uranium enrichment business venture in the United
Cameco to buy interest in GLE for $123.8-million (U.S.)
2008-06-20 09:19 ET - News Release
Shares issued 344,470,142
CCO Close 2008-06-19 C$ 37.56
Mr. Jerry Grandey reports
CAMECO JOINS GE HITACHI ENRICHMENT VENTURE
Cameco Corp. is joining a uranium enrichment business venture in the United States, which will extend the company's involvement in the front end of the nuclear fuel cycle beyond its current position as the world's largest uranium producer and a leading supplier of uranium conversion services.
Cameco has finalized an agreement with GE Hitachi Nuclear Energy (GEH), whereby a Cameco subsidiary will provide $123.8-million (U.S.) to acquire a 24-per-cent interest in Global Laser Enrichment (GLE), based in Wilmington, N.C. The remainder of GLE is owned indirectly by General Electric Co. (51 per cent) and Hitachi Ltd. (25 per cent). Cameco is using its existing credit facilities to finance the acquisition. At this time, Cameco does not expect to incur further development and commercialization expenditures relating to GLE until 2010.
GLE is developing a third-generation uranium enrichment process, using laser technology, to commercially enrich uranium for nuclear power plants. GLE is working on commercial facility licensing activities to support its projected start-up date of 2012, and expects to achieve commercial production in 2013. GLE would be responsible for marketing all the enrichment services from this plant.
"This investment further expands and integrates Cameco's interests in the nuclear fuel cycle, as we pursue our objective to be a leading nuclear energy company, producing uranium fuel and generating clean electricity," said Jerry Grandey, Cameco's president and chief executive officer. "It is fitting that three leaders in the nuclear industry support the development of the next generation of uranium enrichment technology."
Uranium enrichment is a key step in the process of producing fuel for light-water nuclear power plants. Cameco is currently involved in all steps of the nuclear fuel cycle leading up to uranium enrichment, including the production of uranium hexafluoride (UF6), which is the form of uranium required for an enrichment plant.
In addition to the ownership of GLE, Cameco and GLE signed an agreement to pursue and collaborate on complementary business opportunities in the front end of the nuclear fuel cycle. Specifically, the parties may choose to market uranium and enrichment services together, to satisfy potential customer demand for bundled services.
"We are excited about the potential to collaborate more closely with GEH through participation in GLE," Mr. Grandey added. "Our businesses have potential synergies that can be explored to add value for our shareholders."
The demand for enriched uranium is projected to increase significantly in the next decade, with the anticipated construction of a new generation of nuclear power plants.
GLE has exclusive rights to develop, commercialize and launch the technology on a global basis under a 2006 agreement with the original developer, the Australian company Silex Systems Ltd. The next important milestone for the technology is the test loop phase, which is anticipated to begin in late 2008. The test loop process is intended to verify performance and reliability data necessary to support the construction of a commercial-scale enrichment facility.
The target annual capacity of the proposed commercial facility is between 3.5 million and six million separative work units (SWU). GLE has selected Wilmington, N.C., to host the potential production facility. GE currently manufactures fuel bundles for light-water nuclear power plants at the site.
Uranium enrichment
Naturally occurring uranium is made up of two different isotopes, approximately 99.3 per cent U-238 and 0.7 per cent U-235. Uranium enrichment is the process that increases the U-235 concentration from 0.7 per cent. Most commercial reactors require uranium fuel to have a U-235 content of 3 to 5 per cent. Enrichment involves separation of the lighter U-235 atoms from the heavier and more predominant U-238 atoms, in order to concentrate the U-235 portion. There are currently two commercial enrichment methods: gaseous diffusion and centrifuge.
GE Hitachi Nuclear Energy
Based in Wilmington, N.C., GEH is a world-leading provider of advanced reactors and nuclear services. Established in June, 2007, GEH is a global nuclear alliance created by GE and Hitachi to serve the global nuclear industry. The nuclear alliance executes a single, strategic vision to create a broader portfolio of solutions, expanding its capabilities for new reactor and service opportunities. The alliance offers customers around the world the technological leadership required to effectively enhance reactor performance, power output and safety.
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