- The Washington Times - Wednesday, June 19, 2002

The nation's only producer of nuclear fuel yesterday inked a deal that will give it access to uranium from converted Russian warheads and also government support in disposing of its radioactive waste.
But Bethesda-based USEC Inc. still faces a tough road ahead as its main rival irons out plans for a new fuel-manufacturing facility to compete with the financially shaky company.
USEC President and Chief Executive Officer William Timbers said the agreement with the Department of Energy will "enhance shareholder value and at the same time serve vital domestic energy-security and national-security interests."
USEC was created in 1998 through the privatization of the United States Enrichment Corp., the former government monopoly in charge of manufacturing nuclear fuel. Since then, USEC's stock has slid to about half its initial offering price amid worries about its long-term ability to measure up to its European competitors.
USEC shares closed yesterday at $8.31, up 93 cents for the day on unusually heavy trading, but still off its six-month high of $9.98 in May.
The company also administers an international program created by the Clinton administration called "Megatons to Megawatts." The program, aimed at keeping nuclear material out of terrorists' hands, funnels Russian uranium recovered from dismantled nuclear warheads to electric utilities in the United States.
"Our strong cooperation with Russia will help ensure that the important goals of protecting the world from the proliferation of nuclear materials continues," Secretary of Energy Spencer Abraham said in announcing the deal with USEC.
USEC and its Russian counterpart, Tenex, hammered out a deal in February to extend the agreement for 10 years. Access to the Russian material is a vital lifeline for USEC, which operates a single plant in Paducah, Ky., that is owned by the Department of Energy and cannot supply its customers without the Russian deal.
But the department held up government approval of the Russian pact until USEC committed to a timetable for developing new technology to manufacture nuclear fuel. The Bush administration has made it a priority to force USEC to create new nuclear-fuel-production technology and to avoid additional dependence on foreign supplies.
The administration is expected to announce as early as today its final sign-off for USEC's arrangement with Russia.
Currently, USEC uses decades-old, highly energy-intensive technology to produce 30 percent of the nation's nuclear fuel. The rest comes from Russia and a group of Western European companies.
Under the deal announced yesterday, USEC will use technology developed by the Department of Energy to build a more advanced plant in the United States by 2010 or 2011. The government will monitor the company's progress and could put a stop to the Russian agreement if USEC fails to meet this goal.
The department also agreed to take about $60 million in depleted uranium a byproduct of the manufacturing process.
USEC already faces a tough competitor in the race to build a new facility for "enriching" uranium into nuclear fuel.
Louisiana Energy Services, a private consortium, is in discussions with federal regulators to build a new plant that would be using technology pioneered by Britain-based Urenco by 2006. The consortium is made up of major U.S. nuclear-plant operators such as Exelon of Chicago, Houston-based Duke Energy and Entergy of New Orleans.
"Our plans are not affected by the agreement between USEC and the department," said James Malone, vice president for nuclear fuels at Exelon.
But Leo Payne, a former USEC chief financial officer and independent consultant, said the presence of this major consortium will complicate USEC's plans to raise the estimated $1 billion it takes to build a new fuel plant.
"With competing technology out there, one has to wonder whether Wall Street will ever finance this project," Mr. Payne said. "I don't know that the funds are limitless."
USEC spokesman Charles Yulish disagreed, but declined to specify whether USEC has made any progress toward this goal.
"We're confident that we will be able to raise the money and find a partner," he said.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide