Feed Info - USEC Inc. News Releases

BETHESDA, Md. – USEC Inc. (NYSE:USU) has completed construction of its American Centrifuge commercial demonstration cascade.  The 120-machine cascade is the centerpiece of a cooperative research, development and demonstration program (RD&D) with the U.S. Department of Energy (DOE). This program is intended to reduce technical risks and improve the future prospects of commercial deployment of the American Centrifuge technology.

“Completing construction of the demonstration cascade is a major step toward achieving the objectives of the RD&D program,” said Glenn Strausser, director of engineering, procurement and construction for the American Centrifuge project.  “We completed cascade construction with an outstanding safety record, and the RD&D program remains on schedule and within budget. The experience we gained will be invaluable as we move forward with deployment of the full commercial plant.”

“This was a complete team effort between all project areas,” said Dan Rogers, general manager of American Centrifuge Plant operations. “We look forward to completing systems testing and beginning operations to confirm the technical readiness of the American Centrifuge technology.”

Construction activities included preparing the cascade for machine installation, making physical improvements to the facilities, removing existing cascade support equipment and installing new infrastructure systems. The plant operations group has also populated the cascade with its full complement of 120 centrifuges.  With cascade construction complete, the project team will continue system testing in preparation for formal integrated systems testing required before the cascade becomes operational later this year.
 
Cascade construction involved more than 300 workers, including many local union tradesmen who worked more than 150,000 man-hours without a recordable injury or lost-time accident.  The RD&D program as a whole supports more than 1,100 jobs and utilizes more than 160 companies from 28 states.
 
Workers completed more than 700 structural welds, many of which were classified as “Quality Level 1,” requiring rigorous effort and oversight.  Electricians installed 4,000 feet of cable tray, more than 5 miles of conduit and more than 60 miles of cables. 

Background

USEC and DOE are executing a $350 million cooperative RD&D program to confirm the technical readiness of the American Centrifuge technology, the next-generation U.S. uranium enrichment technology. The program is within budget and on schedule to be completed in December 2013.

The RD&D program supports building, installing, operating, and testing commercial plant support systems and a 120-machine cascade that would be incorporated in the full commercial plant of 96 identical cascades in Piketon, Ohio.

The cooperative agreement between USEC and DOE defines the scope, funding and technical goals for the program. The total investment in the program will be up to $350 million, with DOE providing 80 percent, and USEC providing 20 percent of the total. The RD&D program is currently funded through June 15, 2013.  The recently enacted FY2013 continuing appropriations resolution included additional funding for continued work on the RD&D program at an annual rate of $110 million, which is expected to fund the RD&D program through September 30, 2013. The Company will continue to work with Congress and the administration to fund the RD&D program through December 2013 to achieve the remaining program milestones.

An informational video on the RD&D program can be accessed at http://www.usec.com/video/american-centrifuge-investing-americas-energy-future.  You can also view photographs of the full 120-machine demonstration cascade at http://www.usec.com/media/photo-gallery

USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.

Forward-Looking Statements:

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: uncertainty regarding the timing, amount and availability of additional funding for the research, development and demonstration (“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 DOE loan guarantee 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; changes in U.S. government priorities and the availability of government funding, including loan guarantees; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, which is available on our website at www.usec.com.  We do not undertake to update our forward-looking statements except as required by law.

###

Contacts:

Media: Paul Jacobson (301) 564-3399
Investor Relations: Steven Wingfield (301) 564-3354

The 2012 Christmas Gifts for Children Program provided gifts for more than 2,400 children with help from nearly 45 coordinators, 50 employee volunteers (buyers & wrappers), and hundreds of shoppers who selected tags and purchased gifts.

This program was started by site employees in the early 1990s to help provide Christmas presents for area children in need, and Gary Crandall of Fluor-B&W currently serves as president of the organization. Gifts go to children in Pike, Scioto, Jackson, Ross, and Adams Counties, in Ohio, and in Greenup County, Ky.

