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Disarmament Diplomacy

Issue No. 66, September 2002

News Review

US-Russia Uranium Deal Revived

On June 17, the US Energy Department and the United States Enrichment Corporation (USEC) concluded a new contract allowing a 1993 US-Russia uranium reprocessing deal to proceed. The 'megatons to megawatts' agreement envisages the sale by Russia, over a 20-year period, of 500 tons of highly-enriched uranium (HEU) to be converted into fuel by USEC for sale to the American commercial nuclear power sector. Steeply falling uranium prices since the mid-1990s, coinciding with the controversial privatisation of USEC in 1998, led to years of chaotic negotiations on the fixed prices and conditions specified in the original agreement. The scheme has also been criticised for the risks involved in transporting and storing such large quantities of fissile material, and for dramatically increasing the amount of nuclear material available, and potentially vulnerable, in the US. Proponents counter that the agreement is valuable, in addition to removing from Russia the burden of guarding and dispensing with the HEU, precisely because it ensures a plentiful supply of uranium for the American nuclear industry. See Disarmament Diplomacy No. 63 (March/April 2002), pp. 46-48, for more details.

On June 18, US Energy Secretary Spencer Abraham welcomed the successful outcome of the contract talks with USEC: "With this agreement America accomplishes two very important goals, ensuring our domestic capacity to produce fuel for our commercial nuclear reactors and meeting important nuclear non-proliferation goals by accepting enriched uranium from Russia." A Department press release (June 18) gave more details:

"First, DOE's agreement with USEC will require the company to take delivery of Russian weapons-enriched uranium. Second, USEC agrees to deploy a new advanced technology enrichment plant at Portsmouth [Ohio] (by 2010) or Paducah [Kentucky] (by 2011). Third, USEC must maintain production of enriched uranium at the Paducah Gaseous Diffusion Plant at a level of 3.5 million SWU (the standard unit of measure for enriched uranium fuel) per year. This production level can be reduced only after USEC is within six months of completing deployments of new enrichment technology with a productive capacity of 3.5 million SWU. Finally, the agreement calls for USEC to continue operating the Shipping and Transfer Facility located in Portsmouth for an additional 15 months to remove technetium from a portion of USEC's uranium inventory, thereby saving over half the jobs that could have been lost under USEC's corporate downsizing announced earlier."

A June 19 USEC press release highlighted three aspects of the new arrangements: a "commitment through 2013 to purchase at least 5.5 million SWU annually, which is derived from approximately 30 metric tons of HEU, resulting in the purchase of a total of 500 metric tons"; a "market-based pricing formula that includes a discount from an index of international and US price points, including both long-term and spot prices"; and the expectation that "Russia will receive at least $7.5 billion over the 20-year term of the HEU agreement."

The contract breakthrough was rapidly endorsed by Russia, as a US State Department statement of June 19 made clear:

"The governments of the United States and the Russian Federation have approved a new market-based mechanism for determining the price paid to Russia for reactor fuel derived from highly-enriched uranium. The new market-based pricing mechanism will provide a stable and predictable procedure for implementing the HEU Agreement on a commercial basis that will obviate the need for periodic renegotiation to reflect changing market conditions. ... Shipments [of HEU] began in 1995 and will continue through 2013. To date more than 150 tons of HEU from the Russian nuclear weapons program has been converted to peaceful uses under this initiative."

Reports: DOE inks agreement to ensure domestic uranium enrichment capacity is maintained - nuclear non-proliferation programs in Russia to benefit, US Department of Energy Press Release PR-02-114, June 18; High-tech uranium plant to be built, Associated Press, June 18; Governments approve new USEC-Russian agreement, USEC Press Release (http://www.usec.com), June 19; United States and Russia agree on new contract terms for the highly-enriched uranium agreement, Washington File, June 19.

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© 2002 The Acronym Institute.