The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Saturday, February 23, 2002

USEC likely has Russian deal
Cheaper uranium will affect the future of the Paducah plant, although the company and the union have different expectations.

By Joe Walker

USEC Inc. has struck a deal to buy cheaper uranium from Russia, which has major implications for the future of the 1,500-employee Paducah uranium enrichment plant.

Although company officials declined comment Friday, various Washington sources said USEC and Russia reached a tentative pact this week.

"All I know for certain is that USEC and Tenex, the Russian agent, have initialed a new long-term agreement that both governments have to approve," said Phil Potter, Washington, D.C.-based policy analyst for the plant energy workers' union. "There's no question they've initialed a deal, the State Department has received it and faxed it to various agencies in the U.S. government involved in this."

Potter said he was uncertain of details and had heard various prices speculated, but couldn't confirm any of them. He said he expected governmental review to be fast because of the importance the deal has to America's uranium enrichment industry.

The deal, reached Thursday, was confirmed by a senior Bush administration official, who spoke on the condition of anonymity, and Massachusetts Institute of Technology physicist Thomas Neff, who conceived the program and has consulted with both governments. Neff said some Russian officials are concerned the new price is too low and wonít increase enough annually to keep up with future spikes in the market.

U.S. Sen. Jim Bunning, R-Southgate, said during a Paducah visit Wednesday that USEC was closer than ever to a new contract with Russia. He said the Department of Energy was pushing the deal as part of an overall agreement to protect the Paducah plant, the nation's sole remaining enrichment facility.

USEC is middleman for sales of the Russian material, recycled from former Soviet warheads and accounting for about half the enriched uranium used by U.S. nuclear plants. About a third comes from the Paducah plant and the rest from European competitors.

In the eighth year of a $12 billion, 20-year pact with Russia, USEC has pinned the future of the Paducah plant on lowering prices for the cheaper Russian uranium. It says lower prices help offset the plantís high production costs from using massive amounts of electricity.

USEC leases the plant from the Energy Department. Tentative terms between the two call for USEC to run the facility at guaranteed production levels or turn it back to government operation. The company would be removed as agent for the Russian uranium if it defaulted on any of various terms of the agreement.

Union officials have expressed concern whether the cheaper Russian uranium will help or hurt plant jobs. They had hoped the Paducah plant agreement would precede the new Russian deal because too much Russian uranium could displace plant production.

Bunning said Wednesday that DOE Deputy Secretary Francis Blake had replaced Undersecretary of Energy Robert Card as chief negotiator in the Paducah plant agreement. That came after Card and USEC President William Timbers exchanged heated criticism in letters about the talks.

The Associated Press contributed to this report.