White House supporting USEC

1 January 2002

The Bush administration is leaning towards allowing USEC to continue as the government's only purchaser of uranium fuel from Russia.

USEC faced heavy criticism last year when it announced that it would close one of its two uranium enrichment plants. Its credit rating was reduced to junk-bond level and its stock price plummeted.

Some US utilities want to purchase uranium directly from Russia, saying that it would reduce the cost of producing electricity and lower power bills for consumers.

It is thought that the Bush administration plans to keep USEC, but with certain conditions. These include a promise by USEC to build a more efficient enrichment plant.

A pricing agreement between USEC and its Russian counterpart Tenex expired at the end of 2001. USEC wanted a long-term deal with a lower purchase price, to bolster its bottom line. The US and Russian governments must give their approval to any agreement, and analysts say that the Russians are very unlikely indeed to be willing to agree to lower the price.

Meanwhile, Cogema and RWE Nukem have recently signed an amendment to a commercial agreement that gives them the right to purchase from Tenex uranium derived from HEU contained in Russian nuclear weapons. The HEU is blended down to LEU in Russia. Sales to US utility end users are subject to annual quotas according to the following schedule: (see table) Under the terms of the amendment, Cogema and RWE Nuken have committed to exercise options to purchase quantities of natural uranium at least equal to their respective US quota shares each year for the period 2002-2013.



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