More than half a century has passed, but the scene is still etched in her mind.

"I saw it from the street in front of my house," said Proskovya Koloskova, 85. "There was a flash like white lightning, then a great cup of fire rising into the sky with black smoke spilling out from the sides and tongues of red flame."

The year was 1954 and Koloskova, a farm worker, was witnessing one of the Soviet Union's first detonations of an atomic bomb. Between 1949 and 1989 the Red Army tested more than 450 nuclear weapons here on the vast sun-scorched steppes of eastern Kazakhstan. Erratic winds blew streamers of toxic fallout toward villages on the edge of the test ground, known as the poligon.

Even today, the horrors of the Semipalatinsk test site are still palpable. At a small orphanage in nearby Semey, two toddlers lie in cots. Their heads are deformed to enormous size, their eyes flutter upwards into their sockets. Nurses believe they are victims of contamination caused by the nuclear experiments. On a tour of Semey, organised and paid for by the Kazakh government, the Guardian was shown a cancer clinic where a new "nuclear medicine" department is soon to be built — and a cabinet of misshapen babies in pickling jars at the city's medical university.

The genetic consequences of radiation exposure are disputed but doctors say cancer rates in eastern Kazakhstan are 50% higher than the national average. Koloskova's youngest son died aged 44 after severe kidney problems. "Maybe the tests were to blame," she said.

But while Kazakhstan laments its grisly nuclear past, it is rapidly constructing a nuclear future.

This week the country has been flaunting its energy wares as leaders from 56 countries – including Angela Merkel, the chancellor of Germany, and the US secretary of state, Hillary Clinton – gather in the capital, Astana, for a summit of the regional security organisation, the OSCE.

China, Russia and Europe are already jockeying for access to the Central Asian state's huge reserves of oil and natural gas. Now bountiful supplies of uranium to fuel a new generation of nuclear power plants are another energy target.

Last year Kazakhstan leapfrogged Australia and Canada to become the world's largest producer of uranium. The metal is extracted by leaching from boreholes, concentrated and then converted into yellowcake. In 2009 the country produced 13,900 tonnes of uranium, more than a quarter of global output.

Kazakhstan's rebranding comes at a time of reviving interest in nuclear power worldwide, with even some prominent greens calling it a crucial source of carbon-free energy.

At times the sinister legacy of the Semipalatinsk explosions feels like a sideshow. In Kurchatov, the former closed town on the edge of the poligon that was once home to thousands of researchers working on the Soviet bomb, scientists offer visitors an excursion through the former test ground. The spot where blasts were detonated is now a quiet patch of steppe dotted with wormwood, 40 miles west of Kurchatov. Fanning out from the epicentre are disintegrating concrete towers that housed equipment to measure the force of the explosions. Round pebbles of molten rock lie scattered on the ground.

A dosimeter shows radiation at the epicentre is 30 times higher than background level. But Yury Strilchuk, a radioecologist who leads the excursions, says there is little danger: "You could suffer more from the stress of worrying about coming here than from radiation itself."

Some of the scientists swim and catch fish in a nearby pond called Atomic Lake, claiming they suffer no ill effects. A long-term project to monitor contamination of grasses is largely redundant because herders already graze their animals on the poligon without censure.

While the painful nuclear past occupies a hallowed place in national identity, what Kazakhstan really cares about now is its nuclear rebirth.

President Nursultan Nazarbayev ordered an end to testing in 1991, three years before the country gave up its nuclear weapons arsenal, which was the fourth largest in the world. Kurchatov – named after Igor Kurchatov, the Russian nuclear physicist – was left almost deserted.

Today many of the town's apartment blocks are still boarded up, but there are signs of a renaissance. The stuccoed buildings in the central square have been spruced up and work is trickling back.

"Kurchatov is coming alive again," says Dzhambulat Gilmanov, the chief specialist at the National Nuclear Centre, which occupies one side of the square.

Down the road in a hangar, engineers are testing a Tokamak materials reactor, a bus-sized grey cylinder festooned with pipes and wires.

Next door is a sprawling "nuclear technopark" where employees irradiate building materials and sterilise medical equipment using an electron accelerator.

The uranium business is the real muscle behind the revival. The World Nuclear Association said in a report last year that it expects a global shift to nuclear projects will lead to a 59% increase in demand for uranium by 2030. French, Canadian and Japanese companies have already signed joint ventures to exploit Kazakhstan's reserves.

Some investors may yet be cautious of following suit. In March a court in Astana sentenced Mukhtar Dzhakishev, the former head of state nuclear firm Kazatomprom, to 14 years in prison for embezzlement and the illegal sale of assets to foreign companies.

Kazakh politics are vapid – President Nazarbayev has preserved his authoritarian rule for 19 years and shows no sign of budging – but observers say Dzhakishev was probably the victim of a clash between factions inside government.

The US diplomatic cables revealed by Wikileaks this week show that the US ambassador to Astana, Richard Hoagland, believes the Kazkah elite is riddled with corruption, as rivals battle for control of the energy spoils. Senior officials "receive profits from businesses registered in the names of their spouses or other relatives," he writes in a cable to Washington. "In other cases, they're stealing directly from the public trough."

As for ordinary Kazakhs, many are ambivalent about the nuclear renaissance, which includes plans to store enriched fuel in the east of the country. "I'm against it," said a military officer in Semey.

"We've suffered enough. Please, no more dead fish in our rivers."