July 31, 2014
UPDATE: This article has been updated to include comment from the Uranium Producers of America.
Converdyn says it will press on with a legal challenge against the Department of Energy (DoE) after a federal judge this week denied a temporary injunction to stop the department's uranium barter program. Converdyn is the USA's sole uranium conversion company.
Denver, Colorado-based Converdyn - a general partnership between affiliates of Honeywell and General Atomics - filed for the injunction against DoE in June, claiming it is losing $10 million a year in potential revenue.
"Converdyn put forth strong arguments and evidence that the DoE's actions have caused harm to the US conversion industry, contrary to federal law," Honeywell spokeswoman Nina Krauss told World Nuclear News on 31 July.
"While we are disappointed in the judge's decision to deny a temporary injunction, the hearing was only the first stage of this legal action and we are encouraged that the formal proceedings will be expedited. The company firmly believes the law is on its side in this matter and it will prevail in this legal action," Krauss said.
The federal court decision is good news, however, for Fluor-B&W Portsmouth – DoE's contractor for the decontamination and decommissioning of the Portsmouth Gaseous Diffusion Plant in Piketon, Ohio. If Federal Judge Reggie Walton had granted an injunction blocking the sale of uranium, the 2000-strong workforce at Piketon would have been cut to about 650 employees, according to a report in Ohio newspaper the Chillicothe Gazette.
The Piketon plant is authorized by DoE to sell a predetermined portion of the inventory on the open market for use as fuel in nuclear power reactors. The remaining uranium inventory at the Piketon plant generates 70% of the clean-up project's funding, while the rest comes from federal appropriations. Piketon's uranium inventory could be depleted by 2016.
Walton will issue a formal written opinion within 30 days, outlining in detail the basis for his ruling, Krauss said. In the meantime, the government and Converdyn have begun working on a joint proposed schedule for formal proceedings, with the starting date for those yet to be decided, she said.
Morris Township, New Jersey-based Honeywell argues that, under federal law, DoE is prohibited from making any such transfers unless the secretary of energy determines those transfers will not have an adverse material impact on the US nuclear industry. The act also specifies that DoE must receive fair market value for the material.
Converdyn "has repeatedly provided information to DoE demonstrating that the transfers would and do have a substantial adverse impact on the domestic conversion industry, in part because the government will receive less than fair market value," Krauss said.
"Even though Converdyn's position is supported by economic analyses prepared by DoE's own expert consultants, DoE elected to proceed with the transfers without explanation. The US Government Accounting Office has questioned this practice, noting in one report that the sales 'did not comply with federal fiscal law'", she said.
In June, the GAO questioned the legality of four transactions involving DoE and uranium enrichment company USEC that took place in 2012 and 2013. Three of them involved the transfer of depleted uranium tails or low-enriched uranium between DoE and USEC, providing USEC with operating cash to support the development of next-generation centrifuge technology in the period running up to the closure of the Paducah gaseous diffusion enrichment plant in May 2013.
Former US secretary of energy Spencer Abraham has openly criticised the Administration and both Houses of Congress for recent decisions that impact the commercial markets for nuclear fuel goods and services. Abraham is now chairman and CEO of The Abraham Group, an international strategic consulting firm based in Washington D.C.
Abraham wrote a damning critique on 3 July of a study conducted by Energy Resources International (ERI) for DoE's Office for Nuclear Energy and issued in April 2012. The study estimates that only 15% of conversion services, or 3000 tU, are purchased on the US spot market. Abraham wrote that DoE barters would account for 67% of that spot demand "and thereby swamp it".
This, and other "infirmities" in the ERI study, indicate that the Administration's "overriding concern" is to help US uranium enrichment company USEC, he wrote.
The Uranium Producers of America (UPA) said it is confident Converdyn will win its lawsuit.
"It is in everyone’s interest to stop DoE from dumping uranium on the market"
"To fund ongoing decommissioning and clean-up work, the Department is selling uranium from the federal inventory. While we are not opposed to these projects, the Department is now selling more uranium than the entire domestic industry produces in a year. This hurts our industry and violates the law," Scott Melbye, UPA president, said on 31 July.
DoE's own market analysis concludes these transfers will result in an 8% drop in the uranium spot price, a 12% cut in the conversion market price, and additional job losses, said Melbye.
"The domestic uranium industry is struggling to survive. Uranium prices are at a level not seen since 2005. We have lost half our workforce, and our production costs far exceed the current spot market price," he said.
"As uranium prices have fallen, the Department is selling more uranium and raising less money, putting more than 700 jobs at risk at the Portsmouth, Ohio decommissioning site. Lower uranium prices mean fewer jobs – fewer uranium jobs and fewer decommissioning jobs. It is in everyone’s interest to stop DoE from dumping uranium on the market," he said.
The Administration failed to request full funding for these projects in the appropriations process, he said.
"Despite what the Department might claim, this is not a choice between protecting the uranium industry and saving jobs in Ohio. We are confident the Department can find $160 million in a $27 billion budget to fully fund the cleanup, limit transfers, and fulfill its statutory mandate to protect the domestic uranium industry," he said.
Current UPA members are: Cotter Corporation; Crow Butte Resources, Inc; Energy Metals Corp; International Uranium Corporation; Laramide Resources Ltd; Mestena Uranium LLC; Power Resources, Inc; Strathmore Minerals; Uranium Resources, Inc; and US Energy.
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by World Nuclear News