Although it is a critical element in the nuclear fuel cycle, the importance of natural uranium (U3O8) to uranium hexafluoride (UF6) conversion services supply is often overlooked. This is partly a result of the fact that conversion services only amount to about 2% of the total nuclear fuel cycle’s cost, while uranium and enrichment amount to about 50%. Nonetheless, the importance of the world’s conversion services business can be gauged by the fact that it currently represents revenues for the five primary suppliers of approximately $325 million annually, a figure that will approach $0.5 billion by 2010.

The health of the conversion services market’s health can be characterised, in part, by the behaviour of the spot market price in recent years. The spot market price for deliveries in North America bottomed out in the second and third quarters of 2000, falling as low as $2.25 per kilogram of U as UF6 (kgU), a level that suppliers claimed was below the cost of production; the price for deliveries in Western Europe at that time was about $3.50 per kgU. In fact, the long term price indicators for North American delivery bottomed out at about $3.25 in 2000. As the end of 2000 approached, the spot market price began to rise when it became apparent that secondary market excess supplies had been cleared from the market. The price upturn was strengthened in December 2000 when USEC filed dumping allegations against the two European enrichers, Urenco and Eurodif/Cogema. The market price received a further upward impetus in February 2001 when BNFL announced that it planned to shut down its Springfields conversion plant at the end of March 2006 and that, as a result, it was now ceasing all further marketing of conversion services. These events resulted in a doubling of the North American spot market price by May 2001. The current North American and European spot market prices are approximately $5.10 and $5.75 per kgU, respectively. The long term price indicators are about 10 to 20 cents higher.

The sustainable capacities of the existing conversion plants, when combined with highly enriched uranium (HEU) from Russia and commercial inventories, are sufficient to provide equivalent conversion services supply through the end of 2005. The supply capability margin is sufficiently thin that an interruption by any one of the producers or the inventory holders could cause problems for consumers. However, it is projected that the shutdown of the BNFL plant in 2006 and the substantial draw-down of inventories by then will result in the need for an expansion of the remaining primary production capacity by the beginning of the second half of this decade. There is the potential for a further hardening in the market price by then.

The USEC inventories and HEU-derived low enriched uranium (LEU) will have to provide the market with a substantial supply of equivalent conversion services throughout this decade, a supply that is as large as the output of a major conversion plant. The conversion services contained in the Russian HEU are equivalent to 9180 tonnes of uranium (tU) as UF6 per year, approximately the same as the current production provided by the only US producer, ConverDyn.

The market

The world conversion services market annual requirements for all commercial forms of uranium (UF6, UF4 and UO3), adjusted downward for plutonium and uranium recycle, are projected to remain relatively flat at about 64,000tU during the next 20 years. World requirements for uranium as UF6 for enriched uranium fuelled reactors are projected to be relatively flat at about 61,000tU during the next 20 years. The difference between the projections represents projected requirements for natural uranium fuel for Canadian Candu and United Kingdom reactors. The Western world’s requirements are projected to be flat through 2020 at about 52,000tU per year.

The annual requirements of the USA, Western and Eastern Europe, and the CIS are projected to collectively decline by almost 3000tU during this decade. However, collective annual requirements in East Asia and other countries are projected to increase by about 3200tU during the same period. Western Europe and the USA are expected to account for the largest cumulative shares of world annual requirements through 2010, at 30% and 32%, respectively. East Asia represents about 23% of world requirements, with Japan accounting for almost 60% of this sector. France represents approximately 14% of world requirements and almost half of Western European requirements.

The conversion services spot and long-term market volumes were approximately 5000tU as UF6 and 22,000tU, respectively, in 2001. The spot market volume was approximately constant over the past three years. The long-term volume in 2001 was split about four to one between US and non-US customers. Approximately half of the long-term sales were in the form of conversion services, with enriched uranium product making up four-fifths of the other half. In 2001, US and non-US buyers both tended to contract for a delivery term of about four years. Approximately half of the spot market transactions were off-market. The rise in the market price during the past 20 months led to a diminished interest in discretionary purchasing. While producers were the predominant source of spot and long term supply last year, the US government and enrichers were also sellers in the long term market.

The uncertainty surrounding the technetium contaminated natural UF6 transferred by the US DoE to USEC in the 1990s contributed to supply uncertainty until June of 2002, when a replacement agreement was entered into. With that issue now largely resolved, there is not likely to be any significant demand ‘bubble’ from that direction. Again, the 2001 amendment to the Commercial Marketing agreement between Russia’s Minatom and three Western nuclear fuel companies confirms Russian HEU as a source of equivalent conversion services through to at least 2013.

