USEC, DoE reach $90 million cost share agreement

24 March 2010

In a move suggesting growing confidence in USEC's American Centrifuge technology, the US Department of Energy (DoE) has agreed to provide the company with $45 million in funding for its ongoing technology demonstration and manufacturing activities.

 

American Centrifuge from the air (USEC)

The American Centrifuge plant site (Image: USEC)

Under a cooperative agreement signed yesterday, the DoE will provide financial support for USEC to continue its American Centrifuge activities by taking the disposal obligation (but not immediate possession or custody) for a limited quantity of depleted uranium tails from USEC, releasing $45 million in cash for investment in American Centrifuge demonstration that USEC had otherwise committed to future tails disposition obligations. USEC will match the $45 million, for a total investment of $90 million.

 

USEC said, "The funding under the cost-share cooperative agreement supports increased operational run-time of the Lead Cascade as well as production of additional machines by USEC's manufacturers and rotor process improvement activities in preparation for full, high-rate production."

 

In a statement, the DoE noted, "The Department sees promise in this advanced technology, and last summer announced a willingness to invest in it." The new cooperative agreement was announced as US energy secretary Steven Chu toured USEC's American Centrifuge technology and manufacturing centre in Oak Ridge, Tennessee.

 

USEC president and CEO John Welch said, "We appreciate DoE's vote of confidence in the American Centrifuge technology." He added, "We have made significant progress and continue to work hard to address the recommendations of DoE's independent engineer. This funding will boost those efforts and preserve approximately 355 jobs dedicated to centrifuge machine manufacturing and operation of the American Centrifuge machines. These activities will give us valuable operational data and experience as we prepare to update our loan guarantee application."

 

Last week, USEC announced that it had started operating a cascade of AC100 centrifuge machines in a commercial-plant configuration at its Piketon, Ohio, plant. Some two dozen AC100 machines are operating in a lead cascade in a commercial plant configuration and operating under commercial plant conditions, the company said.

 

This cascade is intended to provide additional data on equipment operation and reliability that could identify opportunities to further optimize the centrifuge and cascade design, USEC said.

 

The partially-built American Centrifuge Plant (ACP) in Piketon, with a capacity of 3.8 million SWU, will comprise two production buildings with space for some 11,500 centrifuges. The plant had originally been scheduled for commercial operation this year but financing for the plant has long been a concern.

 

In August 2009, the DoE agreed to postpone by some six months a final review of USEC's loan guarantee application for the ACP plant. The additional time was to allow USEC to address the financial and technical concerns that caused the DoE to deny the application in late July. At that time, USEC said that it was preparing to 'demobilise' - or cancel - its partially built uranium enrichment plant after the DoE denied its application.

 

The DoE said that it would delay the ultimate review of USEC's application until a series of specific technology and financial milestones have been met. It said that the milestones outlined to USEC are in line with the criteria and legal requirements of the statute of the Energy Policy Act of 2005 and the subsequent loan guarantee regulations, which it said USEC's application did not previously meet.

 

To date, USEC has invested some $1.7 billion in the American Centrifuge project. To complete the project, the company believes that it will require additional capital beyond the $2 billion in DoE loan guarantee program funding that it has applied for and the company's internally generated cash flow. The amount of additional capital needed will depend on a variety of factors, including how USEC ultimately determines to restructure and deploy the project, the input received from project suppliers as part of ongoing negotiations, the length of the demobilization, and efficiencies and other cost-savings that USEC is able to achieve in the future. USEC expects that the amount of additional capital needed will be significant.

 

Researched and written

by World Nuclear News

 

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