Report Sees Downside to Uranium Buys From Russia

Buying more than 100 metric tons of weapons-grade uranium from Russia helped U.S. national security but may be hurting domestic producers as the nation’s nuclear power plants become dependent on Russian uranium, congressional auditors said Friday.

In 1993, the United States agreed to a 20-year program of buying highly enriched uranium from dismantled Russian nuclear weapons, imported in a form suitable to fuel commercial reactors.

The Energy Department created the U.S. Enrichment Corp. to handle the purchases, then let the corporation be privatized through a July 1998 public offering that brought the Treasury $1.9 billion.

The Russian government’s counterpart is Technsnabexport, known as Tenex, which processes the uranium and takes the payments.

Congress’ investigative arm, the General Accounting Office, found that a committee of officials from several federal agencies, formed to oversee the uranium purchases, “has not fulfilled all of its responsibilities.”

The Enrichment Oversight Committee had no contingency plan for replacing USEC, as it was instructed to have, when the company considered severing its ties with the Russia deal in 1999. The committee likewise has yet to complete a study of how government purchases of Russian uranium is affecting the U.S. nuclear fuel industry.

The GAO said that study should be done and the United States “should be prepared to either replace [USEC] or to take on the responsibilities itself.”

While the corporation has tried “to balance conflicting commercial and national security interests,” the report said, its stated “priority as a private company is to remain a profitable commercial enterprise and maintain maximum value to its shareholders.”

The 40-page report was requested by House Commerce Chairman Thomas J. Bliley (R-Va.), who is leaving Congress in January.

Undersecretary of Energy Ernest Moniz told the GAO he agrees with some of the report’s broad themes and noted the 1993 agreement has succeeded in removing the equivalent of 4,000 nuclear weapons from Russia since 1995.

“It is a unique agreement that breaks new ground in the relations among nuclear weapons states,” Moniz said.

He said, however, the report “understates” some of the oversight committee’s accomplishments, such as acting to “address domestic market and fuel cycle interests.”

The number of Russian nuclear warheads is expected to drop to 1,000 or fewer within seven years because of treaties and obsolescence. The prospective START III arms-control treaty, which is still to be negotiated, is expected to establish ceilings of 2,000 to 2,500 warheads.

Nuclear power supplies about 20% of U.S. electricity needs. In 1999, about half the 47.9 million pounds of uranium bought by U.S. utilities for commercial reactors came from the United States and Canada. The other half came from overseas sources.

The “growing dependence on Russian-origin material for nuclear fuel” that emerged from the 1993 agreement has prompted worries among industry officials about the United States’ continued ability to produce fuel sufficient for commercial nuclear power plants domestically, the report said.

An oversupply of uranium caused by Russian imports has led to price drops, lower domestic production and decreased employment in the U.S. industry.

From June 1995 through October 2000, the USEC paid Russia $1.6 billion for slightly more than one-fifth of the 500 metric tons of uranium that the United States agreed to buy between 1993 and 2013.

The corporation plans to close its Portsmouth, Ohio, uranium enrichment facility in June, leaving just one plant, in Paducah, Ky. The GAO says that would increase USEC’s production costs and cause reliance on an aging plant that lies in an earthquake zone.

The Energy Department is to spend $630 million over five years to keep the Ohio plant in “cold standby” status to be reopened quickly if needed.