Under the terms of the 1993 government-to-government nuclear non-proiferation agreement, the United States and Russia agreed to commercially implement a 20 year program to convert 500 metric tons of HEU (uranium 235 enriched to 90 percent) taken from Soviet era warheads, into LEU, low enriched uranium (less than 5 percent uranium 235). The United States established a government corporation United States Enrichment Corporation (USEC), and the Russian Federation designated Tekhsnabeksport (?Tenex?) a commercial subsidiary of its Ministry of Atomic Energy (MinAtom), as their agents to implement the program on commercial terms. The terms also required that the HEU be converted by dilution (downblending) to LEU in Russian nuclear facilities. USEC would then purchase the low enriched fuel and transport it to its facilities in the USA. The value of the process is in two components: The uranium itself and the work involved in the conversion process, measured as Separative Work Units (SWU). Both have separate commercial values. Early disagreements on interpretations of the terms of the governmental and commercial agreements on this issue led to controversy and some delays. Although each shipment contains LEU, the commercial nature of the global uranium market defines the uranium and the enrichment components as separate commercial values and costs. The solution reached was for USEC to promptly pay for the SWU component it purchased and to transfer an equal amount of natural uranium to Tenex. Due to the initial technical and purity issues in the HEU to LEU conversion process, the first shipments began in 1995. USEC includes this Russian LEU in sales of low enrichment uranium produced at USEC facilities. As years passed, numerous commercial contract terms were renegotiated and revised to accommodate mutual interests.
Based on market prices, USEC estimates that by the completion of the 20 year Megatons to Megawatts program in 2013, USEC will have paid Russia more than $8 billion for its purchases of the SWU component in shipments of low-enriched-uranium fuel. [edit] Status of program as of 2010
On September 9, 2010 USEC (http://www.USEC.com); announced that the Megatons to Megawatts program had reached a new milestone--400 metric tons of Russian HEU warhead material, equivalent to 16,000 nuclear warheads has been eliminated.[citation needed] From 1993 to date 400 metric tons of Russian warhead HEU have been diluted and converted in Russia to LEU--low enriched uranium--fuel for nuclear power plants. The fuel is purchased from Russia by USEC for use in many of America's 103 commercial nuclear power plants to produce electricity. Approximately 20% of America's electricity is generated by nuclear power plants. Nuclear warheads that were once on Russian ICBMs aimed at American cities are now providing 50% of the electricity produced by America's nuclear power plants--nuclear power generates about twenty percent of America's total electricity production. The mission of the U.S.-Russian agreement and commercial implementing contract will be completed in 2013. At that time it is expected that a total of 500 metric tons of warhead HEU will have been converted in Russia to LEU and purchased to fuel U.S. nuclear power plants. The Megatons to Megawatts program will have eliminated material equivalent of 20,000 nuclear warheads.
During this period, on a comparatively modest basis, the U.S. government has also been converting some of its excess nuclear warhead HEU into power plant fuel. Efforts have also been undertaken to demonstrate the commercial feasibility of converting warhead plutonium into fuel to augment nuclear fuel for U.S. power plants.
Completion of the Megatons to Megawatts agreement may leave a gap in the supply of uranium fuel at a time when the global use of nuclear power is increasing. In the United States, there are 103 nuclear power reactors currently operating. New construction and operating permits for 15 nuclear power reactors are under review by the U.S. Nuclear Regulatory Commission. According to government and industry sources, seventeen companies are preparing license applications for as many as 31 new U.S nuclear reactors. Since the Megatons to Megawatts program is scheduled to end in 2013, demand for other sources of uranium supply will be necessary to meet current and future demand.[citation needed]"
"BETHESDA, Md. ? USEC Inc. (NYSE: USU) announced today that the Megatons to Megawatts? program has eliminated 425 metric tons of highly enriched uranium, the equivalent of 17,000 nuclear warheads, by converting it into fuel for commercial nuclear reactors. Megatons to Megawatts is a 20-year, commercially financed government-industry partnership in which 500 metric tons of Russian weapons-grade uranium is being downblended to low enriched uranium for use as commercial reactor fuel.
?Megatons to Megawatts continues to be the most successful non-proliferation program in history as it provides a reliable source of fuel for nuclear power plants while making the world safer,? said John K. Welch, USEC president and CEO.
?The program has served as an important element of USEC?s ability to provide its utility customers with the nuclear fuel and technology solutions they need to power the world through diverse, secure and reliable supply offerings,? said Welch. ?Under this program, we have built a strong long-term relationship with our Russian partners, which we expect to continue through our new enrichment supply contract starting in 2013 after the Megatons to Megawatts? program is successfully finished.?
USEC, as executive agent for the U.S. government, and JSC ?Techsnabexport? (TENEX), acting for the Russian government, implement the program, which is on track to complete the downblending of the equivalent of 20,000 nuclear warheads into nuclear fuel by the end of 2013. USEC has paid the Russian Federation more than $7.2 billion for the SWU (separative work units) component of the low enriched uranium delivered since 1995. The fuel generated to date could produce enough electricity to meet the demand from U.S. households for nearly five years and has the energy equivalent of 10.4 billion barrels of oil, or about 29 months of U.S. crude oil imports.
Building on the companies? long-term relationship, USEC signed a new contract with TENEX in March 2011 for the 10-year supply of low enriched uranium that will provide USEC with continued access to Russian enriched uranium, which currently constitutes about one-half of USEC?s supply source.
Under the terms of the new contract, the supply of this low enriched uranium to USEC is expected to begin in 2013 and ramp up until it reaches a level in 2015 that is approximately one-half the level currently supplied under the Megatons to Megawatts program, with the mutual option to increase the quantities up to the same vel as under that program.
Unlike the Megatons to Megawatts program, the quantities supplied under the new contract will come from Russia?s commercial enrichment activities rather than from downblending of excess Russian weapons material."
Personally, I'll believe it when I see it.
PEN Price at posting:
5.7¢ Sentiment: None Disclosure: Held
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