uranium transfers canceled for 2011

Uranium transfers canceled for 2011, continue for 2010

* Department doesn't want too much uranium in the market

* Uranium transfers help pay cleanup of enrichment plant (Adds uranium transfers continuing for 2010)

By Tom Doggett
WASHINGTON, Feb 4 (Reuters) - The U.S. Energy Department has canceled plans to put into the market during 2011 extra government-owned surplus uranium supplies, Energy Secretary Steven Chu told Congress on Thursday, but the uranium transfers will continue for this year.

The department had planned to transfer next year up to 1,125 tonnes, or about 2.48 million lbs, of its surplus uranium a year to raise money to pay for the cleanup of the Portsmouth uranium enrichment plant in Ohio.

The uranium would have been transferred to USEC Inc (USU.N). The company is one of the biggest suppliers of low enriched uranium that is used as fuel for nuclear power plants.

However, Chu told the Senate Energy and Natural Resources Committee that the department did not want to put too much uranium in the market because it would go against an earlier agreement with uranium producers.

Not only would business be taken away from domestic uranium producers, but the additional government supplies in the market could have depressed prices, making it difficult for producers to expand operations.

The department instead included the Portsmouth cleanup funds in its proposed 2011 budget that was sent to Congress this week.

The department is continuing with its uranium transfers planned for this year to USEC to fund the cleanup of the Portsmouth plant, a department spokeswoman said.

Again, up 300 tonnes a quarter with a 1,125-tonne cap on total uranium transfers will be allowed this year, the spokeswoman said.

The Energy Department has 59,000 tonnes of inventories of natural uranium built up for military purposes during the Cold War and is releasing the stocks gradually over about 25 years. (Reporting by Tom Doggett; Editing by Walter Bagley and Lisa Shumaker)

http://www.reuters.com/article/idUSN0414186520100204?type=marketsNews