Sunday, January 18, 2004

Project big for firm, Piketon

Uranium process is restoring jobs

By Mike Boyer
The Cincinnati Enquirer

PIKETON, Ohio - The $1.5 billion American Centrifuge project, which officials last week said will be located here, is as important to contractor USEC Inc. as it is to this jobs-thirsty Southern Ohio community.

Bethesda, Md.-based USEC is the world's largest producer of enriched uranium for nuclear power plants, but it still uses old technology known as gaseous fusion rather than the newer centrifuge technology, which uses tall, spinning cylinders to separate enriched uranium and waste in a more efficient manner.

The centrifuge technology uses only a fraction of the electricity of gaseous fusion and produces much less waste.

The company plans to install the technology on a 640-acre plant site that has been idle since 2001. The shutdown cost Piketon more than 500 jobs. About that many are expected to be restored as the plant ramps up between now and 2010.

In announcing Monday the addition of the centrifuge technology in Piketon, USEC pointed out that electricity, now bought mainly under a long-term agreement with the Tennessee Valley Authority, accounts for about 60 percent of its annual production costs. By contrast, the centrifuge will use only about 5 percent of the electricity of a similar-sized gaseous fusion plant.

USEC embraced the centrifuge technology after experiments using lasers didn't prove to be commercially viable.

"The American Centrifuge will reinforce USEC's long-term position as the global leader in the uranium enrichment marketplace," USEC president William Timbers said.

"This is a very, very important project for the company and for the United States,'' said David Schanzer, an analyst with the investment firm of Janney Montgomery Scott LLC.

Without the investment, Schanzer said, USEC "runs the risk of becoming obsolete vis--vis the competition.''

The company's shares, which traded at around $15 five years ago, closed Thursday at $8.44. Due to early deadlines for the Enquirer, Friday's closing price was not available.

Schanzer said investors have been cool toward USEC because of the realization that the capital needed to build the centrifuge will wipe out the company's remaining quarterly dividend of 133/4 cents a share.

USEC, spun off by the Department of the Energy in the mid-1990s, is one of four main producers of enriched uranium in the world.

The others are:

• Urenco, a consortium of British and Dutch government-controlled companies and private German utilities.

• Eurodif, a multinational consortium controlled by Cogema, a unit of French government-controlled Areva.

• The Russian Ministry of Atomic Energy, which sells enriched uranium through Tenex, a government-owned entity.

Urenco, Tenex and smaller producers in China and Japan also use the centrifuge method. Louisiana Energy Services, a group controlled by Urenco, has announced plans to build a centrifuge plant, using Urenco's technology in Eunice, N.M., by 2010.

USEC, which said it will continue to produce enriched uranium at its Paducah, Ky., operation, employs 3,800 people.

For the third quarter ended in September, the company said net income increased to $3.4 million, or 4 cents a share, from $1.2 million, or 1 cent a share, a year ago. Quarterly revenues declined to $293.6 million from $360.8 million a year ago.


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