USEC Advances American Centrifuge RD&D Program
- DOE agrees to project test plan, completing first of five program milestones
- Representatives from nuclear industry leaders B&W, Exelon, and Toshiba, along with other accomplished industry experts, join demonstration subsidiary board of managers
- Hiring has begun, additional AC100 machines are being built and construction of the demonstration cascade commenced
- DOE authorizes continued program spending through November
BETHESDA, Md.--(BUSINESS WIRE)-- USEC Inc. (USU) reported today that it is making steady progress towards the goals of the American Centrifuge research, development and demonstration (RD&D) program. During the programs first two months, USEC met the initial program milestone, placed additional AC100 centrifuge machines into service and established an independent board of managers to oversee the program. USEC also met the conditions established in the cooperative agreement to continued funding in the initial budget period, and the Department of Energy (DOE) has authorized continued federal cost share for the program of up to $61.3 million, for a total federal cost share of $87.7 million, which is expected to fund the program through November.
Workers at USEC's American Centrifuge facility in Piketon, Ohio, prepare for the installation of the first of several service modules (far left) that will support a 120-machine demonstration cascade as part of a research, development and demonstration program. (Photo: USEC Inc.)
Our preparations for the RD&D program during the first half of 2012 allowed us to hit the ground running and to make excellent progress during the past two months, said John K. Welch, USEC president and CEO. With DOEs approval of the RD&D test program, we will continue to build and install AC100 machines, complete balance of plant systems for a full commercial cascade and operate that cascade to demonstrate technical readiness of the American Centrifuge in a production plant. During the past two weeks, we have begun installing service modules and other control equipment to support the RD&D commercial cascade.
We have also made great progress in establishing the governance structure required by our agreement with DOE, including establishing the board of managers for American Centrifuge Demonstration, said Welch. We have identified and attracted a board with strong project management, nuclear operations and technology deployment experience. The board includes representatives from the largest U.S. nuclear operator, our strategic partners and other noted experts. This is another important step towards commercialization of the American Centrifuge technology.
USEC recently completed the first of five project technical milestones for the RD&D program with the finalization of a test program. The test program defines the objectives of the RD&D program with specific requirements for fulfillment of each of the remaining milestones. The RD&D program will be complete when American Centrifuge Demonstration and USEC have demonstrated AC100 centrifuge manufacturing quality, AC100 operational reliability, and sustained operation of a full cascade of 120 AC100 machines. During the process of achieving these milestones, American Centrifuge Demonstration and USEC will also demonstrate the robustness of the AC100 centrifuge and plant support systems. American Centrifuge Demonstration and USEC expect to complete the program by December 2013.
Under the terms of the RD&D program, USEC has begun hiring to support manufacturing and operating additional AC100 machines and expects to complete and operate a 120-machine cascade in a commercial plant configuration in 2013. As of July 31, USEC has built and conditioned with uranium gas approximately 50 AC100 machines for the demonstration cascade. USEC is also finalizing the installation of the first of six service modules, a critical component of the balance of plant systems, which includes wiring and piping to connect centrifuges together in the cascade. The Company continues to build new AC100 machines and supporting infrastructure for the demonstration cascade.
USEC and its newly created subsidiary, American Centrifuge Demonstration, LLC, will carry out the RD&D program. American Centrifuge Demonstration is putting in place a program management and enhanced program execution structure as agreed to in the cooperative agreement with DOE. Last week, USEC entered into a limited liability company agreement for American Centrifuge Demonstration that, among other things, establishes a board of managers in accordance with the enhanced program execution structure. The board of managers will oversee and direct the management of the RD&D program. The seven-person board is comprised of the following members:
- M. Roger Eshelman, executive vice president and chief operating officer (retired), Savannah River Nuclear Solutions, LLC,
- Bruce Rash, director, nuclear project management, Exelon Generation Company, LLC,
- Luis Reyes, executive director for operations (retired), U.S. Nuclear Regulatory Commission,
- Philip G. Sewell, senior vice president, American Centrifuge and Russian HEU, USEC Inc.,
- Randall J. Spickard, vice president, business development, Babcock & Wilcox Technical Services Group, Inc.,
- Robert Van Namen, senior vice president, uranium enrichment, USEC Inc., and
- Hitoshi Yabuta, vice president, project management, Toshiba America Nuclear Energy Corporation.
