The Paducah Sun
The Paducah Sun
Thursday, May 25, 2000
Paducah, Kentucky

Analyst: USEC deal kills plants

By Joe Walker jwalker@paducahsun.com--270.575.8650

A labor analyst says USEC Inc. is lobbying President Clinton for "a deal sweetener" with Russia, which suggests the firm is headed toward brokering uranium and away from running two enrichment plants that employ 3,550 people.

"This was done behind everyone's back in a secret deal by USEC," said Richard Miller, Washington-based policy analyst for the plants' atomic workers' union. "We believe it may no longer be a question of whether we lose one plant, but both plants."

Charles Yulish, USEC communications vice president, accused Miller of continuing a "smear and fear" campaign.

"It's basically a smoke screen. It's not based on fact," Yulish said. "We're not a broker. We're not going to be a broker. We're in the business to make (enriched uranium)."

Amid serious financial problems, USEC is cutting 621 jobs at the Paducah Gaseous Diffusion Plant and its sister plant near Portsmouth, Ohio. At its next meeting, which may be next month, the USEC board is expected to consider closing one of the plants. Power and labor costs at the facilities account for most of the company's expenses.

A nuclear disarmament agreement has USEC buying enough enriched uranium from Russia to equal the output of one of the plants and at prices cheaper than plant production costs. Chief Executive Officer William "Nick" Timbers has been negotiating with Russia for lower prices.

Miller said the union learned this week that USEC has offered to buy huge amounts of Russian commercially enriched uranium as incentive for cheaper warhead material. The firm has hired "a football team" of powerful, well-known lobbyists to further the effort with the Clinton administration, he said.

Miller said USEC lobbyists have tried to get the issue on the agenda for the Clinton summit next week with new Russian President Vladimir Putin.

"This has nothing to do with nonproliferation, but it would be clearly part of a deal sweetener that would help USEC be a major brokerage corporation this year," he said. "They're going to swap more American jobs for Russian jobs to make the Russian deal profitable."

If USEC managers can close the Russian deal, they will more quickly announce a plant closure, Miller said.

"If they don't have the deal with the Russians, Russia will have them over a barrel in negotiations if they close a plant first because Russia knows USEC doesn't have the supply to back it up," he said.

However, Yulish said USEC is committed to be a domestic supplier of enriched uranium. If it wanted to be a broker, it would be legally bound to disclose that to the Securities and Exchange Commission, he said.

"This kind of blatant fear-mongering by Miller in order to get people fearful about our intentions really is completely misleading," Yulish said.

1st District Rep. Ed Whitfield, R-Hopkinsville, spoke with Commerce Secretary William Daley and other high-ranking government officials and was unable to confirm USEC efforts to broker uranium, said Anthony Hulen, Whitfield's press secretary.

"But if there are attempts made to do that, we'll certainly stand in the way," Hulen said. "That would require a change in the (Russian) agreement."

Nuclear trade publications report that USEC and British Nuclear Fuels want to buy the Dutch and German shares of USEC competitor Urenco, a consortium of British and Dutch governments and private German utilities. USEC and British Nuclear reportedly could team to trump Canadian firm COGEMA's rumored $1 billion counteroffer for the shares.

Miller said USEC needs to bolster the Russian agreement to try to improve its slumping credit rating so that is has borrowing power for the Urenco deal. Yulish would not confirm or deny that USEC is vying for part of Urenco, but he said USEC is talking with the consortium about gas centrifuge technology as a possible replacement for gaseous diffusion.

USEC also is lobbying Congress to change a 1993 agreement controlling the amount of Russian uranium entering the U.S. market, Miller said. "That agreement would have to be amended to allow the material to come into the U.S., because there are not quotas left available," he said.

Russia has stopped shipments of uranium to the United States reportedly because of legal action against it by Swiss firm Compagnie NOGA to enforce a Swedish court arbitration award. The judgment resolves a dispute between Russia and NOGA over oil.

Earlier this year, NOGA sued Russia in U.S. District Court at Paducah in an effort to force Russian action. The site was chosen because of USEC's inventory of Russian natural uranium at the Paducah plant.

The State Department and National Security Council are trying to resolve the shipping stalemate with Russia. Meanwhile, USEC may have to draw on inventories or increase production to meet customer orders, Yulish said.