Standstill agreement still stands

15 August 2011

The American Centrifuge project will continue under an amended standstill agreement between project leader USEC and its partners Toshiba and Babcock & Wilcox.


In May 2010 the trio agreed a securities purchasing deal to fund the construction of the American Centrifuge, for which USEC is trying to secure a $2 billion loan guarantee from the US Department of Energy (DoE). In order to get this the company has to meet a set of technology milestones.


Toshiba and Babcock & Wilcox invested $75 million in USEC in May 2010, with $50 million more to follow upon the DoE's conditional approval of a loan guarantee - as long as this came before the end of June this year, otherwise the investors would have the right to walk away. This deadline was not met, but instead of pulling out, the investors made a 'standstill agreement' with USEC which shifted the deadline to today. It has now been moved again, to 30 September.


USEC said this "limited additional period of time" provides for it to "finalize and enter into a conditional commitment" with the DoE. On its website, the company said, "The DoE believes that USEC needs to further improve its financial and project execution depth to achieve a manageable credit subsidy cost estimate and to proceed with the DoE loan guarantee." The DoE and USEC are working under a cost sharing research, development and demonstration plan worth $90 million.


While the $2 billion in potential loan guarantees would boost lender confidence, the DoE would still want to be satisfied that commercial lenders consider the project viable. Meanwhile, the completion costs would exceed the guaranteed $2 billion leaving some lenders unprotected by the government coverage for construction delays due to any federal fault. USEC said it is in talks with Japanese export credit agencies for $1 billion of the cost.
The basic technology for the American Centrifuge is a tall carbon fibre centrifuge unit based on designs developed at the Oak Ridge National Laboratory and demonstrated by the DoE in the 1980s. Main buildings for the plant have been constructed at USEC's site in Piketon, Ohio. It should eventually house around 11,500 centrifuges, which together would have a capacity of 3.8 million separative work units per year. A lead cascade began operation at Piketon in September 2007.
Researched and written
by World Nuclear News