WASHINGTON, July 22 — A consortium of European and United States nuclear companies said today that it would apply soon for a license from the Nuclear Regulatory Commission to build a $1.1 billion plant for processing reactor fuel, the first in this country in half a century and one of the largest private nuclear projects here since the 1980's.
The plant would enrich uranium for use in power plants, using a technology that consumes about 5 percent as much electricity as the one now used in the United States. It would break a domestic monopoly held by USEC Inc., formerly the United States Enrichment Corporation, which runs an Atomic Energy Commission plant in Paducah, Ky., that was privatized in July 1998.
USEC announced a month ago that it would also seek to build a plant but that it would first have to modernize a prototype plant tested in the 1980's.
The consortium's proposal poses a serious threat to USEC, some experts said. "As a business, they are dead," Thomas L. Neff, a scientist at the Massachusetts Institute of Technology, said of USEC. In the 1990's, Dr. Neff came up with the idea of buying weapons-grade uranium from Russia and diluting it for use in United States reactors, a job once done by the Energy Department and now done by USEC. If USEC does not build an enrichment plant, he said, it will become merely a broker of the Russian uranium.
Patrick C. Upson, the chairman of the consortium, said, "We have a significant head-start on the technical side."
But USEC executives said their technology would be even better.
"USEC remains the leading supplier of enriched uranium fuel in the United States market, and we're on track to be enriching uranium using new advanced gas centrifuges by the end of the decade," a spokesman for the company, Charles Yulish, said. "We expect our technology to be proven the most efficient in the world."
The company wants to incorporate advanced composite materials into the Energy Department's older centrifuge design. When the plant was privatized four years ago, the company said it would seek to commercialize an enrichment technology using lasers, but it later dropped the idea.
USEC has shut down one of two plants it took over, and it has kept itself afloat partly by winning a trade case and forcing tariffs on two European suppliers that it accused of taking government subsidies. But a plant built here using European technology would face no such tariffs.
USEC has also raised revenue by taking electricity it had bought under long-term contracts, intending to use it for enrichment, and selling it in peak demand periods.
The consortium raising the challenge includes Urenco, a British-Dutch-German company that uses a technology called gas centrifuge to enrich uranium; the Cameco Corporation of Canada, the world's largest uranium supplier; the Westinghouse Electric Company and Fluor Daniel, which are active in many areas of the nuclear industry; and affiliates of three companies that operate power reactors in the United States: Exelon, Entergy and Duke Energy.
The same group, but with a different United States utility partner, tried several years ago to build a plant in Louisiana, but it gave up because of opposition at the site.
This time, Mr. Upson said, the partnership will seek to build at a site that is already licensed for nuclear uses.
Industry experts say the group is looking at sites in Lynchburg, Va.; Wilmington, N.C.; and Erwin, Tenn. All have been used for uranium enrichment. Environmental advocates in Erwin have already organized to oppose that choice.
The consortium, still known as Louisiana Energy Services, said it would pick a site soon.
Enrichment means raising the proportion of uranium-235, the kind that is easy to split in reactors. Natural uranium is about 0.7 percent uranium-235. The problem is that the dominant type of uranium, uranium-238, is chemically identical; the only difference is in the weight. USEC's plant, built in the 1950's, uses a method called gaseous diffusion, in which uranium, converted to gaseous form, is forced through a barrier, with one type slightly more likely to pass through than the other. The European technology uses a centrifuge.
Enrichment is measured by "separative work units," or S.W.U.'s, and the United States market is about 11 million units a year. USEC meets more than half of United States demand by blending down Russian bomb uranium. USEC also enriches uranium at the plant in Paducah. It shut down a plant in Portsmouth, Ohio, with a capacity of 10.5 million units.
The consortium plans to build a plant that would begin operation in 2007 or 2008 and reach a capacity of 3 million units a year in 2012.
USEC shares closed at $7.06, down 10 cents.
From Wall Street Journal 23jul02
USEC Inc., a global energy company, is engaged in the supply of low enriched uranium for commercial nuclear power plants. In fiscal 2001, USEC began purchasing electric power under a new long-term power supply contract with Tennessee Valley Authority, ensuring a competitively priced supply of electric power. An agreement was reached with Ohio Valley Electric Corporation releasing USEC from future power purchase commitments at the Portsmouth plant. In May 2000, USEC negotiated an agreement-in-principle with its Russian counterpart to establish market-based pricing under the Russian Contract. In May 2001, USEC ceased uranium enrichment operations at the Portsmouth plant and began providing winterization, cold standby and deposit removal services at the Portsmouth plant under contract with the United States Department of Energy.
