BETHESDA, Md., Oct 10, 2006 (BUSINESS WIRE) -- A program to optimize the performance of individual centrifuge machines destined for use by USEC (NYSE:USU) in its American Centrifuge Plant has demonstrated performance levels above the Company's target level of 320 separative work units (SWU) per machine per year.
USEC announced in early August that it had achieved performance essentially at the target level in tests during the spring under sub-optimal operating conditions. In recent weeks, scientists and engineers at the Company's facilities at Oak Ridge, Tenn. have tested a centrifuge machine under more optimal conditions that demonstrated higher than the target level of 320 SWU. Information regarding specific performance beyond the target level is currently classified by the U.S. government.
"These initial test results validate our decision to spend several additional months optimizing the centrifuge machines before building our Lead Cascade," said John K. Welch, USEC president and chief executive officer. "As the optimization work continues, we are gaining confidence that there are additional opportunities for gains in performance. Each incremental SWU that our machines produce helps improve the economics of the project."
The effort to optimize the American Centrifuge machine further will continue during the fourth quarter of 2006 with a goal of freezing the design of the centrifuge before the end of the year. USEC plans to assemble these machines into a group called the Lead Cascade, which will be the first cascade in the American Centrifuge Demonstration Facility located in Piketon, Ohio. The Company expects to have the Lead Cascade installed and operating by mid-2007, which will provide the additional performance and reliability data we need to help confirm the economics of the American Centrifuge program. At the same time, USEC will also continue with further performance optimization and value engineering demonstrations at Oak Ridge in order to achieve lower centrifuge unit costs.
The successful effort to optimize the centrifuge machines has also given USEC additional reliability and performance data that we are reviewing with the U.S. Department of Energy (DOE) as part of our discussion of the October 2006 program milestone. DOE is well aware of our machine performance testing and progress towards starting up the demonstration facility, and we expect to reach a mutually acceptable agreement with DOE regarding upcoming milestones.
USEC continues to update its cost estimate and schedule for deployment of the American Centrifuge. In response to delays over the past year, the Company previously adjusted its schedule for initial operation of the Lead Cascade and is evaluating the impact of this delay on the overall schedule. After reviewing the impact of recent increases in the cost of key materials for the centrifuges and increased cost of commodities that will be used in construction of the balance of plant, USEC believes the cost of the American Centrifuge program will be higher than our previously stated estimate of $1.7 billion. The Company expects to complete its current effort to reset its estimate of cost and deployment schedule by year's end or early 2007.
In August, the U.S. Nuclear Regulatory Commission (NRC) assumed oversight of the demonstration facility from the DOE. This regulatory transition allowed USEC to begin operating centrifuge machines with uranium hexafluoride gas. The Company has a small number of machines installed at the Piketon facility that will help verify cascade configuration and support system functionality. USEC expects to begin introducing uranium hexafluoride gas into centrifuge machines and related systems at Piketon by the end of the month.
The NRC issued its final Safety Evaluation Report for the American Centrifuge Plant in September as a key step in the licensing of the facility. In May, the NRC issued the final Environmental Impact Statement. The NRC will hold a public hearing later this month in Piketon for comment on the Safety Evaluation Report and the Environmental Impact Statement. USEC expects to receive the operating license in early 2007.
This news release contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainty. Economic, business, market, regulatory, technology and other factors could cause USEC's actual future results to differ materially from those expressed in our forward-looking statements. More information about these factors is contained in USEC's filings with the Securities and Exchange Commission, including USEC's annual report on Form 10-K and quarterly reports on Form 10-Q, which are available on USEC's website www.usec.com. USEC does not undertake to update its forward-looking statements except as required by law.
USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.
SOURCE: USEC Inc.
USEC Inc.
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