By Jason Simpkins
Managing Editor
Money Morning

Russia today (Tuesday) will begin selling enriched uranium directly to U.S. utilities, a development that will give the fuel supplier an expanded role in the U.S. energy sector for decades to come.

Techsnabexport, a state-owned nuclear energy company, has agreed to sell an undisclosed quantity of enriched uranium to a consortium of American companies for more than $1 billion, Reuters reported. The U.S. companies involved include PG&E Corp. (NYSE: PCG) and Ameren Corp. (NYSE: AEE).

The deal will give utilities a chance to deal directly with enriched uranium suppliers and creates a better opportunity for Russian energy companies to come into the U.S. market.

However, it also undermines the United States’ ability to dissuade other countries from pursuing their own uranium enrichment programs.

North Korea, which carried out a nuclear test over the weekend, and Iran, which is currently facing United Nations sanctions for pursuing its own enrichment program, are two countries that could potentially use Russia’s commercial uranium sales to justify their atomic ambitions.

Nuclear reactors run on uranium that has a composition of 3% and 5% uranium 235. However, uranium houses just 0.7% of uranium 235 in nature, which means it needs to be enriched. Atomic weapons and nuclear submarines require a uranium 235 density of more than 90%.

Thanks to its Cold War buildup, Russia leads the world with about 40% of global uranium enrichment capacity and has long supplied atomic fuel to countries in Europe and Asia.

Russia is also the leading supplier of enriched uranium to the United States, but those dealings were previously funneled through the United States Enrichment Corporation (USEC) as part of a program to eliminate nuclear weapons.

The USEC was originally part of the U.S. department of energy, but has since been sold to a private company.  Though even after the company was sold, the government allowed the USEC to maintain its monopoly on the sale of diluted weapons-grade uranium from Russia. And Russian authorities complained that the USEC was underpaying.

Sales of diluted weapons grade uranium will still go through USEC, but Techsnabexport and other Russian companies now have the opportunity to sell separate, commercially conscripted uranium directly to U.S. utilities.

That gives Russia, which provides half of all the uranium used in U.S.