The Paducah Sun
The Paducah Sun
Wednesday, October 11, 2000
Paducah, Kentucky

USEC happy with uranium deal timeline

By Joe Walker
William Timbers

USEC Inc. says it is ahead of schedule in completing 20 percent of a highly controversial deal to buy overpriced uranium derived from dismantled Russian nuclear warheads.

"Just a decade ago, who would have imagined that Soviet warheads would be dismantled and diluted to supply electricity to U.S. cities?" said William "Nick" Timbers, USEC president and chief executive officer. "Yet it is happening today."

Last week, the Bethesda, Md., firm, which operates the Paducah Gaseous Diffusion Plant, reached a milestone of receiving 100 metric tons of the material, the equivalent of 4,000 nuclear warheads. USEC said the program has converted weapons-grade uranium into nearly 3,000 metric tons of commercial reactor fuel to generate electricity in the United States.

USEC customers include the Calvert Cliffs nuclear power plant in Maryland and the Nebraska Public Power District's Cooper Station.

USEC and Techsnabexport (TENEX) are agents for the U.S. and Russian governments in the agreement, which is converting 500 metric tons in Russia to fuel-grade uranium and shipping it to the United States over 20 years. USEC has paid $1.7 billion so far and is expected to spend another $6.3 billion.

"This is our sixth year of implementing the Megatons to Megawatts program, and we are ahead of the original government schedule," Timbers said in a news release. "This has been called the deal of the century the most successful nuclear nonproliferation initiative in history."

But USEC's role in the swords-to-plowshares pact has repeatedly been attacked by federal lawmakers, organized labor, and nuclear fuel and financial experts as a threat to national security and the American uranium enrichment business.

They say USEC is paying more for the Russian material than the production costs of its plants here and at Piketon, Ohio. The amount of Russian uranium shipped roughly equals the output of one of the plants.

Facing a glutted market with falling prices, USEC has laid off hundreds of workers at both plants and will close the Ohio facility next June. A recent proprietary study by the Nuclear Regulatory Commission said USEC won't be profitable beyond 2003 without drastic measures, such as closing both plants and becoming solely a broker of uranium.

Senior managers of ConverDyne, the marketing arm of the 330-employee Honeywell plant in Metropolis, Ill., said the plant may have to close without government help to prop up sagging prices caused partly by the influx of Russian uranium. Honeywell makes uranium hexafluoride enriched by the Paducah plant, which employs about 1,600.

Witnesses in congressional hearings have testified that USEC should not continue as agent for the Russian material because it has a conflict of interest in balancing business with nuclear disarmament. The Russians have stopped shipments several times because of similar concerns, and USEC itself threatened to pull out of the agreement last December if it didn't get as much as $200 million in federal money to help offset its losses.

The agreement was signed in 1993 and a contract in 1994. The first shipment of blended-down uranium arrived at the Ohio plant in June 1995.