Terms of The Program
Under the terms of the 1993 government-to-government nuclear non-proliferation agreement, the United States and Russia agreed to commercially implement a 20 year program to convert 500 metric tons of HEU (uranium 235 enriched to 90 percent) taken from Soviet era warheads, into LEU, low enriched uranium (less than 5 percent uranium 235). The terms of the agreement required that it be implemented on commercial terms withough government funds. The United States established a government corporation United States Enrichment Corporation (USEC), and the Russian Federation designated Tekhsnabeksport (“Tenex”) a commercial subsidiary of its Ministry of Atomic Energy (MinAtom), as their agents to implement the program on commercial terms. The terms also required that the HEU be converted by dilution (downblending) to LEU in Russian nuclear facilities. USEC would then purchase the low enriched fuel and transport it to its facilities in the USA. The value of the process is in two components: The uranium itself and the work involved in the conversion process, measured as Separative Work Units (SWU). Both have separate commercial values. Early disagreements on interpretations of the terms of the governmental and commercial agreements on this issue led to controversy and some delays. Although each shipment contains LEU, the commercial nature of the global uranium market defines the uranium and the enrichment components as separate commercial values and costs. The solution reached was for USEC to continue payments for the SWU component it purchased and also to transfer an equal amount of natural uranium to Tenex. Due to the initial technical and purity issues in the HEU to LEU conversion process, the first shipments began in 1995. USEC includes this Russian LEU in sales of low enrichment uranium produced at USEC facilities. As years passed, numerous commercial contract terms were renegotiated and revised to accommodate mutual interests.
Based on market prices, USEC estimates that by the completion of the 20 year Megatons to Megawatts program in 2013, USEC will have paid Russia more than $8 billion for its purchases of the SWU component in shipments of low-enriched-uranium fuel.
Read more about this topic: Megatons To Megawatts Program
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