On June 12, USEC and DOE entered into a cooperative agreement to provide funding for the RD&D program. The agreement provides for 80 percent DOE and 20 percent USEC cost sharing for work performed during the period June 1, 2012, through December 31, 2013, having a total estimated cost of $350 million. DOEs total contribution would be up to $280 million, and USECs contribution would be up to $70 million. USEC and DOE are initially providing $110 million in cost-shared funding for the program. This is intended to fund the RD&D program through the end of November 2012. DOEs portion of the funding for the initial period will come from taking the disposal obligation for a quantity of depleted uranium tails from USEC, releasing $87.7 million in cash that USEC had previously committed as security for future tails disposition obligations.
The cooperative agreement will be incrementally funded, and DOE funding is limited to $87.7 million until DOE provides authorization for additional funding. DOE funding through July 31, 2012, was $26.4 million. On July 31, 2012, after USEC completed a series of actions including completing a detailed cost/schedule review, setting firm dates for the project milestones, establishing the project governance structure and submitting to the Nuclear Regulatory Commission a Foreign Ownership, Control or Influence information package for American Centrifuge Demonstration, DOE authorized an additional $61.3 million of funding, for a total of $87.7 million. The remaining funding of $192.3 million from DOE has not yet been authorized and is subject to the availability of appropriations or other sources of consideration. USEC will continue to work with Congress and DOE to pursue opportunities for funding the balance of the RD&D program.
The objective of the RD&D program is to demonstrate the American Centrifuge technology through the construction and operation of a cascade of 120 commercial centrifuge machines and to sustain the domestic U.S. centrifuge technical and industrial base to ensure the capability exists to meet future national security needs. This includes activities to reduce the risks and improve the future prospects of deployment of the American Centrifuge technology.
USEC intends to meet this objective through the construction and operation of one complete demonstration cascade of 120 commercial centrifuge machines and supporting infrastructure. USEC will also demonstrate redundancy of the primary cascade support systems that will be used in a production plant and complete integrated testing against operational requirements. The RD&D cascade would be incorporated in the full commercial plant in Piketon, Ohio, which is planned to operate 96 identical cascades.
The RD&D program will support more than 1,000 direct jobs in Ohio, Tennessee and several other states.
USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel and nuclear industry related services for commercial nuclear power plants.
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that is, statements related to future events. In this context, forward-looking statements may address our expected future business and financial performance, and often contain words such as expects, anticipates, intends, plans, believes, will and other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain For USEC, particular risks and uncertainties that could cause our actual future results to differ materially from those expressed in our forward-looking statements include, but are not limited to: risks related to the ongoing transition of our business, including uncertainty regarding the transition of the Paducah gaseous diffusion plant and uncertainty regarding continued funding for the American Centrifuge project and the impact of decisions we may make in the near term on our business and prospects; uncertainty regarding the timing, amount and availability of additional funding for the research, development and demonstration (RD&D) program and the dependency of government funding on Congressional appropriations; restrictions in our credit facility on our spending on the American Centrifuge project and the potential for us to demobilize the project; limitations on our ability to provide any required cost sharing under the RD&D program; the ultimate success of efforts to obtain a loan guarantee from the U.S. Department of Energy (DOE) and other financing for the American Centrifuge project, including the ability through the RD&D program or otherwise to address the concerns raised by DOE with respect to the financial and project execution depth of the project, and the timing and terms thereof; potential changes in our anticipated ownership of or role in the American Centrifuge project; the impact of actions we have taken or may take to reduce spending on the American Centrifuge project, including the potential loss of key suppliers and employees, and impacts to cost and schedule; the impact of delays in the American Centrifuge project and uncertainty regarding our ability to remobilize the project; the potential for DOE to seek to exercise its remedies under the June 2002 DOE-USEC agreement; risks related to the completion of the remaining two phases of the three-phased strategic investment by Toshiba Corporation (Toshiba) and Babcock & Wilcox Investment Company (B&W), including the potential for immediate termination of the securities purchase agreement governing their investments; changes in U.S. government priorities and the availability of government funding, including loan guarantees; uncertainty regarding the continued capitalization of certain assets related to the American Centrifuge Plant and the impact of a potential impairment of these assets on our results of operations; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are available on our website at www.usec.com. We do not undertake to update our forward-looking statements to reflect events or circumstances that may arise after the date of this news release except as required by law.
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Paul Jacobson (301) 564-3399
Steven Wingfield (301) 564-3354
Source: USEC Inc.Copyright Business Wire 2012