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USEC's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Allow me to provide a few details why these two agreements were important accomplishments. Starting first with the extension of enrichment operations at Paducah, this agreement is somewhat complex but works well because it’s a win for everyone involved. Under the agreement, USEC is feeding depleted uranium tails into the Paducah plant rather than using a natural uranium feedstock. These tails are from DOE operations during the 1980s and this by-product material contains higher amounts of the valuable U235 isotope than the depleted uranium by-product we’ve generated in recent years.

The government consider this tails material to be a liability to be disposed of sometime in the future. These leaded uranium tails have been transferred from DOE to Energy Northwest and much of the material has already been provided to USEC. Over the next 10 months, USEC will deliver low enriched uranium to Energy Northwest which in turn will transfer much of that LAU to the Tennessee Valley Authority over a couple of years.

Customers of Energy Northwest and Tennessee Valley Authority will benefit from lower cost nuclear fuel in future years. TVA also benefits from significant electricity sales to USEC during the next year. DOE will benefit because TVA reactors using our fuel will provide DOE with tritium, which is a radioactive isotope used in our nation's national security programs. Tritium for these programs must come from U.S. sources and DOE now has secured additional tritium supply for our national security needs until the American centrifuge plant can serve that role.

A contract also maintains jobs for more than 1000 USEC employees in Kentucky. USEC benefits from the additional SWU sales that will generate cash flow and positive gross profits. Under the contract with Energy Northwest, enrichment operations will continue at the plant through next May. That will provide time for USEC and DOE to plan for Paducah’s orderly transition.

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