What is the difference between natural uranium and dirty laundry? The Laundromat throws the dirty water away while the enricher keeps the depleted uranium. That makes doing the laundry a service while EURODIF keeping the tails makes them a producer of LEU (as opposed to a provider of enrichment services, which I’ve always called them). Strangely enough, I agree with the ruling written by Justice Souter:
A customer who comes to a laundry with cash and dirty shirts is clearly purchasing cleaning services, not clean shirts. And a customer who provides cash and sand to a manufacturer of generic silicon processors is clearly buying chips rather than sand enhancement services. … But the line blurs when the facts get more complicated.
As I mentioned in my post on uranium enrichment, the customers of “enrichment service providers”—as they style themselves—don’t, in general, want the tails returned to them. It costs money to store and to convert back from UF6 to something more storable; neither of which do the nuclear power plants want to bother with. It seems from the Court ruling that if the enrichers dumped the tails down the drain they would be providing a service. Instead, they are taking ownership of the natural uranium, removing an enriched fraction from it, and selling that product to the nuclear power plant. As a final proof, URENCO, at least, has sold some its tails to Russia for further enrichment, demonstrating that the enrichers consider the natural uranium their own. (This, of course, begs the question why the nuclear power plants bear the total cost of supplying natural uranium to the enrichers, or at least that is my understanding. Anyone know for certain?)
Several readers of that post commented on the megatons to megawatts deal with Russia (which I will refer to as the “HEU deal”) and pointed out that as that deal comes to an end, there will be an increased demand for enrichment capability. That, of course, is absolutely true. But the HEU deal doesn’t really have to come to an end. USEC, however, is apparently using the details of the HEU deal to force Russia to sell them the blended down uranium at low prices. In fact, the US managed to word the deal so that they only pay Russia for the separative work units to make the equivalent amount of LEU. They are, in other words, getting the uranium for free. (TENEX, the Russian corporation set up to handle this deal is, by the Supreme Court’s ruling, clearly a service provider.) This is why Russia is not delirious about continuing the deal. So it seems a bit rich for USEC to be suing EURODIF about dumping on the US market.
Maggie Leber | January 28, 2009
Insert obligatory posting decrying misuse of the phrase “begs the question” here.
Matthew Bunn | January 29, 2009
Actually, the United States is not getting the uranium for free. Russia gets paid cash for the enrichment content, and gets paid in natural uranium for the uranium content. In essence, utilities send USEC natural uranium to be enriched, USEC sends them LEU that came from Russia, and then gives Russia title to the uranium from the utilities that USEC didn’t need to use for enriching because it had the LEU from Russia. Russia takes some of the uranium component back to Russia for use there, and markets the rest through a consortium including CAMECO, Areva, and NUKEM, if memory serves.
There are two other reasons why the deal as currently structured is not very profitable for Russia — lower revenue and higher costs than it would have enriching natural uranium to LEU from scratch.
The revenue is lower because the U.S. government will only allow Russia to market this material through USEC, so USEC was able to negotiate below-market prices, so it makes a profit on selling the Russian material. (In other words, Russian sales subsidize uneconomic enrichment using gaseous diffusion in the United States.) Russia has high costs because, in order to dilute impurities in the original HEU, the HEU is not blended with natural uranium, but with 1.5% enriched LEU, which is made by stripping tails, which takes a LOT of SWU; what with that and the costs of dismantling warheads, chopping up the HEU components, oxiding the HEU metal, dissolving it in acid and doing a solvent extraction (to get rid of other impurities), converting it back to oxide, converting it to UF6, and blending it, it ends up being probably higher cost per kilogram than just enriching LEU from scratch.
But there are a variety of options for large-scale downblending of additional HEU that would not require either limiting sales to USEC or blending with 1.5% enriched blendstock, which could potentially be highly profitable for Russia.
NTI has sponssored some very interesting work by Russians at the blending facilities to assess the cost of various options for accelerated blenddown. For my paper on various means to make such an effort profitable for Russia (and to provide other incentives), see http://belfercenter.ksg.harvard.edu/publication/18424
Geoff Forden | January 29, 2009
Thanks for the clarification Matt!
Phil Chaffee | January 30, 2009
Re: getting uranium for free, it might be useful to look at the tail assays under the deal. Under the agreement (and written into US law under the ’96 Usec privatization act), Usec calculates the SWU component of the LEU from Russia at a presumed tails assay of 0.3%. For a long period of time, the average tails in a US SWU contract was well above this, and Usec was therefore able to get free uranium from its customers (it would enter into a contract with them at a tails assay of .32, for instance, take their feed, and then deliver feed to Russia at an assay of .3, collecting the difference). But now that the average industry tails assay is lower, Usec actually loses uranium in the process (but presumably makes up for this in the below-average price it pays per SWU).
bradley laing | February 1, 2009
An article in the Washington Times says “Scholar Selig Harrison” was told the North Koreans have six nuclear weapons.
Power struggle suspected in N. Korea
Pacts severed with the South
Andrew Salmon
Saturday, January 31, 2009