USEC outlook improves, but funding cut

3 September 2003

Standard & Poor's (S&P) has modified its outlook for USEC from negative to stable because of "diminished concerns regarding the proposed Louisiana Energy Services (LES) enrichment facility." S&P said that startup of the LES uranium enrichment plant in the USA has become less certain, and support for the project by members of the Urenco-led consortium "appears to be weakening." Earlier this year Cameco withdrew its support from the project (see NEI April 2003, p4).

However, S&P also said that it was not changing USEC's below-investment-grade corporate credit rating (BB), which reflects, among other things, "poor profitability measures." Although USEC's current operating environment has stabilised, several long-term concerns remain, S&P said, including USEC's ability to commercialise its "unproven" centrifuge uranium enrichment technology and to obtain additional financing for the project. The article on page 12 of this issue covers in detail the LES and USEC planned enrichment facilities.

Meanwhile, the US Department of Energy (DoE) has informed USEC that funding for the deposit removal programme at the Portsmouth, Ohio plant will not be extended after 30 September 2003. USEC said the loss of this funding would result in laying off approximately 116 personnel working under a DoE contract.

The deposit removal programme uses a chemical process to reduce uranium compounds remaining in cells, piping and auxiliary equipment that are no longer operating. As contractor to the DoE, USEC will complete the first phase of the programme this month, covering approximately 40% of the facility.

Other programmes, such as cleaning up 9500t uranium (transferred from the DoE to USEC prior to USEC's privatisation), site preparation for the American Centrifuge demonstration facility, and the cold standby programme are expected to be funded by the DoE for the coming fiscal year.

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