Cameco enters uranium enrichment business in US

The world’s leading uranium miner, Cameco (CCO-T, CCJ-N) of Saskatoon, Sask., is joining a uranium enrichment business venture in the United States.

Through a subsidiary, the company will pay GE Hitachi Nuclear Energy (GEH) US$123.8 million for a 24% interest in Global Laser Enrichment (GLE). The remainder of GLE, based in Wilmington, N. C., is owned indirectly by General Electric (GE-N) (51%) and Hitachi (HIT-N) (25%). General Electric produces fuel bundles in Wilmington.

Uranium occurs in nature as a mixture of two isotopes, about 99% of uranium 238, and about 1% of uranium 235. Most nuclear reactors use fuel that is 3-5% uranium 235, so natural uranium has to be enriched to this level. Conventional enrichment methods include centrifuge and gaseous diffusion.

GLE is developing a third-generation uranium enrichment process using laser technology to enrich uranium. The company is working on commercial facility licensing activities to support its projected startup date of 2012 and expects to achieve commercial production in 2013. GLE would be responsible for marketing all the enrichment services from Wilmington.

Uranium enrichment is a key step in the process of producing fuel for light water nuclear power plants. Cameco is currently involved in all steps of the nuclear fuel cycle leading up to uranium enrichment, including the production of uranium hexafluoride — the form of uranium used by enrichment plants.

Cameco and GLE have also signed an agreement to pursue and collaborate on complementary business opportunities in the front end of the nuclear fuel cycle. Specifically, the parties may choose to market uranium and enrichment services together to satisfy potential customer demand for bundled services.

In a statement, Cameco president and CEO Jerry Grandey said the deal expands Cameco’s interests in the nuclear fuel cycle, and allows it to collaborate with GE-Hitachi, taking advantage of synergies. Cameco is using its existing credit facilities to fund the acquisition. The company does not expect to spend more on development and commercialization relating to GLE until 2010.

GLE has exclusive rights to develop, commercialize and launch the technology on a global basis under a 2006 agreement with the original developer, the Australian company Silex Systems (SILXY-O, SLX-A). The next important milestone for the technology is the test loop phase, anticipated to begin late this year. The process is intended to verify performance and reliability data needed to support building a commercial-scale enrichment facility.

Cameco says that the demand for enriched uranium is projected to increase significantly in the next decade with the anticipated construction of a new generation of nuclear power plants. One of the main competitors of GLE is Bethesda, Md.-based USEC (USU-N), which is constructing the American Centrifuge plant in Piketon, Ohio.