Recently Licensed Gas Centrifuge Facility for Uranium Enrichment

I recently picked up a news article on the licensing by the Nuclear Regulatory Commission of what’s billed as the first major nuclear processing facility permitted in the US in 30 years. Announcement here. Called the National Enrichment Facility, it will be the only privately owned source for commercial enriched uranium. The license is issued “to Louisiana Energy Services (LES) to construct and operate a gas centrifuge uranium enrichment plant in Lea County, N.M.” LES license application and environmental report.

Description of LES from the NRC’s website, “The LES partnership is made up of limited and general partners consisting of Urenco, Exelon, Duke Power, and Entergy. The partnership intends to use Urenco’s sixth generation gas centrifuge technology that is being used in Europe. Urenco has a capacity of about 20 percent of the world’s enrichment market.” Announcement from the NRC here.

Each of the articles announced opposition from NIRS, where you find a bit of historical color. Apparently according to NIRS, Louisiana Energy Services originally tried to license a facility in 1989 in Louisiana, and pulled the application it 1997 when the NRC found that the plant siting was “environmental racism” as the site was next to poor, rural predominantly African-American towns. A full history of LES and the application process according to the NIRS is on their site here. As you might imagine, they are not particularly positive about the project or the firms behind it. Each of the press releases include US minority partners Duke, Entergy, and Exelon, but the company is a consortium controlled by European nuclear industry heavyweight Urenco, a multi-national nuclear venture. And Urenco’s annual report lists their ownership in LES at 100%, after buying out Westinghouse last year, so I’m unclear exactly what interests US concerns have in the venture.

The site for the project is http://www.nefnm.com, and states that construction will begin in 3Q2006 and with first production expected 2008/09. Urenco, who is also providing the technology, operates three similar facilities in Europe, and makes and sells the centrifuges.

Urenco is owned by British Nuclear Fuels (a UK government entity) a Dutch government entity, and a partnership of E.On and RWE from Germany. In 2005 it had annual revenues of 730 mm euros, operating cashflows of 460 mm euros, and claims 20% of the global uranium enrichment market, apparently a significant portion of that already in the US.

The project is slated to cost $1.4 Billion. With an equity base of only 600 mm euros, and an asset base of 2 billion euros, I haven’t figured out how Urenco is financing the project, but it with a single A credit rating, tremendous cashflows, and deep pocked owners, it looks like they would likely have the wherewithal to accomplish it.

I am one of those that views nuclear as relatively clean power source, when compared to breadth of the upstream environmental footprint of coal, gas, hydro, etc. And given that our power industry has been looking at nuclear as a key growth fuel of the future, I can’t help but think this project is a big plus for the industry. In addition, it seems from Urenco’s annual report, that US utilities are already buying from Urenco, and this facility is simply onshoring the production of enriched uranium fuel supplies, bringing more investment capital into a critical industry in the US.
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