By Gregory Korte
WASHINGTON – The U.S. Department of Energy will invest $280 million — in a company worth less than half that — to research whether American-made centrifuge technology is commercially viable.
The government said Wednesday it would invest the money in a "cost-shared cooperative agreement" with USEC Inc., which hopes to build 11,500 43-foot-high nuclear centrifuges to process uranium in southern Ohio. USEC would put in $70 million.
Energy Secretary Steven Chu said the deal was intended to "strengthen U.S. national security" while "ensuring strong protections for the American taxpayers." It's the second major government contract that USEC Inc. has secured in a month, after years of frustrated attempts to secure a $2 billion federal loan guarantee for the project.
Shares of USEC were up 25% on the news, closing at 94.5 cents, giving a much needed boost to a company whose stock price puts it in danger of being kicked off the New York Stock Exchange.
When the 120-centrifuge "test cascade" is completed next year, the project "will fully demonstrate that the American Centrifuge technology is ready for commercial deployment," USEC President John Welch said in a statement.
USEC said the research-and-development phase would create 1,000 jobs in southern Ohio, a battleground state in the presidential election, where President Obama said he supported the project in 2008. But the project faltered after the Energy Department put a $2 billion loan guarantee on hold, and some centrifuges were damaged by a power outage a year ago.
The taxpayer subsidy comes with strings attached. Along with its $70 million investment, USEC will relinquish management of the contract to a a subsidiary, American Centrifuge Demonstration LLC, whose board will include contractors Toshiba Corp. and Babcock & Wilcox. And DOE will have an ownership stake in the centrifuges, which will be built using technology owned by the government and licensed to USEC royalty-free after the government privatized the company in 1998.
"Given DOE's track record on USEC it's pretty obvious that they're joined at the hip," said Autumn Hanna of Taxpayers for Common Sense, which has been critical of the project. She called the project a "radioactive version of Solyndra," the California solar panel maker that went bankrupt despite a $535 million federal loan guarantee.
The project is one of the more contentious items in the defense authorization bill being debated in Congress. Supporters, including most members of the Ohio delegation, say it's critical to have a domestic source of uranium enrichment. Critics say the Department of Energy is playing favorites in the marketplace.
The government's purchase of centrifuges damaged in last year's failure "is a complete and total waste of taxpayer dollars," said Rep. Ed Markey, D-Mass. On Tuesday, he called for the Government Accountability Office to investigate what he called "the continued bailouts of a clearly failing company."
Energy OKs $280M for ailing USEC centrifuge project in Ohio (USA Today)
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