USEC provided a $1,000 corporate donation for the 2012 program, which was also funded by donations from the X-152 Trailer Complex (Chili Cookoff), USEC Piketon Central Employees, the Fire Department, the PORTS Biggest Loser Contest, the RSI Pampered Chef Fundraiser, NMC&A and these additional business donors: Fluor-B&W Portsmouth, Wastren Advantage, Innovative Solutions, Restoration Services Inc., Washington Township Fire Department, Jefferson Township Fire Department, DKM Construction, Geiger Brothers Construction, Washington Township Fire (Ladies’ Auxiliary), Wise Services, Atomic Credit Union, Value Added Business Services, and Pro2Serve.

Thanks to the USEC coordinators for this year’s program. They included: Lisa Buckle, Jeff Riley, Frankie Dawkins, Angie Rowe, Jennifer Hurd, Kathy Salyer, Rebecca King, Gary Stiffler, Rachele Lawson, Mary Taylor, Rick Mays, Michelle Webb, Veronica Miller, and Matt Sanders.

Mary Taylor (left), USEC Operations, and Christi Gambill, Fluor-B&W, pose with just a few of the presents received for the Christmas Gifts for Children program. Mary was one of 14 USEC coordinators for this year's gift program.

On January 31, Sandy Fout and Rachele Strickland of USEC’s American Centrifuge Plant in Piketon, Ohio, hosted 12 seniors from the Scioto County Career Technical Center’s (CTC’s) engineering program.

The students received a presentation and tour and then met with USEC engineers to discuss their career goals and education paths. Fout, Strickland and fellow USEC engineer Justin Kammer serve as advisors on the Scioto County CTC engineering advisory board.

On January 29-30, Greg Corzine, manager of nuclear safety at the American Centrifuge Plant in Piketon, Ohio, spoke to seven physical science classes (approximately 160 students) at Chillicothe High School. Topics included nuclear power in general, the nuclear fuel cycle, and Piketon activities related to enrichment, conversion, and decontamination and decommissioning.

The school is inviting local professionals to speak about their education and career experiences in an effort to give the students a better understanding of their studies and help them plan their future education and career paths. The school district is moving toward a performance requirement for the teachers to make this type of outside participation a standard practice to improve overall student outcomes.

Dan Rogers, general manager, American Centrifuge Plant Operations, recently presented a USEC donation to Dr. Rita Rice Morris, President, Shawnee State University, in support of Shawnee's 9th Annual Celebration Scholarship Undergraduate Conference scheduled for March 28-29.

This conference features students in baccalaureate programs from different colleges across Shawnee State's campus and visiting from neighboring universities who deliver academic presentations showcasing their projects. Students are sponsored by a faculty member and present the results of their original work in oral and poster presentations before their peers, faculty and the public. Students present work related to research in their field, creative work in the visual and performing arts, community service and study abroad.

"We appreciate the opportunity to again partner with Shawnee State to provide this opportunity for our local students to present their academic work in a formal setting and receive feedback from faculty and scholars in the field," said Rogers. "We also appreciate Dr. Morris and Shawnee State's continued support in providing curriculum to prepare local residents for potential careers at the American Centrifuge Plant."

In 2012, more than 230 students participated as oral or poster presenters.

USEC’s American Centrifuge facility in Oak Ridge recently supported a fundraiser for the ALS Research Foundation hosted by the RUSH Fitness Complex in honor of a nationally recognized fitness colleague of theirs “Augie” who has been stricken with the disease. USEC made a $1000 donation for ALS Research. In return, The RUSH held a special Spin and Small Group Training classes for more than 20 USEC employees. In addition to the corporate donation, USEC employees also contributed another $500 for ALS research.

USEC’s American Centrifuge facility in Oak Ridge purchased 200 valentine gifts of stuffed animals and candy to benefit Oak Ridge Utility District’s Project Safe, a local program offering utility assistance to eligible families during times of extreme need.  On February 14, the valentine gifts were taken to Children’s Hospital in Knoxville by Brenda Shipley, Gayla Hunter and Lana DiFiore to be distributed to hospitalized children.

USEC’s Gayla Hunter and Brenda Shipley present the Valentines gifts to Alexis Nicely, Annual Giving Coordinator, East Tennessee Children’s Hospital

USEC’s American Centrifuge facility in Oak Ridge recently made a donation to the Boys & Girls Club of the Clinch Valley, which serves an active membership of more than 600 youth 7-17 years of age through services and programs.  The club gives youth the opportunity to make new friends, and through its diversified social, athletic, craft, and educational programs gives the chance to learn skills for work and play. Most often, the most important service provided is the enhancement of self-esteem via role models and positive encouragement.

