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Future of Piketon uranium company unclear

For the last few years, the Maryland-based company that wants to build a uranium enrichment plant in southern Ohio has lived the equivalent of a taxpayer-funded paycheck-to-paycheck life.

Time after time, the company has gone to the brink of running out of federal dollars, only to see the government infuse another injection of cash to keep the project running.

The latest infusion runs out April 15. That’s when a federally-funded research and development project at the American Centrifuge Project in Piketon, Ohio, runs out of money. The future beyond that is unclear, and employees at the plant have been sent notices warning of possible layoffs.

In March, the company declared bankruptcy in a Delaware court to restructure its debt, assuring bondholders that it would not stop its work in Piketon despite its Chapter 11 filing.

USEC, which operates the American Centrifuge Project, repeatedly has escaped — if narrowly — extinction. Supporters say despite a dismal demand for enriched uranium, the need for U.S.-produced enriched uranium outweighs concerns about weak demand for uranium or even concerns about USEC’s long-term viability.

“We have to have it for our national security,” said Sen. Rob Portman, R-Ohio, who said if the government doesn’t continue to move forward, it will have wasted billions of dollars on technology it ultimately abandoned.

Opponents say it would be more of a boondoggle to continue spending on a struggling company.

“USEC has been on the ropes for years,” said Michael Mariotte, president of the Nuclear Information and Resource Service, a nuclear nonproliferation organization based in Takoma Park, Md. “It exists now only because of tax dollars into it. At some point, Congress will decide it’s foolish to keep throwing good money after bad.”

The United States Enrichment Corporation was established in 1992 as a wholly-owned federal entity, but was privatized in 1998. It originally operated a uranium enrichment plant in Paducah, Ky. But the technology used in Paducah was outdated – it stopped enriching uranium in 2013 - and USEC sought to enrich uranium in Piketon using new technology.

For years, the company sought a $2 billion loan guarantee from the Department of Energy.

But in 2011, Solyndra, a solar company that had received a $535 million loan guarantee from the federal government, went bankrupt, chilling the Obama administration’s appetite toward loan guarantees, and ultimately, the DOE that year offered the two-year, $350 million research and development project, now at its end. The next steps are unclear.

“The federal government can’t seem to get its act together to provide any certainty or predictability,” said Portman. “What we’re looking for is a plan.”

But the Department of Energy is focused on “reducing the technical and financial risk” of the Piketon project, said Niketa Kumar, of the Department of Energy. She added that the department is exploring “a number of options” for how to proceed after April 15.

In the meantime, the demand for enriched uranium has sunk.

A few factors played into that: The nuclear disaster in Fukushima, Japan, in 2011 knocked three of the Daiichi plant’s six reactors offline, and in the aftermath of that, some 50 nuclear reactors were taken offline – many which used USEC’s uranium. In February, the country’s prime minister announced plans to bring them back online after they had passed rigorous new safety standards.

Germany, too, alarmed by the Fukushima disaster, also announced plans to decommission its nuclear power plants. Combined, that means less demand for enriched uranium.

The natural gas boom also has meant less of a demand for nuclear energy.

Others disagree.

George David Banks, deputy director of the Nuclear Energy Program at the Center for Strategic and International Studies said just as the U.S. has proclaimed it doesn’t want to be reliant on the Middle East for oil and gas, the U.S. shouldn’t be reliant on other countries for nuclear fuel.

URENCO, which operates a uranium enrichment plant in New Mexico, primarily is owned by a coalition of European companies. And Areva, which sought but indefinitely has delayed plans to open a uranium enrichment plant in Idaho, is owned primarily by the French.

The U.S., Banks said, needs to be able to supply enriched uranium, particularly with Russia the dominant player in the market.

He said as the EPA continues to crack down on coal emissions, a demand for nuclear energy invariably will increase.

“Assuming an advance of climate change, you’re going to have a build-out of nuclear in the United States,” he said. “When that happens, do we want to be substantially dependent on foreign imports?”

Sen. Sherrod Brown, D-Ohio, said the company is more than a necessity for national security. “It’s an economic engine for the region,” he said.

And the uncertainty has taken its toll, said Rep. Brad Wenstrup, R-Cincinnati.

“Congress did their part to support the project in Piketon, and it’s time for the Department of Energy to do their job and come forward with a long-term plan,” he said.

USEC spokesman Paul Jacobson said the company believes there’s $9.6 million available in appropriations that could help them eke past April 15. Beyond that, the federal government can transfer $56 million from other accounts, but doing so could take a month.

USEC, said Jacobson, has spent $2.5 billion.

The company needs the federal government’s help to move forward, he said.

“This is not about a normal business making widgets,” he said. “This is about a product inexorably woven into U.S. national security policy.”

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