Utilities turn to US, Europe for uranium enrichment

Thursday, September 4, 2008

LONDON, Sept 4 (Reuters) - Uranium enrichment companies in the United States and Europe have seen an increase in customer interest after the recent conflict involving Russia and Georgia, industry sources said on Thursday.

Nuclear reactors are dependent on reliable supplies of fuel, made from uranium ore that has been converted into a gas which in turn is enriched into nuclear fuel.

There are four major enrichment services firms in the world: Russia's Tenex, France's Areva, Europe's Urenco and U.S.-based USEC , each holding around 25 percent of the market.

'We have a very tight market right now because political occurrences influence the market,' Chief Executive Officer Helmut Engelbrecht at the Anglo-Dutch-German consortium Urenco said on the sidelines of the World Nuclear Association conference.

'There is a lot of enrichment capacity in Russia ... and after recent events the market is focused on security of supply,' Engelbrecht said.

U.S.-based USEC had also experienced a rising interest.

'The Russians have much of the excess capacity in the market,' said Robert Van Namen, senior vice president of uranium enrichment at USEC.

He said 10 percent of world enrichment capacity up to 2010 comes from Russia blending down nuclear warheads which contain uranium.

This material is sold mainly to U.S. utilities and represents around 50 percent of the U.S. market, Van Namen said.

Russia also has centrifuge enrichment capacity used for U.S. utilities.


In Ohio, USEC is in the process of switching their diffusion plant to a centrifuge plant, which will only use 5 percent of the electricity currently used to produce an equal volume.

'The centrifuge facility we expect to have online in mid-2010 and fully up to capacity at 2012,' Van Namen said.

The total price tag for the project was now seen at $3.5 billion.

In September last year the firm raised over $700 million and for the remainder of the financing needs USEC had applied to the Department of Energy (DOE) for a loan guarantee programme.

'We have made our application for $2 billion worth of loan guarantees ... and hope to get some good indications by the end of the year and hopefully finalise the loan package early 2009,' Van Namen said.

If the DOE says no, USEC would have other alternatives such as going for project finance, where a third party would take an equity position in the centrifuge project.

'We definitely need money to take the project forward,' Van Namen said.

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