[NukeNet] Uranium Windfall Opens Choices for the Energy Dept.

[Bill Smirnow]

  Get on the blower to your Reps [Phone: 202-224-3121 & 1-877-762-8762]  to
tell them no more nuclear. Energy needs and climate change can be be
addressed with  a Manhattan Project for renewables, conservation & energy
efficency. Pass this along to interested lists & parties.


   http://www.nytimes.com/2007/05/29/washington/29nuke.html
   Uranium Windfall Opens Choices for the Energy Dept.

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By MATTHEW L. WALD
Published: May 29, 2007
WASHINGTON, May 28 - The government accumulated vast quantities of uranium
when prices were very low and no one else wanted it. But now that uranium
prices have increased tenfold, the government has a precious commodity - and
some tough questions - on its hands.

Furious lobbying has broken out over who should end up with the prize, which
will eventually end up as nuclear reactor fuel after being run through an
enrichment plant. And though the material's market value has been estimated
at $750 million to $3 billion, one of the companies most vocal in making its
case says it deserves the uranium - without paying a cent for it.

Up for grabs is 25 million kilograms of uranium hexafluoride that was
incompletely processed at government enrichment plants when prices were very
low. The enrichment plants separate uranium 235, a rare type that splits
easily, in bombs or reactors, from uranium 238, which does not. When the
price of natural uranium was very low, the government, in a cost-saving
move, decided to skim off just the uranium 235 that was easiest to obtain.

"In the old days, they left a lot of good stuff behind," said Julian Steyn,
a uranium expert at Energy Resources International, a consulting firm in
Washington.

In fact the "tailings" left after enrichment have in some cases more than
half the original uranium 235 still in them. In its current form, the
material is not attractive to the makers of illicit bombs, because the
technology to sort the two types of uranium is cumbersome and found in just
a handful of plants around the world.

The lone operating enrichment plant in this country, built by the old Atomic
Energy Commission, is in Paducah, Ky. It is run by a subsidiary of USEC, a
company formed in the 1990s to privatize the enrichment monopoly that the
government had run since the days of the Manhattan Project.

The technology at the plant is outdated, and USEC is struggling to
commercialize a more efficient system, using centrifuges, at another plant,
in southern Ohio. USEC will not say what it thinks that project will cost,
but it has said it does not know how it will raise the money.

USEC is arguing that the government should give it the remaining uranium as
a way to ensure that any new enrichment technology that is developed is
American owned.

"Essentially, it would be a win-win situation for everybody," said Elizabeth
Stuckle, a spokeswoman for the company, which runs the Paducah plant through
a subsidiary, the United States Enrichment Corporation.

That solution would add uranium to the market to tamp down high prices, Ms.
Stuckle said, and prolong the life of the Paducah plant and help pay for the
centrifuges, whose technology the government owns and licenses to USEC. The
government would collect royalties.

USEC officials say the Energy Department could transfer much of the uranium
to it with the stroke of a pen. Department officials have signaled that they
would appreciate guidance from Congress.

Some lawmakers on Capitol Hill say giving the uranium to USEC would reward a
company that has not demonstrated fiscal responsibility.

On Thursday, several senior members of Congress asked the Government
Accountability Office to evaluate the options.

"There needs to be vigorous oversight of USEC's request for a bailout, to
ensure the taxpayer's interests are protected," Representative John D.
Dingell, the Michigan Democrat who is chairman of the House Energy and
Commerce committee, said in a statement.

Mr. Dingell said Congress should consider "whether we should be allocating
this $2 billion or $3 billion to children's health insurance instead of
subsidizing executives who have mismanaged their companies."

USEC, he said, had "squandered resources on multimillion-dollar golden
parachutes, stock buybacks and dividend payments that frequently exceeded
their earnings."

If the uranium is sold, it would be up to Congress to decide what to do with
the income. One possibility would be to use the money to offset cleanup
costs in the Energy Department's nuclear complex.

The company denies that it has improperly handled its financial dealings and
says its problems stem from the challenge of operating World War II
technology that is a heavy user of electricity at a time electric bills have
soared.

A Senate aide who has been briefed on the discussions said that the company'
s future was uncertain and that if it were sold and broken up, the
government would effectively be subsidizing some other entity.

In addition to USEC, a consortium of British, Dutch and German companies has
expressed interest in the partly processed uranium for a centrifuge plant
that it is building in New Mexico, using the same type of machines that have
operated for years in Europe.

Congressional aides say one possibility is that the government would lend
the uranium to the consortium, to be "repaid" later, when prices will
presumably be lower.

Utilities that are contemplating building nuclear plants would also like
some of the uranium, which would please companies that mine uranium. Assured
of an adequate uranium supply, energy companies would be more likely to go
ahead with constructing reactors, ensuring a long-range market for the
mining companies.

There is some sympathy for that view on Capitol Hill, where some lawmakers
are wary of disposing of the uranium in a way that would push down market
prices and discourage investments in new mines.

The spot price is more than $120 for a pound of yellowcake, the ore form, up
from less than $10 earlier in this decade. The spot market is fairly small,
with more trading under long-term contracts at lower prices.

"Before the government does anything, it needs to have a serious open debate
about the future of USEC, with the specific end goal of criteria for
deciding when enough is enough," said Andrea Jennetta, publisher of Fuel
Cycle Week, a newsletter.
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