By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - In the conclusion of an economic duel between two states, Ohio beat Kentucky on Monday to get a $1.5 billion uranium enrichment plant that promises to create up to 500 high-paying new jobs.

USEC Inc. chose to put the company's new enrichment technology project at the Portsmouth Gaseous Diffusion Plant in Piketon, a jobs-hungry community in southeast Ohio. USEC closed the plant more than two years ago.

The Piketon plant competed for the project with USEC's Paducah, Ky., facility, the nation's only operating uranium enrichment plant.

The new plant will use a more-efficient technology to enrich uranium for use in nuclear power plant reactors. The Maryland-based company is the world's leading supplier of uranium fuel for nuclear power plants.

The centrifuge process will be built at the sprawling 640-acre enrichment plant that has been idled since 2001. A test of the new process is scheduled for 2005 at Piketon, with full production expected by 2010.

The decision promises economic revival for a region of Ohio that's been linked with nuclear power since the Cold War and is desperate for good-paying jobs.

"You've just given this facility a new lease on life," Rep. Rob Portman, R-Ohio, told USEC executives, Gov. Bob Taft and other officials who gathered in Columbus to make the announcement. "We are going back to the future, back to a plant with a proud history and a proud work force."

Portman worked for the past two years with other elected officials to help bring the new production technology to the eastern edge of his congressional district.

It was a big win for Taft and development officials who promised more than $125 million in tax breaks, state grants and low-interest loans to entice USEC. Ohio has lost more than 100,000 manufacturing jobs since the recession began in 2000.

Taft has made finding new jobs his top priority, committing more than $1 billion to create new high-tech businesses in Ohio over the next 10 years.

"This announcement is tremendous news for southern Ohio," Taft said. "I want to commend everyone who had a role in making this happen."

The Piketon plant began life in 1954, turning out enriched uranium for atom bombs. It was converted to produce uranium for commercial power plants in the 1960s.

USEC shut down the plant more than two years ago in response to decreased worldwide demand for uranium. Operations were shifted to Paducah.

The U.S. Department of Energy kept about 1,350 workers doing maintenance and environmental cleanup work.

William Timbers, USEC's president and chief executive, said construction will begin in 2006 and create up to 300 construction jobs. Workers at the plant could expect to make an average of $24 an hour.

The new plant comes two decades after the Energy Department spent $3 billion to develop the technology at the Ohio plant. The project was abandoned in favor of a different uranium enrichment method. Buildings and infrastructure once used for this project remain at the Ohio plant.

The company chose its Ohio site over its Paducah plant largely because existing buildings from 1980s tests would reduce costs, Timbers said.

Dan Minter, president of the Piketon workers' union, said USEC's decision will revive an area with 8 percent to 12 percent unemployment and a 26 percent poverty rate.

"Those statistics tell you clearly we are well-advantaged to having additional jobs and not additional lost jobs," Minter said.

The company will close its Paducah enrichment plant in 2010. There are about 1,200 USEC workers at Paducah.

Kentucky Gov. Ernie Fletcher released a statement expressing his disappointment.

"Kentucky made a competitive offer, but USEC ultimately decided Ohio was a better fit," Fletcher said. "Clearly, this is another example of how we must make Kentucky more competitive and attractive for these types of economic opportunities and job growth."

Ohio lawmakers changed state laws to help pump up the tax incentives, grants and financing. Bruce Johnson, Taft's economic development director, said the state will recoup its lost tax revenues "in a few years."

He said the state will take in roughly $1 million a year in taxes from new employees and jobs created by the factory.

Greg Bauer, the mayor of Portsmouth, estimates that at least one out of every six Piketon workers will come from his town.

"This should help with the economic bad news we've been dealing with here the past few years," Bauer said.

Starts, stops, changes in direction mark uranium program in U.S.

The Portsmouth Gaseous Diffusion Plant in Piketon, Ohio, has been operating for nearly 50 years. A look at the history of uranium production in the United States:

1940s - The U.S. government begins work on uranium enrichment as a defense initiative to produce material for the atomic bomb. The first gaseous diffusion plant, K-25, goes online in 1945 in Oak Ridge, Tenn.

1950s - Uranium conversion operations begin at a government-owned plant in Paducah, Ky., in 1952. That same year, Pike County, Ohio, is chosen for the new Portsmouth Gaseous Diffusion Plant, which goes on line in 1954. Full production starts two years later.

1964 - The power industry begins buying lower-grade uranium from the Ohio and Kentucky plants for use in commercial nuclear power plants.

1976- The Department of Energy breaks ground at the Ohio plant on a $4.4 billion centrifuge technology plant, which would replace the gaseous diffusion process of enriching uranium.

1985 - Energy Dept. briefly tests, then abandons work on centrifuge technology in favor of another more promising uranium enrichment method: Atomic Vapor Laser Isotope Separation process. Uranium enrichment operations cease at Tennessee plant.

1991 - The Ohio plant is reconfigured to eliminate its ability to produce military-grade uranium.

1993 - Russian Federation agrees to ship uranium from old warheads to the United States to be sold commercially to nuclear power plants.

1995 - First shipment of Russian uranium arrives at the Ohio plant. A plan for privatizing plant operator, the U.S. Enrichment Corp., is sent to President Clinton.

1996 - The Privatization Act is signed into law.

1998 - The government sells the government-owned corporation now known as USEC Inc. for $1.9 billion in a public stock offering. Stock for the Bethesda, Md.-based company finishes its first day at $14.25 a share.

1999 - USEC abandons the atomic vapor process after spending $100 million because it says additional work on the project would take too long, cost too much and provide too little profit.

2000 - Amid plunging stock prices, lower earnings and junk bond credit ratings, USEC announces it will shut down the Ohio plant.

2001 - USEC stops uranium enrichment operations at its Ohio plant and consolidates work at its Kentucky plant. About 530 workers lose their jobs.

2002- USEC moves shipping and transfer operations from Ohio to Kentucky; Energy Dept. renews its agreement with the company regarding the import of Russian uranium; Energy Dept. announces it will build plants in Ohio and Kentucky that will be used to convert spent uranium into a more stable form.

2003 - USEC announces it will open in Ohio by 2005 a 50-person facility to test centrifuge technology.

2004 - USEC announces it will open at its Ohio site a new commercial plant by 2010 that will employ 500 to enrich uranium using centrifuge technology.

--The Associated Press

Southern Ohio's uranium plant

Facts about the Portsmouth Gaseous Diffusion Plant in

Piketon, Ohio:

The $1.2 billion plant began production in 1954.

It initially enriched uranium for nuclear weapons, but that mission changed in the 1960s to commercial nuclear power plants.

The plant has 109 buildings on 640 acres, which USEC Inc. leases from the U.S. Energy Department's 3,708-acre site.

Gaseous diffusion took place in three separate mile-long, 93-acre process buildings.

The site was chosen Monday for the $1.5 billion plant to process uranium with centrifuge technology because it has existing infrastructure from a 1980s centrifuge testing project and stable seismic conditions.

Centrifuge processing will take place in tall, spinning cylinders housed in two primary buildings of 7.5 acres each and a 20-acre assembly building.

The site along the Scioto River was selected in 1952 based on its size and relatively flat terrain, the availability of large amounts of electrical power, a dependable source of water, local labor and suitable transportation routes.

The plant was put on standby in 2001 when uranium enrichment operations were consolidated at Paducah, Ky.

About 1,200 workers maintain it and do environmental cleanup. Piketon's population is about 1,900.

--The Associated Press

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Gannett reporter Jim Siegel and the Associated Press contributed to this report.