Stephen Eilertson, left, and Bob Eby, right, present USEC’s donation to DJ Jones of the Clinch Valley B&GC.

• Research, development and demonstration program on schedule, on budget
• DOE provides $44.4 million as next increment of funding
• Installation of plant support systems and AC100 machines for RD&D commercial cascade nears completion
• RD&D program employment exceeds 1100 with more than 300 workers added

BETHESDA, Md. – USEC Inc. (NYSE:USU) today provided an update on the American Centrifuge project and the ongoing cooperative research, development and demonstration (RD&D) program. USEC is successfully executing the RD&D program with the Department of Energy (DOE) to reduce the technical risks and improve the future prospects of commercial deployment of the American Centrifuge technology.

During the RD&D program we have built plant control systems, assembled AC100 centrifuge machines and conditioned the machines with uranium gas in our existing lead cascade. Importantly, the RD&D program continues to operate on schedule and on budget. The company has taken a non-cash charge of approximately $1.1 billion for previously capitalized costs related to the American Centrifuge project during the period of 2007 through late 2011. This action has no effect on the RD&D program or the assets that have been transferred to DOE. More information on the non-cash charge is contained in our annual report on Form 10-K filed with the Securities and Exchange Commission and posted on our website.

“We’ve seen solid performance from our team working on the RD&D program and the program remains on budget and on schedule,” said John K. Welch, USEC chief executive officer and president. “We are pleased to see continued broad-based, bipartisan support for the American Centrifuge project due to its importance in meeting national and energy security goals, and the opportunity to create more jobs.”

Welch added, “Our American Centrifuge team is on track to meet program goals and we remain committed to moving forward with commercialization of the technology. We believe that is the path to USEC’s long-term competitiveness in the uranium enrichment business and the best way to maximize value for all stakeholders.”

The RD&D program is being conducted under our Lead Cascade license issued by the U.S. Nuclear Regulatory Commission. We have operated centrifuges as part of our lead cascade test program for more than one million machine hours since August 2007. Through the lead cascade test program, we demonstrate the performance of centrifuge machines, demonstrate the reliability of machine components, obtain data on machine-to-machine interactions, verify cascade performance models under a variety of operating conditions, and obtain operating experience for our plant operators and technicians.

In June 2012, we entered into a cooperative agreement with DOE to provide cost-share funding for the RD&D program. The cooperative agreement provides for 80 percent DOE and 20 percent USEC cost sharing for work performed during the period June 1, 2012, through December 31, 2013, with a total estimated cost of $350 million. DOE’s total contribution would be up to $280 million and our contribution would be up to $70 million.

The cooperative agreement is being incrementally funded, and $177.8 million of DOE funding has been provided. Most recently, $44.4 million was provided this month by DOE transferring the separative work unit component of low enriched uranium to USEC that DOE had previously acquired from us in 2012 in exchange for the transfer of quantities of our depleted uranium tails to DOE. The remaining obligated funding has not yet been authorized and is subject to congressional appropriations, congressional transfer or reprogramming authority to permit the use of DOE funds previously appropriated for other programs, or other sources available to DOE. Although we have adjusted our program spending to accommodate changes to the timing and amount of federal funding, we remain on schedule and budget to complete the RD&D program by the end of 2013. The amount of federal funding made available to date is expected to fund RD&D program activities through mid-June 2013, and we will continue to work with Congress and the administration to fully fund the RD&D program through December 2013 and achieve the remaining program milestones.

Under the cooperative agreement, we and our newly created subsidiary American Centrifuge Demonstration, LLC (ACD) are carrying out the RD&D program. ACD has put in place a program management and enhanced program execution structure, which includes a board of managers who oversees and directs the management of the RD&D program.  The seven-person board is comprised of two independent managers, two managers appointed by USEC, and one manager appointed by each of Babcock & Wilcox Technical Services Group, Inc., Toshiba America Nuclear Energy Corporation and Exelon Generation Company, LLC.

