GE-Hitachi files with NRC for laser enrichment plant

If licensed it will be the 4th uranium enrichment plant slated for start-up by 2014

The clock is ticking on the U.S. Russian “Megatons-to-Megawatts” program which ends in 2013. Once it wraps up there could be as many as four uranium enrichment plants slated for start-up in 2014.

There could not be a clearer signal that investors see the U.S. nuclear industry expanding than the commitments to these four plants which come in at a minimum of $2 billion each. This is not just about replacing the supply of commercial fuel coming from blending down of Russian HEU. It is a series of multi-billion dollar bets that by 2020 the US will have four-to-eight new nuclear plants, or 5-10 GWe, coming into revenue service with as many as another 10-12 (12-15 GWe) in new reactors coming behind in a second wave of construction.

The first fuel loads for new reactors are always the largest buys that a reactor makes so U.S. demand for nuclear fuel will spike significantly during the next two decades. The demand profile in this country will be mirrored in other nations like China, India, and the UK, which also have plans for massive new builds for nuclear reactors.

The latest entry into the commercial enriched uranium market for U235 to 3-5% is Global Laser Enrichment (GLE), a business unit of GE-GHitachi and Cameco, who announced June 30 they submitted a license application to the U.S. Nuclear Regulatory Commission (NRC). The application is for a first-of-a-kind laser enrichment plant based on technology acquired by GE-Hitachi from Silex, and Australian firm. [fact sheets]

Cameco took a 24% stake in the Ge-Hitachi project for $125 million in June 2008. It is one of the world’s largest producers of uranium mostly from mines in Canada. Note that GLE will hold the license for the plant assuming the NRC issues one. The NRC has no experience with licensing a commercial plant using a laser enrichment process so it will fall on GLE to take the agency up the learning curve.

For a technical explanation of the differences between laser enrichment and gas centrifuge uranium enrichment processes, see this blog post by Brian Wang at Next Big Future and his graphic below,

Some of the critical technical issues are how much U235 can be produced in how much time, and how efficient the process is, e.g. tails assay at the end. GE-Hitachi has for proprietary reasons not released any of this information.

Before GE-Hitachi can break ground, the NRC must “docket” the application and complete a 30-month review of safety and environmental issues. Docketing means the regulatory agency must determine that the application is complete. Once that happens, the clock starts ticking on the review process which includes several public hearings.

GE-Hitachi said in a press statement the plant will be built in Wilmington, NC, adjacent to an existing commercial nuclear fuel fabrication plant and the GE-Hitachi nuclear energy business unit which makes and markets the firm’s reactors to global markets.

New plant will seek loan guarantees

In a surprise move the GLE said it will seek federal loan guarantees for its new uranium enrichment venture. This move will put it in direct competition with USEC and Areva both of which are also building new uranium enrichment plants in the U.S. and have applied for the same federal insurance.

Bloomberg wire service reported that the firm thinks it can come out on top in what appears to be a “winner take all” outcome for the $2 billion insurance pot.

Tammy Orr, CEO of GLE, said in a telephone interview with Bloomberg . . .

“We are closely working with the government on the next round of loan guarantees and would be very interested in participating,” Orr said. “We believe nuclear energy is a worthwhile energy to invest in from a stimulus perspective.”

She declined to disclose the project’s estimated cost. However, she noted that the plant would employ 300 workers once built. Assuming there is some basis for comparison between number of permanent employees and plant size, this suggests an initial capacity of approximately 3 million SWU/year. A gas centrifuge plant that size would like cost between $2.5-3.0 billion to build. Because the laser enrichment plant is a first-of-a-kind, there isn’t an industry benchmark to estimate its costs.

GLE is currently building a test-loop for the laser enrichment plant at its Wilmington, NC, facility. The test loop will be used to confirm the commercial feasibility of the technology, help design the plant equipment, and layout production processes with the facility. GLE will make a go/no-go decision to proceed with full construction of the laser enrichment plant based on results achieved at the test loop.

The other three plants already slated production in the U.S. are Louisiana Energy Services (LES) in Eunice, NM, Areva’s Eagle Rock Enrichment Facility in Idaho Falls, ID, and USEC’s American Centrifuge Facility for Piketon, OH. The plants range in size from 2.0-3.8 million SWU/year.

Market share among plants

USEC is the most problematic of the three plants as it has experienced difficulty attracting investors. It has issued formal statements that it cannot build the plant without getting the federal loan guarantee. The other two plants do not have financing issues. LES has not applied for a loan guarantee, but Areva has based on its worldwide need for capital.

Taken together they could account for approximately 75% of the market share of expected demand of 13-15 million SWU in 2014 or about 10-12 million SWU. This would leave three-to-five million SWU on the table. If GE-Hitachi succeeds with its new process, that would be the initial target market share for the firm.

Both LES and Areva has announced plans to double the size of their plants by 2018 as a marketing contingency. Actual construction of the additional plant capacity is relatively straight forward and will depend entirely on domestic and international demand.

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