Another US-Traded Uranium Play? (USU)

Apr.13.06 | About: Centrus Energy (LEU)

Uranium stocks have recently become a hot topic. On April 4th we published Investing In Uranium: A Stock Play about Fronteer Development Group Inc. (FRG). Here's another US-traded stock that's a possible play on playing uranium, via an excerpt from The Wall Street Transcript's 12/26/05 interview with USEC Inc. (USU) CEO Ellen Wolf:

TWST: We would like to begin with a description of USEC's history, and a picture of the things you are doing at the present time.

Ms. Wolf: We are a company that was formerly a part of the Department of Energy, and in 1998 we were officially spun off as a public company that's listed on the New York Stock Exchange. Our main focus at this point is the enrichment of uranium for nuclear power plants.

TWST: Why was the company privatized in 1998? What was the thinking behind that?

Ms. Wolf: The Energy Policy Act of 1992 stated that the government's uranium enrichment enterprise should be privatized. The thinking was that it could better compete in an increasingly competitive global market as a private company. So in July 1993, the United States Enrichment Corporation was set up to prepare the government's enrichment enterprise for privatization, which occurred in July 1998.

TWST: Is your main activity handling nuclear materials from Russia?

Ms. Wolf: No, our main activity is the sale of enriched uranium to nuclear power plants. We have two sources of supply. One source is our own enrichment plant located in Paducah, Kentucky, and the second source is the Russian program that we call Megatons to Megawatts. It involves the down-blending of highly enriched uranium to low-enriched uranium, which is then used to fuel nuclear power plants. We are the executive agent for the sale of that low-enriched uranium here in the United States.

TWST: Who are your principal customers?

Ms. Wolf: Our principal customers are utilities that have nuclear power generation capabilities in the United States, Europe and Asia.