Silex Systems out of GLE restructure

13 June 2018

Silex Systems Limited has abandoned its acquisition of a majority stake in GE-Hitachi Global Laser Enrichment (GLE), saying there are too many risks associated with GLE's business case which includes the construction of a commercial enrichment plant in the USA. It also intends to terminate GLE's exclusive licence for the SILEX laser enrichment technology.

GE-Hitachi (GEH) announced in 2016 its intention to exit the GLE joint business venture, which was set up by GE (51%), Hitachi (25%) and Cameco (24%) to develop uranium enrichment services capability and is the exclusive licensee for the SILEX laser isotope separation process technology developed by Sydney, Australia-based Silex in the 1990s. In May 2016, Silex and GEH agreed to negotiate a mutually acceptable restructure of GLE, with Silex potentially taking an equity position in the company by acquiring GEH's 76% interest.

Silex yesterday said that despite being at an advanced stage in negotiations with GEH there remained too many risks associated with GLE's business case. Investment in GLE, with the entailed ongoing expenditure, would not be in its shareholders' interests, it said.

"This is a very disappointing outcome for the company," Silex CEO Michael Goldsworthy said yesterday. "The SILEX technology remains one of the most exciting developments in the nuclear industry for several decades, and after 20 years of cooperative development with the US, was just three years from reaching a key demonstration of full-scale 24/7 operation. Unfortunately, the continuing decline in the nuclear fuel markets precipitated by the tragic events of Fukushima in 2011, in combination with unresolved issues relating to the GLE restructure and the associated cash burn, has forced the Board to draw a line and make this decision," he added.

Silex has now given notice for the termination of a term sheet on the proposed acquisition and by doing so, its monthly funding obligations of about AUD600,000 (USD455,000) per month for GEH's operations have ceased. Silex also said it intends to give notice to GLE of the termination of the SILEX technology licence "unless circumstances change dramatically in the short term".

GEH yesterday told World Nuclear News that it is evaluating the impact of this development, and will continue to work with the US government and other key stakeholders to determine next steps.

Laser enrichment uses a laser beam to preferentially excite the uranium-235 isotope in gaseous uranium hexafluoride, which can then be separated. Its proponents claim that it has the potential to be more efficient than current commercial centrifuge enrichment technology. The principles of the SILEX (Separation of Isotopes by Laser EXcitation) process were formulated by Goldsworthy and Horst Struve in the early 1990s.

GLE completed a test loop demonstration of the concept at its facility in Wilmington, North Carolina in 2012, and the same year received a construction and operation licence for a full-scale laser enrichment facility - the first ever granted anywhere for such a plant - from the US Nuclear Regulatory Commission (NRC). The US Department of Energy (DOE) in November 2016 agreed to sell around 300,000 tonnes of depleted uranium hexafluoride to GLE for re-enrichment at a proposed plant to be built near DOE's Paducah site in Kentucky, for commercialisation of SILEX laser enrichment technology.

Silex said the "worsening outlook" for the global nuclear fuel market was the overarching factor contributing to the decision by Silex's board. The company also cited several issues connected with the commercialisation programme. These were: the need for external funding to support the programme in Wilmington, for which no clear path or timeline currently exists; the need to mitigate a number of risks relating to market access and project financingĀ in connection with the proposed commercial plant at Paducah; and continuing delays and uncertainty regarding the passage of a US congressional bill that would have effectively guaranteed GLE's rights to sell natural-grade uranium from the processing of its tails inventories into the market at "acceptable" rates.

Silex will now seek to repatriate the SILEX technology to Australia, but said it will also consider exploring commercialisation of the technology with third parties in other countries should opportunities arise and as market conditions improve.

Researched and written
by World Nuclear News