- The Washington Times - Sunday, August 31, 2003

Louisiana Energy Services tomorrow will announce plans to build its first uranium-enrichment facility in the United States, stepping up pressure on Bethesda-based USEC to implement new technology for the competitive nuclear fuel market.

USEC, currently the sole U.S. supplier of the fuel used by nuclear power plants to generate electricity, is speeding up the schedule for a $150 million nuclear test facility in Ohio followed by a commercial plant in either Ohio or Kentucky.

“We are aggressively moving forward,” said Charles Yulish, a USEC spokesman.

USEC is the world’s biggest supplier of enriched-uranium fuel for commercial nuclear power plants and controls about 60 percent of the U.S. market. Louisiana Energy Services is a European-U.S. partnership, led by British-Dutch-German consortium Urenco.

LES plans to win more of the North American market with the new $1.2 billion uranium enrichment facility in southeastern New Mexico.

“I think that the company is certainly looking at gaining market share in this country, or it wouldn’t be pursuing this,” said Douglas Turner, an LES spokesman.

“From a business perspective, there is a need for competition in the uranium-enrichment market in the U.S.; today there is none,” Mr. Turner said.

LES had selected a site in Tennessee but faced local obstacles. Construction at the new location awaits federal approval and would not start for about three or four years.

USEC downplayed LES’s announcement and potential competition.

“Any notion that this would introduce competition [into the U.S. market] is inconsistent with the facts,” Mr. Yulish said, indicating that foreign-based firms already have about 40 percent of the U.S. market.

“It’s a fiercely competitive market,” he said.

Mr. Yulish said that USEC is focusing on gaining permits and starting construction on the test facility next year, then moving forward with a $1 billion to $1.5 billion commercial plant by the end of the decade.

The new plant would allow USEC to phase out its Kentucky facility, which uses technology from the 1950s. The new operation, slated for Ohio or Kentucky, would use technology based on Department of Energy equipment from the 1980s.

LES is modeling the New Mexico facility on designs being built in Western Europe.

“Is there enough of a market for the two technologies? Our answer would be yes,” said Marvin Fertel, vice president of the Nuclear Energy Institute, a Washington-based policy group supported by utilities and companies like USEC and Urenco.

“It’s a global market; it’s not just in the United States. Both USEC and LES are looking at new technologies … that will be safer, more economical. We see it as a win-win for the industry if we can get both of these companies to succeed,” Mr. Fertel said.

Europe’s enriched uranium producers offer tough competition for USEC, but the Commerce Department in February 2002 ruled that USEC’s European rivals sold products in the United States at unfair prices, and set duties of 32 percent for France-based Eurodif and 2.2 percent for Urenco.

The shutdown of an enrichment facility in the United States in 2001 and the trade action led to a mild spike in enriched uranium prices from December 2001 through February 2002, though they have held steady since. The proposed facilities are several years from completion, so it is unclear what impact they would have on prices.

The worldwide enriched-uranium market is worth about $3.6 billion, and USEC supplies about one-third of the total share. USEC’s revenue last year was more than $1.4 billion. The company’s stock, traded on the New York Stock Exchange, closed Friday at $7.18, barely changed from the previous day. Through the past 52 weeks, USEC’s share price has slipped almost 5 percent, though it has surged 19.3 percent since Jan. 1.

Through April, coal-fired plants produced about half of the electricity generated in the United States, followed by nuclear plants, with about 20 percent, then natural gas, hydro and oil, the U.S. Energy Information Administration reports.

The United States is the world’s largest supplier of commercial nuclear power, with 104 commercial nuclear generating units fully licensed to operate, the EIA said.

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