Nuclear plant enriched uranium supplier USEC on Tuesday said it was in discussions with the Department of Energy’s (DOE’s) Loan Guarantee Program office to proceed to the next step toward obtaining a $2 billion conditional loan guarantee commitment for its American Centrifuge Plant (ACP).
The company said that the DOE had provided it with a draft term sheet after the federal agency “largely completed its initial technical review of the loan guarantee. “During the third quarter, DOE had been reviewing a comprehensive update submitted July 30 of USEC’s loan guarantee application that reflected the significant steps taken by USEC in the past year,” USEC said in a statement. The next steps involved “completion of due diligence by the DOE” and negotiation of terms and conditions toward the potential issuance of the loan guarantee.
The ACP is an advanced uranium enrichment facility in Piketon, Ohio, which will produce low enriched uranium using UCEC’s AC100 centrifuge machine. The AC100 design is based on classified U.S. technology originally developed by the DOE and successfully demonstrated in the 1970s and 80s. The plant’s capacity is expected to satisfy about one-third of the fuel requirements for commercial power reactors in the U.S.
The ACP already has a construction and operating license issued by the Nuclear Regulatory Commission, and USEC has been building the plant since May 2007. Originally, the facility had been planned to replace USEC’s gaseous diffusion uranium enrichment plant.
As of October 2010, the company had invested approximately $1.9 billion in the American Centrifuge program, which includes approximately $738 million charged to expense over several years for technology development and demonstration.
USEC has of late run into funding difficulties, however, and in August 2009, it substantially demobilized and reduced construction and machine manufacturing activities at the American Centrifuge project. “Because we deferred high-volume machine manufacturing, work at all of our strategic suppliers has been sharply reduced,” the company said. “Over the past year since the project was demobilized, we have worked aggressively to strengthen the project, address DOE’s concerns and attract additional sources of capital.”
Complete construction of the ACP is estimated to cost $2.8 billion. That total includes AC100 machine manufacturing and assembly, engineering procurement, construction costs and related balance-of-plant work, start-up and initial operations, and project management. In September, USEC secured a $200 million investment by a consortium of Japan’s Toshiba Corp. and Babcock & Wilcox, but even this wouldn’t be enough, USEC admitted. To get the DOE loan guarantee, the company must demonstrate sufficient capital is available to complete the project.
“We continue to work with suppliers to refine our estimates, while seeking reductions in the project cost and greater schedule certainty,” USEC said, adding that it would likely require 18 to 24 months to begin initial commercial operations upon receiving financing to complete the plant and another 30 to 36 months thereafter to complete the plant after initial commercial operations.
Sources: USEC, POWERnews