Sep. 28, 2009 (Business Wire) -- USEC Inc. (NYSE:USU) is providing an update on the status of deployment of the American Centrifuge technology following an agreement with the Department of Energy in early August to delay final review of USEC’s loan guarantee application to build the American Centrifuge Plant (ACP) in Piketon, Ohio.
Following DOE’s decision, USEC began demobilizing the project in August. In parallel, the Company is continuing American Centrifuge demonstration activities, evaluating how best to configure the project on a go-forward basis, and seeking to reduce technical and financial risk for the project.
“During the past two months, we have been preparing an action plan that balances a demonstration of commercial, production-ready centrifuge machines with our need to preserve cash. We previously made it clear that absent a loan guarantee, we would take action to ensure that we have adequate liquidity for our ongoing operations, and we have done so,” said John K. Welch, USEC president and chief executive officer.
“This has been a challenging time for the American Centrifuge program as we had to demobilize the project at a point when we had expected to be ramping up towards commercial operation,” Welch said. “Approximately 1,000 USEC employees and team members working for our strategic suppliers have lost their jobs in recent weeks. This has been a difficult decision for USEC and no doubt a painful one for the affected individuals. We appreciate their hard work and dedicated effort to rebuild America’s industrial base and to support the deployment of this American technology to fuel our nation.
“We continue to believe in the American Centrifuge technology and we are working to address the issues that concerned DOE so that we can update our application to the Loan Guarantee Office in early 2010,” Welch said. “Upon resolution of DOE’s issues, we will ask the Loan Guarantee Office to act promptly on our application.”
Lead Cascade Testing Program Update
USEC continues its lead cascade testing program in Piketon. The prototype centrifuges operating there for more than two years have accumulated more than 265,000 machine hours. Data from this testing program has provided valuable assembly, operating and maintenance information, as well as operations experience for the American Centrifuge staff. The prototype machines continue to operate.
We refer to our production centrifuge machine design as the AC100 series machine. USEC’s suppliers assembled approximately 40 AC100 series machines over the summer and initial AC100 cascade operations were planned for the third quarter. However, our project team determined that at least some of the machines were not assembled in full compliance with the specified drawings and procedures. As a result, we initiated a stand down from our operation of the AC100 cascade in order to remove, disassemble and inspect all of the AC100 machines. We are taking advantage of the machine disassembly to install improved components that were incorporated in the design finalized earlier this year. These enhanced machines are production-ready and would be deployed in the commercial plant. We subsequently enhanced procedures to ensure compliance with our quality assurance program for centrifuge component manufacturing and assembly. We expect to restart lead cascade testing of AC100 machines by early 2010.
Demobilization Update
As previously noted, USEC began demobilizing the project in early August. Construction work on the plant infrastructure and finalizing the balance-of-plant design ceased in August. The plant design work is approximately 80 percent complete and would be resumed following a decision to remobilize the project. Machine part manufacturing efforts have also been affected.