The RD&D program is responsible for 1,175 direct jobs, including 470 in Ohio and 430 in Tennessee. Approximately 320 jobs have been added in recent months as a result of the program. The RD&D program also supports jobs at 169 companies from 28 states.

The cooperative agreement includes technical milestones for the RD&D program. The first two technical milestones have been achieved and certified by DOE. On March 15, 2013, we amended the cooperative agreement with DOE to provide for additional incremental funding.  As part of that amendment, we added four new milestones related to specific testing requirements associated with the test program we developed with DOE for the RD&D program.  The original remaining milestones have a milestone date of December 31, 2013, tied to the completion of the RD&D program. The new milestones have milestone dates beginning as early as May 15.  In addition, the cooperative agreement contains non-binding performance indicators that are designed to be achieved throughout the RD&D program and ensure that the RD&D program is on track to achieve the milestones and other program objectives.

Under the agreed upon test program, construction activities for the new demonstration cascade required the suspension of machine operations for several months since late 2012. During this period we have removed existing cascade support equipment, constructed new infrastructure equipment and will soon be conducting integrated systems testing.

Manufacture and assembly of AC100 machines is continuing and may continue through the end of the program. Centrifuge operations and testing is also continuing at our test facility in Oak Ridge during this construction period. The new plant systems and other equipment have been installed and testing has begun, AC100 machines are being installed and we expect to operate the demonstration commercial cascade in the second half of 2013.

We are working with our strategic suppliers to maintain the manufacturing infrastructure developed over the last several years. However, we are constrained by our reduced level of spending. The RD&D program provides for the continued production of AC100 machines, which helps our suppliers gain additional cost experience and familiarity with the manufacturing process. Although we have delayed high-volume production of the AC100 machines, our strategic suppliers have demonstrated flexibility and initiative to keep the project moving forward. However, we face challenges with ensuring the ability and willingness of our strategic suppliers to continue at low rates of production for a prolonged period of time absent greater certainty on funding for the project and a definitive timeline for full remobilization.

Significant additional financing is needed to complete the American Centrifuge Plant (ACP).  Potential sources of financing include:

• We applied for a $2 billion loan guarantee for the project under the DOE Loan Guarantee Program in July 2008.  We continue to pursue a DOE loan guarantee and are planning to update the DOE loan guarantee application for the project during 2013.
• We have also had discussions with Japanese export credit agencies regarding financing up to $1 billion of the cost of completing the ACP, with such potential financing predicated on the project receiving a DOE loan guarantee.
• We also expect to need at least $1 billion of capital for the project in addition to the DOE loan guarantee and the Japanese export credit funding.  The amount of additional capital is dependent on a number of factors, including the amount of any revised cost estimate and schedule for the project, the amount of contingency or other capital that DOE, Japanese export credit agencies or investors may require, and the amount of the DOE credit subsidy cost that would be required to be paid in connection with a loan guarantee. We currently anticipate the sources for this capital to include cash generated by the project during startup, available USEC cash flow from operations and additional third party capital.  We expect the additional third-party capital would be raised at the project level, including through the issuance of additional equity participation in the project.

We have no assurances that we will be successful in obtaining this financing, and if successful, our ultimate ownership share of the project will likely be reduced as a result of raising equity and other capital to deploy the project.  USEC issued its annual report on Form 10-K today and the report provides additional information on the company’s efforts to commercialize the American Centrifuge technology, including risks and uncertainties. The Form 10-K can be found in the Investor Relations section at www.usec.com . An informational video has also been posted on the USEC website that provides a visual update on the RD&D program. The video can be accessed at http://www.usec.com/video/american-centrifuge-investing-americas-energy-future.

USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.

###

Forward-Looking Statements

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: uncertainty regarding the timing, amount and availability of additional funding for the research, development and demonstration (“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 DOE loan guarantee 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; changes in U.S. government priorities and the availability of government funding, including loan guarantees; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, which is available on our website at www.usec.com.  We do not undertake to update our forward-looking statements except as required by law.

Contacts:

Media: Paul Jacobson (301) 564-3399
Investor Relations: Steven Wingfield (301) 564-3354