(Bloomberg) -- The UK stepped up efforts to break Russia’s monopoly over a uranium-fuel market that’s expected to play a key role in a powering a new generation of small, factory-built reactors. 

The Kremlin’s nuclear giant Rosatom Corp. is currently the world’s only commercial supplier of high-assay, low-enriched uranium, known as HALEU. The fuel blend has a higher concentration of the uranium isotopes needed to sustain fission, requiring utilities to re-fuel less often while potentially driving down operating costs. 

The UK government will provide £196 million ($246 million) to Urenco Ltd., the British-Dutch-German consortium that’s the world’s second biggest uranium enricher, to build a HALEU fabrication line at its facility in Capenhurst. 

“Backing Urenco to build a uranium enrichment plant here in the UK will mean we are the first European nation outside Russia to produce advanced nuclear fuel,” said Claire Coutinho, secretary of energy-security and net zero. 

Efforts to diversify uranium supply chains have picked up in the wake of Russia’s invasion of Ukraine. While Rosatom continues to be the world’s biggest supplier of nuclear fuel and technology, more countries are investing in capacity. 

The US uranium enrichment industry is in line to get $2.7 billion infusion in a government funding bill unveiled in March, reflecting efforts to wean the nation off nuclear fuel imported from Russia. Underscoring the need for alternative HALEU suppliers, the US paid $150 million to Centrus Energy Corp. to produce just 20 kilograms (44 pounds) last year. 

“The potential is wider than just the British domestic market,” Andrew Bowie, the minister for nuclear said in an interview. “We have allies who are more exposed to Russia and they will be looking to maximize Urenco’s UK facility.”

While the nuclear industry has promoted small modular reactors, or SMRs, as way to potentially lower costs and accelerate construction, the absence of reliable fuel-supply chains loomed as an impediment. Urenco’s new UK facility will be ready to begin producing as much as 10 tons of HALEU annually by 2031. 

Britain is currently shortlisting SMR projects and is due to award contracts in autumn.

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