The Ohio site was selected because a suitable plant is already there and Paducah is affected by an earthquake fault.
By Bill Bartleman firstname.lastname@example.org
"I am here today to announce that USEC has chosen Piketon, Ohio, as the site of our American centrifuge commercial plant," Timbers said Monday at a news conference in Columbus, Ohio, with Ohio Gov. Bob Taft. Piketon was competing with Paducah for the $1.5 billion gas centrifuge plant that in 2010 will replace the Paducah Gaseous Diffusion Plant.
An existing building in Piketon and Paducah's location on the edge of an earthquake fault were too much for Kentucky to overcome, Timbers said. The decision was made by USEC managers who reviewed incentives and benefits of building in Ohio or Kentucky.
"Both contained economic incentives underpinned by strong community support," Timbers said. "The efforts of both locations to secure this new enrichment facility were impressive. Either site would be a good home for our new commercial plant."
Timbers said Piketon was picked based on economic incentives offered by each state and local communities, and a "determination as to which best addressed schedule, risk and cost."
Regarding scheduling, he said deployment of the new technology will be at least a year earlier because of the presence of a centrifuge building constructed in Piketon 20 years ago by the U.S. Department of Energy. After operating for a short time, DOE abandoned the facility, saying that instead it wanted to pursue a different enrichment technology, known as AVLIS.
The building, which Timbers described as the size of 20 football fields, also provided considerable cost savings, estimated earlier at $300 million.
He said Paducah's proximity to the New Madrid Fault not only would have required increased construction costs, but would have increased risk factors if a major earthquake hit.
Ohio officials put the value of the incentive package at $125 million. Kentucky officials would not reveal the value of their package, saying they had signed a confidentiality agreement with USEC. Economic Development Secretary Gene Strong said Kentucky's package had a higher value than the one submitted by Ohio.
Construction of the plant will begin in 2006 and should be in full operation by 2010, employing 500.
Timbers said he was confident the company would have the plant financing in place by 2006, although some financial analysts contend USEC will have a difficult time raising the money.
"The company is doing quite well, and the stock hit a 52-week high at the end of the year," Timbers said when a reporter asked about financing. He said the key has been restructuring from a company operated by the government to one operated as a private corporation. The Department of Energy ran the enrichment operation until 10 years ago when it was turned over to USEC.
"We've restructured the company so that the business model today works, is effective and has a sound foundation," Timbers said. "We'll be developing a financial package that will be prepared in time, based on a number of opportunities that we have here and abroad to ensure the financing is in place by the time the shovel needs to go into the ground in the 2006 time frame."
He did not elaborate on the financing options.
After the new plant opens, the 1,270-worker Paducah Gaseous Diffusion Plant will close.
"Kentucky has been and will be an important part of USEC's business," Timbers said. "The existing Paducah Gaseous Diffusion Plant will continue to be the engine that drives USEC's business for the remainder of the decade."
He said the Paducah plant has the ability to increase production above current levels as the demand for uranium fuel increases. He also said it "supports the security interests of our nation" by reducing dependence on foreign production of nuclear fuel.
Since DOE abandoned the intended Piketon centrifuge plant 20 years ago, the method has been refined and now is considered an efficient and viable "second-generation" enrichment process, Timbers said.
In centrifuge, uranium is enriched in tall, spinning cylinders, using one-third the electrical power required by the 60-year-old gaseous diffusion process used in Paducah.
USEC said the Piketon plant will produce enough enriched uranium to fuel 30 power plants, each large enough to provide electricity to a city the size of Memphis, Tenn.