French Industry and Energy Minister Eric Besson signed a deal with the government of Kazakhstan today that will see France’s Areva open a nuclear fuel plant with Kazakh firm Kazatomprom, his office said.

KATCO, a joint venture between AREVA and the Kazakh national mining company, has been operating the Muyunkum and Tortkuduk mining sites since 1997. With the Fast Track project to increase production capacity, this concession becomes AREVA Group’s largest source of natural uranium.

“This deal commits to the creation in Kazakhstan, the top global producer of uranium, of a nuclear fuel production plant dedicated to the Asian market,” a statement said.

“The construction of this plant could start as soon as the feasibility study is completed by the end of the first quarter of 2012,” it added.

Besson was on a visit Friday and Saturday to Kazakhstan. Areva said the plant would consist of a new production line at Kazakhstan’s ULBA metallurgical plant that will be 51% owned by Kazatomprom and 49% by Areva.

In Kazakhstan, uranium prospection and/or exploration is being performed by Areva, Atomredmetzoloto, Cameco Corporation, Kansai Electric Power Co.,Inc. (KEPCO), KazAtomProm, Sumitomo Corporation, Tekhsnabexport external link, Uran Ltd external link, Urasia Energy Ltd.

Kazakh authorities declare their country is ready to increase its annual uranium production up to 25,000-30,000 tonnes under the related market demands and can build its own nuclear power plant within the next ten years. Kazatomprom has revised the outlook for Kazakhstan’s uranium production in 2011 to 19,900 tonnes. In 2010, uranium production in Kazakhstan reached 17,803 tonnes.

After more than tripling its output of uranium in four years to become the world’s top producer, Kazakhstan has stabilized production to around 20,000 metric tons annually in order to avoid further depressing prices. As long as prices remain at their current low levels, Kazakhstan will not develop new projects and our production will remain at the current level. But the country may still ramp it up to 25,000 tons annually – about 40% of world production – provided that such quantities are required by the market and we are confident we will realize a fair return on our investments. Prices were low in 2008 and 2009 mostly because Kazakhstan’s production was increasing so fast.