The Paducah Sun
The Paducah Sun
Tuesday, January 16, 2001
Paducah, Kentucky

Deal endangers plant: PACE
Russian uranium will make the Paducah plant uneconomic, the union says. USEC denies an import deal has been made.

By Joe Walker jwalker@paducahsun.com--270.575.8650
International atomic workers' union officials say they will go to court if necessary to try to prevent USEC Inc. from buying enough additional Russian uranium to make the 1,500-employee Paducah Gaseous Diffusion "largely uneconomic by 2003."

Although senior USEC managers insist the long-sought deal does not jeopardize the plant, the union says it seriously threatens a shutdown. The union claimed Monday that the Clinton administration, through the Department of Energy, has reached a "last-minute decision" to approve USEC's importing 3 million more units of enriched uranium annually from dismantled Russian nuclear warheads during the next five years.

That will make the plant unnecessary within two years because its unit production costs will rise far above the price USEC charges its utility customers, the union said, quoting two proprietary documents a Nuclear Regulatory Commission report issued last year and new utilities industry report.

"We do not intend to stand by and allow the public interest in maintaining a reliable and economic domestic enrichment, conversion and mining industry, as required by Congress, to be systematically destroyed," said James K. Phillips, vice president of government relations for the Paper, Allied-Industrial, Chemical and Energy Workers Union.

Phillips, formerly of Marshall County, said no reasons given for the deal are legal grounds to amend a longtime agreement against "dumping" foreign uranium on the U.S. market, forcing slumping sales prices even lower. The Russian uranium, sought as part of nuclear disarmament, costs more than the Paducah plant's production costs.

Phillips said the union "intends to take whatever legal action is necessary to halt this unwarranted move by the administration."

In a news release, PACE said the Russian deal, opposed by Energy Secretary Bill Richardson all last year, "is suddenly being rushed through in the last few days of the Clinton administration." Besides having Energy Department approval, the deal requires the secretary of commerce to approve amending the anti-dumping agreement. PACE, an original party to the agreement, has consistently opposed such an amendment, the union said.

PACE wants the change rejected by the incoming Bush administration, notably Secretary of Energy-designee Spencer Abraham and Secretary of Commerce-designee Don Evans.

Charles Yulish, USEC communications vice president, said no approval had come from the Clinton administration and the news release was another union ploy "to call into question" the company's motives.

"There is fear that any additional (units) coming in will cost jobs or jeopardize the plant, and it's not so," Yulish said. "There will be ample opportunity provided by the Department of Commerce to express those views, and this provision would have to be approved by Commerce before it's effective."

Yulish said that if the Energy Department approves the deal, it must be signed by USEC and Tenex, Russia's USEC counterpart, before being reviewed by the Department of Commerce. He also said the agreement would require that for every additional unit of enriched uranium bought from Russia, the Paducah plant would have to produce an equivalent amount.

"USEC is committed to providing and maintaining a domestic source of uranium enrichment, and we've chosen to consolidate those efforts at Paducah," Yulish said. "It will be our flagship production plant."

USEC announced last year it will upgrade Paducah and close its sister plant at Piketon, Ohio, this June. That decision and the Russian deal are signs that USEC is pursuing being a uranium broker, rather than producing enriched uranium, the union claims.

In the long run, the terms of the deal require USEC to maintain only a million units annually of enriched uranium from Paducah, which means USEC and U.S. utilities may need to import at least 90 percent of the annual U.S. uranium fuel requirement of 10 million units from foreign suppliers, most of it from Russia, the union claims.

"If the Tenex deal does go through, it will make it more attractive for USEC to broker Russian enriched uranium imports than to enrich uranium in U.S. enrichment plants," the news release said. "Indeed, in the next fiscal year, USEC will be importing 6.5 million (units per year) from Russia and producing approximately 4.5 million (units) per year."

David Fuller, president of the Paducah plant union, called the matching of Russian and Paducah plant enriched uranium "a shell game" because a million more units of production from Paducah annually are not needed. Instead, the million-unit match would be subtracted from Paducah's production, he said.

"It's fakery, and smoke and mirrors, and they know it," he said of USEC management. "Frankly, I thought they had given up making this lame claim about matched production long ago."

Fuller said DOE had staunchly opposed the deal until two weeks ago, when he and other union officials were summoned to Washington to meet with high-level Energy Department officials.

"Until our last meeting, DOE verbally and in writing was finding fault with this deal and the negative impact on domestic production," Fuller said. "Then suddenly they're trying to find ways to pull the trigger on the deal. I don't know why or what's happening, but the outcome is very predictable unless somebody is willing to step forward and make commitments to protect the industry."

Richard Miller, a former Washington-based PACE policy analyst, said the NRC and utilities industry reports paint a dim picture for Paducah. Combined, the reports estimate USEC's per-unit production cost will rise from $94 to $105 per unit of enriched uranium by 2003, while its revenue will be about $95, he said, adding that the spot market price is only $84 now.

"Whenever you displace production, that is a real cause for concern," he said. "The Tenex deal will force that (production cost-revenue) line to cross even sooner."