The Department of Energy yesterday officially launched a long-awaited research, development and demonstration program supporting USEC’s struggling American Centrifuge Project through a deal in which DOE will take title to USEC’s liability for $87.7 million in depleted uranium tails. In return, the company has agreed to a number of conditions that include new management for the project from outside of USEC, granting DOE a royalty-free license to the intellectual property rights for the centrifuge technology, and the transfer to DOE of all the program’s centrifuge machines and other equipment. USEC officials said that the agreement, which comes as the company faced a financing deadline from creditors at the end of this week, will allow USEC to forge ahead. “Over the last several months, we have been preparing our demonstration facility for installation of a full-scale commercial cascade with related plant infrastructure. With this RD&D agreement in place, we will move rapidly to build additional AC100 machines and related support systems to complete the demonstration cascade,” USEC President and CEO John Welch said in a statement
In addition to the DOE contribution, the initial phase of the cost-share program will also include about $22 million from USEC and is expected to keep the program running through the end of November. Beyond that, funding will depend on appropriations by Congress. The program is slated to run until the end of 2013 and come to a total of $350 million, 80 percent of which will come from the government. However, DOE’s share will not include the $44 million in tails liability it took on in January from USEC in exchange for a quantity of low enriched uranium. As part of the new agreement, USEC has formed a new subsidiary with project partner Babcock & Wilcox Technical Services Group called American Centrifuge Demonstration, which will have a board of managers that “will not be controlled by USEC,” according to a USEC release. In addition to longtime partners B&W and Toshiba, USEC has also been in discussions with other third parties on participating in the program. The new management structure must be in place by the end of July for DOE to provide funding beyond an initial $26.4 million.
The Department has emphasized the “taxpayer protections” built into the deal, meaning the transfer of intellectual property and centrifuge machines to the government. During the program USEC will lease that equipment from DOE, and the material will be returned to the company if it deploys the plant commercially. But if the program does not succeed, DOE could instead look to use the technology for meeting the need for domestically produced enriched uranium for tritium production. “The question has been, can the centrifuges work at an output that can make sense for USEC on a commercial basis. Even if the technology doesn’t work for that, it can still work for us,” a senior DOE official told reporters today, adding “The way they have to work out from a business perspective and contracts and everything else for USEC for the technology to be financially profitable is different than if we just need to operate it at a smaller volume, at a smaller stage, at a smaller scale for LEU for tritium.”
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