Primary suppliers

The world has five major commercial primary suppliers of conversion services for transforming uranium mine concentrates into either UF6, ceramic grade uranium dioxide (UO2), or uranium metal. Two of these suppliers are in North America, two are in Western Europe, and one is in Russia. The suppliers are: ConverDyn, Comurhex, Cameco Corporation, BNFL, and Minatom. For some years, Minatom has been exporting enriched uranium product (EUP) containing equivalent conversion services to Western Europe, the USA, and East Asia.

The Table gives the projected supply to the Western world through 2010 of conversion services from primary production and inventory draw-down, and HEU, and for comparison purposes, Western world requirements, adjusted for recycle. The data in the table shows that the difference between annual production capacity and requirements is projected to rise to about 17,000tU by 2010, a difference that must be supplied from conversion services equivalent inventories, HEU, and expanded primary capacity. Although inventory supply is projected to be sufficient until about 2005, an annual shortfall of more than 5000 tU is projected for the second half of the decade. This shortfall, which is largely due to the planned shutdown of BNFL’s plant, will have to be accounted for by capacity expansions by one or more of the remaining suppliers.

The status of the five major suppliers is as follows:


ConverDyn, a general partnership of affiliates of Honeywell and General Atomics, is the exclusive agent for conversion services provided by the Metropolis Works plant in Metropolis, Illinois. This plant, with a nameplate capacity of 12,700tU per year, produced approximately 9300tU in 2001. Sustainable capacity is believed to be at least 11,000tU per year.

Cameco Corporation

Cameco Corporation operates the 18,000tU per year Blind River, Ontario, UO3 plant, the product of which is converted to UF6 and UO2 at the company’s 12,500tU per year plant at Port Hope, Ontario. Cameco’s 2001 UF6-plus-UO2 production at Port Hope was about 10,960tU, and UF6 production is estimated at 8900tU. Sustainable UF6 production capacity is believed to be about 10,000tU per year. The UO2 plant, which serves Candu reactors, has a name-plate capacity of 2500tU per year. The uranium metal facility has a capacity of 2000tU per year.


Comurhex, a wholly owned subsidiary of Cogema, operates the Malvesi UF4 plant whose product is converted at the Pierrelatte UF6 plant. Production of UF6 in 2001 was estimated at 11,000tU. The Malvesi plant also produces uranium metal for some customers. Although the UF6 conversion services nameplate capacity of the two-plant system is 14,000tU per year, the sustainable capacity is only about 12,000tU per year, about 85% of the nameplate capacity. While it is believed that it may be possible to increase this output level to about 14,000tU per year in the future, there has been less incentive to do so since Cogema will take delivery of at least 20,380tU in the form of UF6 between 2002 and 2013, under the HEU feed Commercial Agreement.


BNFL of the UK operates a 6000tU per year UF6 plant located at Springfields, near Preston, Lancashire. The plant is reported to be producing at 5000tU per year. On 9 February, 2001, BNFL announced that it planned to stop production at Springfields after 31 March, 2006. It took this decision based on the fact that fuel production for its Magnox nuclear plants is expected to end shortly after 2005, when its Magnox stations will then be approaching shutdown. Operation of the Springfields plant for UF6 production alone would not be economical after the Magnox fuel production ends. BNFL has entered into an agreement with Cameco for it to purchase any unsold conversion production until the Springfields plant is shut down.


Minatom is believed to have a UF6 nameplate capacity of 22,000tU at plants in three locations: Angarsk, Tomsk and Irkutsk, and to have produced about 10,000tU in 2001. However, since the Russian centrifuge enrichment capacity is used to clean up conversion plant product, Russia has not historically sold either conversion services or UF6. While it is believed that the physically sustainable capacity of the three-plant system may be at least as high as 17,000tU per year, since the Tomsk plants is reported to have routinely processed recycled uranium, “clean” output in the form of EUP may be limited to approximately 10,000tU per year, approximately 30% of which is exported to the Western world.

There are also small conversion facilities operating in countries developing their own indigenous fuel cycle capabilities. Brazil has a 90tU per year UF6 plant at Sao Paulo and has had plans to bring a larger plant into operation in the future, though this may be optimistic. Argentina has a 150tU per year UO2 conversion plant at Cordoba. India has a 250tU per year UO2 plant at Hyderabad. South Korea has a 200tU per year UF6 to UO2 conversion plant at Taejon. The total annual capacity of these small plants is currently less than 700tU.

Western world UF6 conversion services capacity (tU as UF6)