USEC Inc. (NYSE: USU) announced today that the Megatons
to Megawatts program has completed downblending of 475 metric tons
of weapons-grade uranium into fuel for commercial nuclear power plants
and is on schedule to complete the program in 2013.
Megatons to Megawatts is a 20-year, commercially financed
government-industry partnership in which 500 metric tons of Russian
highly enriched uranium (HEU) is being downblended to low enriched
uranium (LEU) for use as commercial reactor fuel. USEC, as executive
agent for the U.S. government, and JSC “Techsnabexport” (TENEX), acting
for the Russian State Atomic Energy Corporation (ROSATOM), implement the
program.
“Since 1995, USEC has provided our utility customers with fuel from this
truly innovative program that is making the world safer while fueling
clean, reliable electricity from their nuclear power plants,” said
Philip G. Sewell, senior vice president and chief development officer.
“As we prepare for the end of the program this year, we look forward to
continuing our long-term supply relationship with Russia through our
transitional supply agreement that starts later this year. This
transitional supply will help us meet customer needs as the company
pursues deployment of our American Centrifuge uranium enrichment
technology.”
USEC is scheduled to take delivery of the final material for the program
in November 2013 when the equivalent of 20,000 nuclear warheads will
have been downblended into commercial reactor fuel. To date, the low
enriched uranium created by the downblending could generate electricity
that would meet the demand for a city the size of Boston for
approximately 730 years. In past years, up to 10 percent of the
electricity generated in the United States came from nuclear power
plants using this fuel.
Transitional Supply Contract
In 2011, USEC and TENEX entered into a multi-year contract for the
supply of low enriched uranium that will build on USEC’s long-term
relationship with TENEX. Under the terms of the agreement, the supply of
low enriched uranium to USEC will begin in 2013 and ramp up until it
reaches a level in 2015 that is approximately one-half the level
currently supplied by TENEX to USEC under the Megatons to Megawatts
program. The new contract includes a mutual option to increase the
quantities up to 5.5 million SWU (separative work units), the same level
as the Megatons to Megawatts program.
Unlike the Megatons to Megawatts program, the quantities supplied under
the new contract will come from Russia’s commercial enrichment
activities rather than from downblending of Russian weapons material.
Deliveries under the agreement are expected to continue through 2022.
USEC will purchase the SWU contained in the low enriched uranium and
deliver natural uranium to TENEX for the uranium component of the low
enriched uranium.
Background: HEU to LEU
The recycling of HEU into LEU begins with a multi-step process at
several facilities in Russia. HEU metal is first removed from a warhead,
machined into shavings, oxidized and fluorinated. The resulting highly
enriched uranium hexafluoride is then mixed in a gaseous stream with
slightly enriched uranium to form LEU suitable for commercial nuclear
reactors. The LEU is checked to ensure it meets commercial
specifications, transferred to shipping cylinders and sent to a
collection point in St. Petersburg, Russia. USEC takes possession of the
material there and ships it to USEC’s facility in the United States
where it is inspected and then included in USEC’s inventory for delivery
to customers.
Forward-Looking Statements:
This news release contains “forward-looking statements” within the
meaning of Section 21E of the Securities Exchange Act of 1934 – that is,
statements related to future events. In this context, forward-looking
statements may address our expected future business and financial
performance, and often contain words such as “expects”, “anticipates”,
“intends”, “plans”, “believes”, “will” and other words of similar
meaning. Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. For USEC, particular risks and
uncertainties that could cause our actual future results to differ
materially from those expressed in our forward-looking statements
include, but are not limited to: risks related to the ongoing transition
of our business, including uncertainty regarding the transition of the
Paducah gaseous diffusion plant and uncertainty regarding continued
funding for the American Centrifuge project; the expiration of our
agreement with Energy Northwest on May 31, 2013 and the impact of
actions we will need to take to transition the Paducah gaseous diffusion
plant; our ability to reach an agreement with DOE regarding the
transition of the Paducah gaseous diffusion plant and uncertainties
regarding the transition costs related to USEC ceasing enrichment at the
Paducah gaseous diffusion plant; the continued impact of the March 2011
earthquake and tsunami in Japan on the nuclear industry and on our
business, results of operations and prospects; the impact and potential
extended duration of the current supply/demand imbalance in the market
for low enriched uranium; our ability to manage the transition costs and
other impacts of ceasing enrichment at Paducah; uncertainty regarding
the timing, amount and availability of additional funding for the
research, development and demonstration (RD&D) program and the
dependency of government funding on Congressional appropriations;
restrictions in our credit facility on our spending on the American
Centrifuge project and the potential for us to demobilize the project;
limitations on our ability to provide any required cost sharing under
the RD&D program; uncertainty concerning our ability through the RD&D
program to demonstrate the technical and financial readiness of the
centrifuge technology for commercialization; uncertainty concerning the
ultimate success of our efforts to obtain a loan guarantee from DOE and
other financing for the American Centrifuge project and the timing and
terms thereof; potential changes in our anticipated ownership of or role
in the American Centrifuge project, including as a result of the need to
raise additional capital to finance the project; the impact of actions
we have taken or may take to reduce spending on the American Centrifuge
project, including the potential loss of key suppliers and employees,
and impacts to cost and schedule; the impact of delays in the American
Centrifuge project and uncertainty regarding our ability to remobilize
the project; the potential for DOE to seek to terminate or exercise its
remedies under the RD&D cooperative agreement or the June 2002 DOE-USEC
agreement; changes in U.S. government priorities and the availability of
government funding, including loan guarantees; our dependence on
deliveries of low enriched uranium from Russia under the Megatons to
Megawatts program and under the transitional supply contract and
limitations on our ability to import the Russian low enriched uranium we
buy under the transitional supply contract into the United States and
other countries; and other risks and uncertainties discussed in our
filings with the Securities and Exchange Commission, including our
Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are
available on our website at www.usec.com.
We do not undertake to update our forward-looking statements except as
required by law.
Copyright Business Wire 2013