2 Democracy Center 6903 Rockledge Drive Bethesda,MD 20817 (301) 564-3200 (301) 564-3201 http://www.usec.com corpcomm@usec.com Number of Employees 3,100 1-Yr. Sales Change -23.20% Fiscal Year Ending Date 6/30/01 Net Income Available to Common (in millions) $4.30 Sales (in millions) $1,143.90 1-Yr. Net Income Change -18.78% EXECUTIVES James R. Mellor Dennis R. Spurgeon Henry Z. Shelton, Jr Joseph F. Paquette, Jr James D. Woods Joyce F. Brown, Ph.D. Michael H. Armacost John R. Hall W. Henson Moore Dan T. Moore, III William H. Timbers, Jr. Timothy B. Hansen Sydney M. Ferguson Dennis Blair J. Morris Brown Robert Van Namen James N. Adkins, Jr. Gary G. Ellsworth Philip G. Sewell Michael T. Woo Charles B. Yulish INSIDER HOLDINGS Reflects the top ten insiders based on percentage of shares held. May include holdings of former insiders. To view compensation data, go to Executives Page. Position Name Shares Held Date* n.a. ADKINS JAMES N JR 29,303 1/04/02 n.a. WHITE WILLIAM H 36,033 10/10/01 CEO TIMBERS WILLIAM H 173,834 8/03/00 CFO SHELTON HENRY Z JR 40,977 2/05/01 Dir. MOORE DAN T 41,426 5/09/01 Dir. CAHOUET FRANK V 27,6381/12/00 Dir. MELLOR JAMES R 21,350 5/10/00 Dir. HALL JOHN R 17,174 11/03/99 VP MOORE ROBERT J 19,12 17/28/99 VP RIFAKES GEORGE P 25,000 7/28/99 * Date reflects when the individual most recently disclosed ownership interest. Shares are not adjusted for stock splits. Source: First Call/Thomson Financial INSTITUTIONAL HOLDINGS Institutions 10 largest institutional investors Share Holdings Change in Date Share Holdings* Reported FIDELITY MGMT & RESEARCH CO 8,030,000 0 3/31/02 DEUTSCHE INV MGMT AMERICAS INC 4,781,812 0 3/31/02 PENINSULA CAP PARTNERS, L.P. 3,831,600 271,600 3/31/02 DIMENSIONAL FD ADVISORS, INC. 3,617,220 207,900 3/31/02 DONALD SMITH & COMPANY, INC. 3,517,700 112,500 3/31/02 ADVISORY RESEARCH, INC. 3,064,489 578,924 3/31/02 KENNEDY CAPITAL MGMT, INC. 3,016,200 56,450 3/31/02 BARCLAYS BANK PLC 1,592,725 15,106 3/31/02 FRANKLIN RESOURCES INC 1,350,000 310,000 3/31/02 WELLS FARGO & (NORWEST CORP) 1,174,104 1,860 3/31/02 Mutual Funds The 10 mutual funds Share Holdings Change in Date with the largest holdings Share Holdings* Reported FIDELITY LOW PRICED STOCK FUND 8,030,000 0 1/31/02 SCUDDER GBL FUND 1,795,300 -372,500 8/31/01 FRANKLIN BALANCE SHEET INVT FD 1,350,000 347,900 3/31/02 DFA US SMALL CAP VALUE SERIES 947,600 10,200 3/31/02 VANGUARD SML CAPITAL INDEX FD 469,200 15,400 12/31/01 INVESTORS MUTUAL OF CANADA FD 468,500 0 3/31/02 DFA US SML XM VALUE PORTFOLIO 335,900 0 3/31/02 MSDW INSTITUTIONAL VALUE EQ 330,100 69,500 12/31/01 DFA TAX MNGD U.S.SML CAP VAL P 266,100 0 3/31/02 AEGIS VALUE FUND 251,700 158,700 2/28/02 * Reflects the change in shares since the prior quarter's disclosure of holdings. Shares are not adjusted for stock splits. Source: Thomson Financial
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