Strong 2009 for USEC despite ACP disappointment

1 March 2010

USEC had a strong year in 2009 despite having to demobilze construction of its American Centrifuge Plant (ACP) after it failed to get a conditional loan guarantee commitment from the US Department of Energy.

"We had a solid year of delivering low enriched uranium for our nuclear utility customers. Our operations were strong and total revenue exceeded $2 billion for the first time," said John K. Welch, USEC president and chief executive officer.

USEC Inc. reported net income for 2009 of $58.5 million compared to net income of $48.7 million for 2008, an increase of almost 20%.

The volume of separative work unit (SWU) sold increased by 30% in 2009 due to the timing of nuclear utility customer refuelings. However, most units are refuelled on a 12-24 month cycle and therefore, short-term comparisons of financial results are not necessarily indicative of longer-term results.

American Centrifuge

But 2009 was also a year with disappointments regarding the American Centrifuge programme.

“While we made progress in several important areas, we believed our application for a loan guarantee from the Department of Energy was on track for a conditional commitment in 2009. That didn't happen. We demobilized construction of the American Centrifuge Plant in August and we are now focused on addressing the technical and financial concerns of the DOE in the first half of 2010,” Welch said in a statement on 1 March.

As of end December 2009, some $1.7 billion had been invested in the ACP, which has been under construction in Piketon, Ohio since May 2007.

The plant design work is approximately 80% complete and would be resumed following a decision to remobilize the project. USEC said its near-term spending on the project is dependent upon liquidity and availability of development funds announced by DOE.

In August 2009, DOE and USEC announced an agreement to delay a final review of the loan guarantee application for the ACP until at least early 2010. DOE also committed to provide $45 million to USEC over 18 months to support ongoing American Centrifuge technology demonstration activities.

“At the end of January 2010, in recognition of progress made to assemble AC100 machines for cascade testing and the promise of the technology, DOE indicated its intent to proceed with providing $45 million in matching funding, and we are working with DOE to obtain the funding on mutually acceptable terms,” USEC said.

Some of USEC’s near-term goals for the American Centrifuge project include:

  • The start up of the AC100 Lead Cascade testing programme in early 2010 using upgraded production machines.
  • Manufacture of a limited number of machines and maintenance of the manufacturing infrastructure so that the number of machines in the Lead Cascade testing programme can be expanded.
  • Continue development efforts to further improve reliability of the AC100, increase the machine's productivity as measured by SWU output and lower its capital cost per SWU through value engineering.
  • Continue working with customers to enter into additional long-term contracts to build on the $3.1 billion in committed sales for the output from the ACP.

Approximately two dozen AC100 machines are operating in USEC’s demonstration facility in Piketon, Ohio and USEC expects to transition to Lead Cascade testing operations in early 2010. This cascade will be in a commercial plant configuration and operate under commercial plant conditions. A limited number of additional machines may be added to the cascade to support the machine-manufacturing infrastructure. Installation and successful operation of these additional machines will provide the opportunity to further demonstrate that quality control issues in assembly have been rectified.

The 2002 DOE-USEC Agreement provides that USECl develop, demonstrate and deploy the technology in accordance with a series of milestones. Four milestones remain relating to the financing and operation of the ACP.

In January 2010, USEC and DOE amended the 2002 DOE-USEC Agreement to extend by one year to November 2010 the financing milestone that requires that we secure firm financing commitment(s) for the construction of the commercial American Centrifuge Plant with an annual capacity of approximately 3.5 million SWU per year. The remaining three milestones were not adjusted by the January 2010 amendment but DOE and USEC have agreed to discuss adjusting them in the future based on progress towards achieving the financing milestone and the technical progress of the programme.

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