BETHESDA, Md. – USEC Inc. (NYSE: USU) announced today that it had not been able to conclude a deal for the short-term extension of uranium enrichment at the Paducah Gaseous Diffusion Plant in Kentucky, and the company will begin ceasing uranium enrichment at the end of May. The Paducah plant is the only U.S.-owned and operated uranium enrichment facility in the United States. USEC leases the plant from the U.S. Department of Energy (DOE).
“While we have pursued possible opportunities for continuing enrichment, DOE has concluded that there were not sufficient benefits to the taxpayers to extend enrichment. I am extremely disappointed to say we must now begin to take steps to cease enrichment,” said Robert Van Namen, USEC senior vice president and chief operating officer.
“We will continue to meet our customers’ orders from our existing inventory, purchases from Russia under the historic Megatons to Megawatts program and our transitional supply contract with Russia that runs through 2022,” Van Namen said. “In addition, our work to commercialize the American Centrifuge technology continues through our research, development and demonstration program with DOE, which remains on schedule and within budget, as we remain on a path to deploy this critical technology.”
USEC will take steps to cease enrichment at the Paducah plant over the next month and to prepare the plant site for return to DOE. USEC expects to continue operations at the site into 2014 in order to manage inventory, continue to meet customer orders and to meet the turnover requirements of its lease with DOE.
We will be working with DOE during the coming months and expect to reach agreement on how to best transition the site. The company and our workforce have unparalleled expertise that should be drawn on. We can provide significant value to the government in making that transition in the most cost-effective and timely manner,” Van Namen said.
USEC expects to begin reducing its workforce at the plant in the coming months. The Company will begin notifying workers as the specifics of the transition activities are defined. USEC anticipates maintaining a workforce at the site into next year to support ongoing operations, perform transition activities and meet regulatory requirements.
“We want to thank our employees and the entire Paducah community for their efforts to support continued enrichment at the plant. Although the community has known about this possibility for a number of years, we recognize that the Paducah area will soon feel the real impact of this decision and its effects on many individuals and families,” said Steve Penrod, vice president of enrichment operations.
“For 60 years, Paducah employees and the community have supported our national security and energy security. For now, at least, that mission is ending, but we are committed to working with the community and DOE for the smoothest possible transition that positions the plant site for its future role in the area’s economy.
“We want to thank members of the Kentucky delegation and our unions, the United Steel Workers and the Security, Police & Fire Protection Professionals, all of whom have worked tirelessly on behalf of the employees at this plant. We fully expect they will now recommit to helping the community create the next economic chapter for this site.”
USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.
This news release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 – that is, statements related to future events. In this context, forward-looking statements may address our expected future business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “will” and other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For USEC, particular risks and uncertainties that could cause our actual future results to differ materially from those expressed in our forward-looking statements include, but are not limited to: risks related to the ongoing transition of our business, including uncertainty regarding the transition of the Paducah gaseous diffusion plant and uncertainty regarding continued funding for the American Centrifuge project; the expiration of our agreement with Energy Northwest on May 31, 2013 and the impact of actions we will need to take to transition the Paducah gaseous diffusion plant; our ability to reach an agreement with DOE regarding the transition of the Paducah gaseous diffusion plant and uncertatinties regarding the transition costs related to USEC ceasing enrichment at the Paducah gaseous diffusion plant; risks related to the underfunding of our defined benefit pension plans and the impact of the potential requirement for us to place an amount in escrow or purchase a bond with respect to such underfunding; the continued impact of the March 2011 earthquake and tsunami in Japan on the nuclear industry and on our business, results of operations and prospects; the impact and potential extended duration of the current supply/demand imbalance in the market for LEU; our ability to manage the transition costs and other impacts of ceasing enrichment at Paducah; uncertainty regarding the timing, amount and availability of additional funding for the RD&D program and the dependency of government funding on Congressional appropriations; restrictions in our credit facility on our spending on the American Centrifuge project and the potential for us to demobilize the project; limitations on our ability to provide any required cost sharing under the RD&D program; uncertainty concerning our ability through the RD&D program to demonstrate the technical and financial readiness of the centrifuge technology for commercialization; uncertainty concerning the ultimate success of our efforts to obtain a loan guarantee from DOE and other financing for the American Centrifuge project and the timing and terms thereof; potential changes in our anticipated ownership of or role in the American Centrifuge project, including as a result of the need to raise additional capital to finance the project; the impact of actions we have taken or may take to reduce spending on the American Centrifuge project, including the potential loss of key suppliers and employees, and impacts to cost and schedule; the impact of delays in the American Centrifuge project and uncertainty regarding our ability to remobilize the project; the potential for DOE to seek to terminate or exercise its remedies under the RD&D cooperative agreement or the June 2002 DOE-USEC agreement; changes in U.S. government priorities and the availability of government funding, including loan guarantees; restrictions in our credit facility that may impact our operating and financial flexibility; our dependence on deliveries of LEU from Russia under a commercial agreement with a Russian government entity known as Techsnabexport that expires in 2013 and under a new commercial supply agreement with Russia (the Russian Supply Agreement) and limitations on our ability to import the Russian LEU we buy under the Russian Supply Agreement into the United States and other countries; pricing trends and demand in the uranium and enrichment markets and their impact on our profitability; the impact of government regulation by DOE and the U.S. Nuclear Regulatory Commission; the competitive environment for our products and services; changes in the nuclear energy industry; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which are available on our website at www.usec.com. We do not undertake to update our forward-looking statements except as required by law.
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