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USEC is deploying the American Centrifuge technology, a gas centrifuge uranium enrichment technology, in the American Centrifuge Plant being built in Piketon, Ohio.
This technology was initially developed by DOE during the 1970s and 80s and successfully demonstrated, but was ultimately not commercially deployed for reasons unrelated to the technology itself.
USEC has modified and improved this technology through the use of modern materials, advanced computer-aided design, digital controls and state-of-the-art manufacturing processes.
Demonstration and manufacturing activities are underway at several facilities located in Oak Ridge, Tennessee. USEC initiated testing of centrifuge components in 2003 and began testing individual prototype machines in highly specialized test equipment in January 2005.
In 2006, the USEC project team at Oak Ridge tested a centrifuge machine that demonstrated performance of about 350 separative work units (SWU) per machine per year. This performance level has been reaffirmed in subsequent testing.
In 2007, USEC's project team froze the design of this prototype centrifuge machine, which is now operating in the Lead Cascade.
In 2008, USEC finalized the initial design for the AC100 machine and released the drawings to its strategic suppliers to begin manufacturing components for the 40 to 50 machines that will be installed in the Lead Cascade in the demonstration facility. This cascade is expected to be operational early in the third quarter of 2009 and is intended to provide additional data on equipment operation and reliability and identify opportunities to further optimize machine and cascade design. The AC100 is designed to produce 350 SWU per year.
Work continues on the design for the value-engineered AC100 machine. In March 2009, USEC completed a second design release for the AC100 series machine, which we refer to as the AC100 Mod 1. This design reflects some value-engineering improvements from the initial AC100 design released in 2008. The company plans to continue its value engineering efforts and other efforts to optimize the machine going forward.
USEC has been conducting a Lead Cascade integrated testing program at the Piketon, Ohio, plant since August 2007. The test program involves the integrated testing of multiple prototype machines in a cascade configuration and has demonstrated the ability to generate product assays in a range usable by nuclear power plants. The centrifuges involved in the Lead Cascade integrated test program have operated for more than 150,000 total machine hours.
USEC is now working to deploy a test cascade of AC100 series machines in Piketon. A multi-stage cascade of AC100 machines is expected to be operational early in the third quarter of 2009. This cascade will be in a commercial plant configuration and operate under commercial plant conditions.
Additional machines will be added to the cascade until it reaches 40 to 50 machines, which is expected late in the third quarter of 2009. This cascade is intended to provide additional data on equipment operation and reliability and identify opportunities to further optimize the centrifuge and cascade design.
The AC100 series centrifuge machine is designed to produce 350 SWU per year. However, the Company expects the first machines in the initial AC100 series cascade will have a throughput somewhat less than 350 SWU per year as USEC continues to optimize the AC100 series machine.
For the same reason, the machines deployed in the first commercial cascade of the American Centrifuge Plant may not achieve 350 SWU per year. However, the Company continues to be confident that the AC100 series machines that are deployed in the commercial plant will achieve an average performance level of 350 SWU per year, supporting an annual SWU production of 3.8 million SWU.
The NRC issued the Construction and Operating License for the American Centrifuge Plant in April 2007 and USEC began construction on the American Centrifuge Plant in May 2007.
The baseline deployment schedule for the plant includes beginning initial commercial operations in 2010 and reaching an annual production capacity at the ACP of 3.8 million SWU per year at the end of 2012. However, USEC has initiated steps to conserve cash and reduce the planned escalation of project construction and machine manufacturing activities until the Company gains greater clarity on potential funding for the project through the DOE Loan Guarantee Program. These steps will increase the cost and extend the schedule for the project.
The successful construction and operation of the American Centrifuge Plant is dependent upon a number of factors, including the availability and timing of financing, performance of the American Centrifuge technology, overall cost and schedule, and the achievement of milestones under the 2002 DOE-USEC Agreement.