email.

In Washington, the Treasury Department did not respond to our questions.

“If the Americans and Canadians were serious, they would impose sanctions,” says Guy Marleau, professor of nuclear engineering at École Polytechnique de Montréal.

He notes that a significant obstacle is likely to hold them back: the great needs of the United States in uranium, as is the case with Russian oil and gas in Germany.

The United States is the largest consumer of uranium in the world (18,300 tonnes), ahead of China (10,800 tonnes). However, they only produce a negligible amount, according to data from the World Nuclear Association for the year 2020.

Vulnerable to sanctions

Already in 2020, long before the invasion of Ukraine, Uranium One said it feared new reprisals from Western countries, after those imposed since the annexation of Crimea in 2014.

“There can be no assurance that additional sanctions will not be imposed if an escalation takes place in Ukraine or if Russia’s relations with the United States, the European Union and Canada deteriorate,” his statements say. financial.

In fact, the new Canadian measures against Russia are likely already harming Uranium One. The company must gradually repay a loan of 400 million US (511 million CAN) to its main creditor, Sberbank, a financial institution already under sanctions. However, Canada’s regulations on special economic measures for Russia suggest that such payments could be blocked.

Ottawa and Washington did not respond to our questions on the subject.

Contacted at his home in Toronto, a lawyer for the company also refused to answer our questions. “You have to go through our public relations department first. They will contact you if they want to say anything,” Bozidar Crnatovic said simply before hanging up.

This former partner of Fasken moved to Uranium One in 2012, when Rosatom already held the majority of the company’s shares.

The vice-president for legal matters, the Canadian Jane Luck, did not respond to our messages.

A security risk

The Russian presence in Western nuclear power has raised questions for a long time. In the United States, Uranium One’s ownership of mining facilities in Wyoming was already causing an outcry ten years ago, recalls Michel Jebrak, professor emeritus at UQAM.

“Being an American producer, Uranium One had a seat at the Nuclear Energy Institute and the Russians, therefore, had access to American nuclear industry data,” says the geologist.

The Uranium One site in Wyoming, now inactive, has been in the process of being sold to a Texas company since November 2021.

The possible sanctions of the Biden administration against Rosatom reported on Wednesday would be a logical continuation of the intentions of the previous American administration.

In the spring of 2020, the Department of Energy lamented the vulnerable position of the United States in nuclear energy in the face of Russian and Chinese state companies. In particular, a report suggested that the US Nuclear Regulatory Commission could ban fuel imports from Russia and China for reasons of national security.

An archipelago of shell companies around the world
To exploit its uranium mines in Kazakhstan, Moscow uses an archipelago of companies in the four corners of the world, making extensive use of tax havens. All under the management of a company registered in British Columbia.

Uranium One Inc. oversees an elaborate structure of companies in territories with advantageous legislation for multinational mining companies: Luxembourg, the Netherlands, Canada, Australia, the Virgin Islands of the United Kingdom, Cyprus, Delaware, Nevada…

In turn, these companies control other companies that operate uranium mines in Kazakhstan and carry out exploration campaigns in Tanzania.

Tax optimization

A tax partner at Raymond Chabot Grant Thornton, Luc Lacombe took a look at Uranium One’s organization chart. According to him, the company seeks to minimize the payment of taxes and taxes as much as possible by declaring different types of income and losses where it is most advantageous.

“It’s called ‘complex structures’, which the Canada Revenue Agency doesn’t like very much,” he says. The Member States of the Organization for Economic Co-operation and Development are trying to counter the perverse effects of these arrangements by introducing a minimum tax of 15% on the profits of multinationals.

In 2020, Uranium One earned revenues of 532 million Canadian and released cash of 226 million, according to its financial statements. Its high profitability enabled it to pay a dividend of 373 million to Uranium One Holding NV, a shell company in the Netherlands controlled by the Russian state company Rosatom. The company and its joint ventures employed 2,244 people worldwide in 2020.

Uranium One has had trouble with Revenue Canada, which claimed 5.8 million from it after “minor adjustments” to its tax bill for 2014, especially in sales taxes. Its annual report for 2020 specifies that this revision could still cost it a total of 9.4 million for the years 2015 to 2017.