Urenco-led consortium signs MoA

3 September 2002

United States A memorandum of agreement (MoA) has been signed by Urenco, Cameco, Westinghouse, Fluor Daniel and the affiliates of three US energy companies - Exelon, Entergy and Duke - as an initial step towards restructuring the Louisiana Energy Services (LES) partnership. The MoA marks the first step towards a formal partnership to design, construct and operate a new $1.1 billion uranium enrichment facility to be built in the USA.

Market analysts greeted the announcement positively, saying that the involvement of Cameco and Westinghouse should help the project to succeed by giving it more influence to counter any attempts by USEC to block the project.

Cameco will take an initial 20% stake, which will increase to 25% when the project receives a Nuclear Regulatory Commission (NRC) licence. Cameco said its involvement with LES is conditional upon the completion of a feasibility study that demonstrates that the project will earn an acceptable rate of return. Cameco wants assurances that the project can obtain financing and secure a portfolio of long-term contracts.

The ownership percentages of the other partners has not been disclosed, but it is expected that Fluor Daniel will drop out as a partner when the final partnership arrangement is announced. BNFL, through its ownership of Westinghouse and its one-third interest in Urenco, will have a large stake in the partnership.

LES said that a shortlist of two sites would be decided by the end of August, and expected to make a licence submission to the NRC by mid-December. The intention is to build a plant with an annual output that will reach 3 million SWU. The plans call for the licensing process to be completed by mid 2004 so that construction can begin later in that year. The plant would have an initial capacity of 1 million SWU by 2007/8. The capacity of the plant would be expanded by 600,000 to 1 million SWU/yr until it reached a capacity of 3 million SWU/yr. More capacity would be added if the right market conditions exist.

The US Department of Energy (DoE) has written a letter to the NRC expressing strong support for the plant. LES said that the situation facing the industry has changed recently. With USEC announcing the shutdown of its Portsmouth facility, industry is looking for a new enrichment facility.

USEC hopes to build a new centrifuge enrichment plant at Portsmouth, Ohio, or Paducah, Kentucky, using a re-tooled DoE centrifuge design abandoned by the DoE in 1985. USEC said that the company was: "On track to be enriching uranium using advanced gas centrifuges by the end of the decade. We expect our technology to be proven as the most efficient in the world." USEC hopes to have a plant producing 1 million SWU/yr running by 2010 or 2011. In a letter to the NRC, USEC questioned if the LES plant was needed, claiming that additional capacity in the USA could upset "a stable enrichment market that could undermine the economics of the current contract USEC has with Russia's Techsnabexport to purchase SWU from downblended Russian HEU."



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