- The Washington Times - Wednesday, February 27, 2002

Russian and U.S. officials reached a breakthrough in a pricing dispute over uranium shipments to the United States that had threatened to disrupt both fuel supplies to nuclear power plants and a program to scrap Soviet missiles, the State Department said.
The accord with USEC Inc. of Bethesda, the largest supplier of enriched uranium to nuclear plants, needs the approval of the U.S. and Russian governments, State Department spokeswoman Brenda Greenberg said. It allows for a continuation of the Russian uranium shipments, which faced suspension.
The state-owned Russian company Tekhsnabexport, or Tenex, felt pressure to accept lower prices demanded by USEC because the U.S. government said it would allow no other buyers of the uranium, said Thomas Neff, a researcher who proposed the method for reusing old Soviet nuclear bombs in 1991.
"This story is far from over," said Mr. Neff, a Massachusetts Institute of Technology physicist. "The big hurdle is the Russian government," which previously rejected the prices that Tenex has now agreed to accept from USEC.
The pricing dispute disrupted a 1993 agreement under which Russia promised to sell weapons-grade uranium from dismantled nuclear warheads to USEC. It also endangered the supply of fuel to U.S. commercial nuclear power plants, which provide about 20 percent of the nation's electricity.
USEC has been seeking discounts from Russia to help it remain profitable. Spun off as a private company in 1998, it last month lowered its 2002 earnings forecast after reporting that profits last year dropped 60 percent to $41 million.
USEC supplies about 32 percent of the global market for enriched uranium used in commercial nuclear power plants. It obtains most of that uranium from old U.S. and Russian weapons. It has only one remaining generation plant, in Paducah, Ky., for producing new uranium fuel.
The proposed new pricing agreement would cover the remaining years, through 2013, of a U.S.-Russia agreement for destroying Soviet nuclear missiles.
The State Department is not releasing details of the pricing agreement while the United States and Russia study whether to approve it, Ms. Greenberg said.
An industry newsletter published by the Ux Consulting Co. LLC, an affiliate of the Uranium Exchange Co., described USEC as winning prices more than 20 percent below market levels.
The agreed price is based on a formula that averages seven U.S. and foreign price indicators for three years preceding the delivery year, with an additional discount of about 12 percent, according to the newsletter, Ux Weekly.
Under the proposed agreement, Ux Weekly said, the price this year would remain around last year's price of $90 per "separative work unit," or SWU, which is used to measure enriched uranium for nuclear power plants. The price in 2003 would then drop to about $77, $30 below the current U.S. market price of $107.
A typical 1,000-megawatt light-water reactor consumes about 100,000 to 120,000 SWU a year. USEC's annual sales are about 11 million SWU.
The agreement would provide USEC an annual profit margin of $120 million to $220 million a year, Mr. Neff said.
"Tenex gave in because they had no choice," he said.
USEC spokesman Charles Yulish said he could not comment.

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