The Metropolis uranium conversion facility in the US state of Illinois is now expected to reach its targeted annual production rate of 7,000 tons of uranium as UF6 by next month, despite delays to the plant’s restart and a series of UF6 leaks. Metropolis’ conversion marketer ConverDyn, a joint venture of Honeywell and General Atomics, is currently sold out through 2028, but with more robust demand potentially triggered by a proposed US ban on Russian low-enriched uranium (LEU) imports, Metropolis could expand production further.
Backstopped by long-term supply contracts, the sole US-based UF6 plant is slated to produce 5,000 tU as UF6 in 2023, and going into 2024 it appears likely to almost immediately push output beyond the existing annual target of 7,000 tU as UF6. But while plant owner Honeywell is expected to exercise flexibility to expand production at Metropolis to 8,000 tU as UF6 per year in part by shortening its planned outages, an expansion to licensed annual operating capacity of 15,000 tU as UF6 would take a heavy lift.Any expansion beyond 8,000 tU as UF6 per year would require a decision from Honeywell’s board of directors, which is keen to avoid another oversupply scenario that led to the plant’s prior shutdown.
“We are concentrating on bringing the plant back online,” ConverDyn President and CEO Malcolm Critchley told a nuclear fuel conference last month. “So we haven't really determined exactly what's going to be involved and what's going to be necessary in order to expand the plant or indeed what level we might expand the plant to, and we certainly haven't gone out to our supply chain to get a fully cost estimate.” But as Critchley pointed out, inflationary and supply chain pressures have eased since the plant was in restart mode. "We think an expansion will be affordable, depending upon what level we decide to go to,” he added.
Of the three European or North American UF6 producers, Metropolis is uniquely suited to capacity expansion. Orano’s Philippe Coste conversion complex (also known as Comurhex II) in Southern France is completing a decades-long project to replace and expand Comurhex, and Cameco’s Port Hope UF6 plant near Toronto, Canada, has relatively hard geographical limits to any expansion. Supply of Western nuclear fuel has become increasingly tight since Russia's invasion of Ukraine and has led to capacity expansion decisions by enrichers Orano and Urenco. This in turn has led to Western UF6 supply drying up — ConverDyn has no unsold material to offer until January 2029.
“There is no meaningful supply being added,” one conversion market source told Energy Intelligence. So fortunately for ConverDyn, “there is nothing in the way of prices going up, really.”
Metropolis Resurrected
The Metropolis plant was expected to restart operations by Apr. 1 at an annual capacity of 7,000 tU as UF6, but that was delayed by some three months. This was in part due to the hiring and training of new workers, since few of the plant’s prior workforce returned after the plant was idled in 2018 due to market oversupply, following an extended outage in October 2017.
Due to the Covid-19 pandemic, the restart was also plagued with “significant inflationary and supply chain issues,” Critchley said at last month’s conference. When Metropolis did restart UF6 production in early July, it was amid a series of UF6 spills associated with aging infrastructure. Even once restarted, the plant continued to experience leaks and other technical problems requiring the incremental modernization of equipment and components. With the resolution of those problems, the plant has since begun to operate more smoothly. In fact, Energy Intelligence understands the daily rate of production has sufficiently increased to meet the plant's 2023 product target, in spite of the delays.
The decision to restart the plant was not an easy one, and any future expansion will face similar scrutiny. "I am extremely sensitive about causing us to go back to where we were before we did the shutdown," said Critchley. "When we're considering expansion options, I will always err on the side of caution unless we have firm contracts that back the expansion, so we know exactly what we're facing going forward."
Waiting for Government Signals
Like most Western nuclear fuel suppliers, Honeywell and ConverDyn are waiting to see whether Washington goes forward with a ban of Russian EUP imports, alongside waivers through 2028 and an LEU fuel bank for the existing US nuclear fleet, in addition to the procurement of high-assay LEU (Haleu) for advanced reactors.
At the moment, authorization of an "Advanced Nuclear Fuel Availability Program" has broad support in the US Congress, but the two chambers are at odds over spending, and Energy Intelligence understands the recent effort to authorize a fuel bank and Russian import ban has met some resistance. From the perspective of US utilities, fear of Russia retaliating to a ban by cutting off supply immediately poses a very real risk that they will be caught short before any waivers would have expired in 2028, and before a fuel bank has built up its reserves. For this reason, US nuclear operators — and possibly some fuel cycle suppliers — may be applying quiet pressure on Washington to slow the legislation's progress.
Alongside some other suppliers, ConverDyn argues that the only role for the government in the LEU market should be to provide clarity on how much Russian nuclear fuel will be allowed into the US over the next decade. “I think my stock answer to the question of how much government involvement is desirable is as little as possible and preferably not,” said Critchley. If the conversion business "is viable, then we've got the resources to invest in the facility ourselves. But the type of security that the government can provide by providing more clarity does certainly help in the investment decisions.”
With that said, ConverDyn would likely benefit from the procurement of any fuel bank, just like it is poised to benefit from an imminent US Department of Energy (DOE) request for proposals (RFP) for Haleu availability, including enrichment and UF6 procurement. That RFP is made possible by $500 million allocated under the 2022 Inflation Reduction Act to support Haleu availability. The industry is awaiting a final RFP after the DOE released a draft RFP in June that calls for anywhere between 5-145 metric tons of uranium as Haleu. For Metropolis, that’s a natural UF6 requirement between 200-7,000 tU of UF6. “That's quite a range, and depending where you are on that range massively changes your response,” Critchley said.
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