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WASHINGTON - The federal government will not lend $2 billion to USEC, the sole American-owned uranium enrichment company, the Energy Department said on Tuesday.
The move casts doubt on the company's ability to commercialize its new technology, and probably leaves the market for making reactor fuel in the hands of European companies now building in the United States.
For the second time, the Energy Department turned down USEC, formerly the United States Enrichment Corporation, which was a government enterprise until it was spun off as a private company in 1998. USEC uses 55-year-old gaseous diffusion technology and is trying to replace its old plant, in Paducah, Ky., with centrifuges that use only about 5 percent as much electricity.
The market for uranium enrichment seems poised to grow modestly in coming years, in the United States and abroad, but as with the automobile industry, the American-owned uranium company seems ill-equipped to compete, even on American soil.
The company's shares fell 35 percent on Tuesday, to $4.05, after the Energy Department's decision was announced. John K. Welch, chief executive of USEC, said his company had "engaged outside advisers to evaluate our strategic alternatives."
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| Workers from the USEC and a supplier assemble centrifuge machines at a plant in Piketon, Ohio. USEC had bet its future on commercializing an improved centrifuge design to be built there. |
USEC had bet its future on an improved centrifuge design, and said it had spent $1.5 billion in Piketon, Ohio, at a site where it used to have a gaseous diffusion plant, and had accumulated 235,000 hours of trial runs of the new machines. But Julian J. Steyn, a consultant at Energy Resources International who follows the uranium market, said, "At the moment, there's nobody stepping forward to finance its construction."
Energy Department officials said that they could not lend the $2 billion USEC had requested because it was not clear that was enough to finish the project and there was no definite additional source of financing. They invited USEC to reapply in 18 months.
In the meantime, though, a consortium of European partners is finishing a centrifuge plant in Hobbs, N.M., and Areva, a French company, is planning for another plant, in Idaho.
General Electric, its global nuclear partner, Hitachi, and a Canadian uranium mining company, Cameco, have applied to the Nuclear Regulatory Commission for permission to build an enrichment plant in Wilmington, N.C., that would use laser technology./p>
As a kind of consolation prize for Ohio, where the centrifuge complex was to be built, the Energy Department said it would increase financing of environmental cleanup at the Piketon site, where the government enriched uranium beginning in the 1950s. The department said it would spend an extra $150 million to $200 million a year, paying for the work with uranium from its inventory. That work could be done by USEC or other companies.
Enrichment means sorting two types of uranium, uranium-238, which does not split easily in a reactor, and uranium-235, which does. The uranium-235 makes up only 0.7 percent of natural uranium, but the proportion must be raised to 3 to 5 percent for most reactors. The two types are chemically identical and must be sorted by using their minute difference in weight.