Cameco, Westinghouse join LES consortium to build uranium enrichment facility

By Kathy Helms-Hughes
STAR STAFF
khughes@starhq.com

   A Memorandum of Agreement announced Tuesday by Louisiana Energy Services marks the first step toward a formal partnership to design, construct, and operate a new uranium enrichment facility in the United States, possibly in Unicoi County near Nuclear Fuel Services Inc.
   The $1.1 billion facility will use gas centrifuge technology developed by Urenco of the United Kingdom for uranium enrichment. The memorandum is a move toward restructuring the LES consortium, according to Urenco, which signed the agreement along with Cameco Corp. of Ontario, Canada, Westinghouse Electric Co., Fluor-Daniel and U.S. utilities Exelon, Entergy and Duke.
   Under terms of the agreement, Cameco would obtain an initial 20 percent interest in the project. Following receipt of the NRC license and a final restructuring of the LES partnership, Cameco's interest would increase to 25 percent.
   The company's involvement is contingent upon successful execution of a final partnership agreement, completion of a feasibility study that demonstrates an acceptable rate of return, an ability to obtain project financing, and securing a portfolio of long-term contracts to support the project. Cameco also has the option to withdraw with no further obligation.
   The company is expected to commit about $8.5 million to the project in the next three years during the licensing phase. Cameco earned a profit of nearly $56 million last year after a loss of $87.2 million in 2000.
   George E. Dials has been named president of the LES consortium. Dials, who has degrees from both West Point and MIT, has held senior positions in the nuclear industry, both in government and private sectors. LES Chairman Dr. Pat Upson said Dials is the ideal person for the role of president. "I am looking forward to working with him as we bring this new enrichment plant into production."
   Rod Krich of Exelon said Friday that Westinghouse and Cameco have signed the agreement that will eventually lead to them becoming partners, but that they are not yet partners.
   "The partners now are Urenco, Fluor-Daniel and affiliates of three utility companies: Exelon, Entergy and Duke." Louisiana Power & Light, previously mentioned as a partner, has changed its name and is now Entergy, Krich said. "Entergy is kind of a holding company for a number of utilities in the South."
   Claiborne Energy Services Inc., also previously mentioned as a member of the consortium, is a wholly owned subsidiary of Duke, according to Krich.
   LES's plan to build the uranium enrichment facility got a boost last week from the Department of Energy. Krich said DOE submitted a letter July 25 to the Nuclear Regulatory Commission "that was supportive of another uranium enrichment facility" in the United States.
   LES and U.S. Enrichment Corp., or USEC, of Bethesda, Md., both intend to submit applications to the NRC in December for licensing of gas centrifuge uranium enrichment facilities.
   LES would be a major U.S. competitor for USEC, a world leader in the production and sale of uranium fuel enrichment services. "Right now, we're not competing with them because we haven't licensed or built anything," Krich said. "The objective is to get the facility licensed and built so that we [LES] would be a competitor."
   Krich said an announcement of potential sites could come Aug. 6 during a meeting with the NRC. "It's possible. We're continuing to work through the process here, but as of yet we haven't said that we've changed our schedule from what we told the NRC back on June 25," he said. At that meeting, LES said the announcement would be delayed four to five weeks.
   Krich also said he could not comment on a July 23 article in the Lynchburg News & Advance newspaper which stated that sites in Lynchburg, Va., and Wilmington, N.C., also have been mentioned as possible locations for the gas centrifuge plant.
   BWX Technologies, located in Campbell County, Va., has land near its facility which could be utilized by LES, according to the News & Advance. Framatome ANP -- a consortium which includes Framatome-Cogema Fuels of Lynchburg and Nuclear Fuel Services Inc. of Erwin -- also has headquarters in Lynchburg. Framatome ANP bought the Duke division earlier this year and has inherited Duke's interest in the LES consortium, according to the News & Advance.
   NFS has subcontracted with Framatome-Cogema to downblend 33 metric tons of surplus high-enriched uranium (HEU), stored at DOE's Savannah River Site near Aiken, S.C., and Y-12 at Oak Ridge.
   The HEU surplus will be downblended into fuel for Tennessee Valley Authority's Browns Ferry Nuclear Plant near Athens, Ala. TVA has contracted with Cameco to supply approximately 1 million pounds of uranium trioxide to be used as blend stock.
   In 1999, Cameco and Cogema were among companies signing a commercial agreement with Techsnabexport, the commercial arm of the Russian Federation Ministry of Atomic Energy, for the purchase of natural uranium derived from highly enriched uranium contained in Russian nuclear weapons.
   The companies have exclusive options to purchase about 260 million pounds of the weapons-derived uranium upon delivery in the United States. This would then be resold in international markets.