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Nuclear News - 02/07/00
RANSAC Nuclear News, 07 February 2000


A.  CTR

    1. US Urged To Closely Eye Russia Nukes, H. Josef Hebert,Associated Press (02/06/00)
    2. Russia Says Lagging In Chemical Weapon Destruction,Reuters(02/07/00)
B.  Nuclear Power Industry
    1. Strike Postponed for Two Weeks at Leningrad NPP, Bellona(02/05/00)
C.  HEU
    1. Stock Downgrade May Be Loophole, Joe Walker, The PaducahSun (02/05/00)
D.  Plutonium Disposition
    1. Moscow Takes Step to Ease U.S. Fears on Plutonium Use,Judith Miller, New York Times (02/07/00)

A. CTR

1.
US Urged To Closely Eye Russia Nukes
        H. Josef Hebert
        Associated Press
        February 6, 2000
        (for personal use only)
 
WASHINGTON (AP) - U.S. efforts to keep Russia's nuclear weaponsmaterialaway from rogue nations or terrorists may fail without increasedgovernmentmoney and attention, a bipartisan group of foreign policy experts warns.

The report examined the worldwide threat posed by the potential theftof nuclear materiel from Russia's haphazardly protected stockpiles. Iturges immediate action by the White House and Congress to expand the U.S.assistance program - or face a possible catastrophe.

President Clinton, in his fiscal year 2001 budget being releasedMonday,will seek sizable increases in money for the safeguard programs, accordingto administration sources.

Ensuring the safety of hundreds of tons of Russian plutonium and highlyenriched uranium is among the most daunting post-Cold War challenges ata time of political and economic turmoil in Russia.

The foreign policy experts urged that the United States buy $1 billionmore of highly enriched uranium from Russia.

Washington also should step up efforts to help consolidate the morethan 1,000 tons of plutonium and uranium now scattered in 300 buildingsand 50 sites across Russia, according to the 117-page report by the Centerfor Strategic Studies, a leading Washington foreign policy think tank.

``The possibility that the essential ingredients of nuclear weaponscould fall into the hands of terrorists and proliferating states is alltoo real,'' the report warns.

The study was based on findings by leading foreign policy and nuclearweapons proliferation experts, including former senior officials from pastDemocratic and Republican administrations.

``We must take action to prevent a catastrophe,'' said former Sen. SanNunn, D-Ga., the group's chairman who also heads the center's globalnuclearmaterials management program.

Since 1992, the Energy Department has spent about $1.2 billion onvariousprograms related to protecting Russian nuclear materiel. Among them:helpingRussian nuclear scientists find jobs, improving physical safeguards atnuclear facilities and reducing the stockpile of weapons-grade uraniumand plutonium.

Still, one of the report's authors, Matthew Bunn, said the money setaside for these programs is ``woefully insufficient,'' and more spendingwould be ``tiny in comparison to the cost and risks of failure to act.''

``For the cost of one B-2 bomber (about $2 billion), we might get allthe excess bomb uranium in Russia blended to a form that could never againbe used in weapons,'' said Bunn, a nuclear proliferation expert atHarvard'sJohn F. Kennedy School of Government.

He cautioned that ``the window for cooperation may be closing'' becauseof increased hostility in Russia toward the West. ``It is clear alreadythat the atmosphere for sensitive nuclear cooperation is much worse todaythan it was in 1992 and 1993,'' said Bunn in an interview.

The theft of just a few pounds of highly enriched Russian uranium orplutonium ``could allow a rogue state or terrorists group to acquire anuclear capability, posing a severe threat to the internationalcommunity,''the study said.

The ``lack of sufficient funding and senior leadership attention onthe U.S. side are among the major factors preventing faster and moreeffectiveactions to reduce these serious security threats,'' the report continued.

Rose Gottmoeller, the Energy Department's assistant secretary in chargeof the programs, said she hopes the report will increase attention on theissue.

``We've been chipping away at this problem steadily for eight years.But there's a lot more work to do,'' Gottmoeller, a member of the expertpanel, said in an interview.

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2.
Russia Says Lagging In Chemical Weapon Destruction
        Reuters
        February 7, 2000
        (for personal use only)

MOSCOW, Feb 7 (Reuters) - Russia is lagging behind on a pledge todestroyits chemical weapon stockpile due to a lack of money, a cabinet ministerwas quoted as saying on Monday.

Russia, which is thought to own the world's largest chemical weaponsstockpile, ratified an international chemical arms ban in 1997, obligingit to destroy the whole arsenal and convert production facilities topeacefuluse before 2007.

But Deputy Prime Minister Ilya Klebanov was quoted as warning that ithad fallen behind on an interim schedule to destroy one-fifth of itsstockpile,put at 40,000 tonnes of chemical weapons in 1997.

"By April 2002 we need to have destroyed around 20 percent of ourchemicalweapons. At the moment we are lagging behind that timetable," Itar-Tassnews agency quoted him as saying.

Interfax news agency quoted Klebanov, who oversees the defenceindustry,as saying this was due to a lack of funds.

Klebanov said he had discussed the matter with Acting PresidentVladimirPutin and proposed a revised timetable for destroying weapons to enableMoscow "to catch up".

When Russia ratified the chemical weapons ban, officials estimated thedestruction would cost $5 billion over 10 years.

Russian government experts said at the end of last year it would costabout $110 million just to convert the 24 sites across Russia capable ofproducing chemical weapons. They said Moscow could only pay 10 percentof that bill.

Italy agreed last month to give Russia $8.3 million to help buildinfrastructurefor destroying chemical weapons.

Russia's chemical weapons facilities are capable of producing botholderweapons such as mustard gas, used in World War One, and modern nerveagentssuch as sarin.

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B. Nuclear Power Industry

1.
Strike Postponed for Two Weeks at Leningrad NPP
        Bellona
        February 5, 2000
        (for personal use only)

Strike at Leningrad nuclear power plant has been postponed again. Thenew date set by the labour union for the action that assumes reductionof power output at the plant's three active RBMK reactors is February 19.The employees of the plant demand 50 per cent salary raise while theadministrationsays it can manage only 10 per cent. The workers of the plant is currentlyhaving a meeting that has been lasting for the past 48 hours at the NPP'sadministration building and say they will not dissolve it until theNuclearEnergy Minister, Yevgeny Adamov, arrives to the plant to seek compromise.

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C. HEU

1.
Stock Downgrade May Be Loophole
        Joe Walker
        The Paducah Sun
        February 5, 2000
        (for personal use only)

A downgrading of USEC Inc. stock below investment grade appears morethan coincidental and could signal the shutdown of a uranium enrichmentplant, says a union official who has been closely tracking USEC since wellbefore it became a publicly traded company two years ago.

On Friday, Standard & Poor's dropped USEC stock to abelow-investmentgrade of BB+, which signals analysts' serious concerns over the futureof the financially troubled company. The drop came a day after the USECboard of directors announced major cost-cutting moves - eliminating 850jobs at plants in Paducah and near Portsmouth, Ohio; buying back 20millionshares of stock; cutting USEC's dividend in half; and drastically loweringearnings projections.

Richard Miller, Washington-based policy analyst for the plants' atomicworkers' union, said the rating devaluation gives USEC a loophole to shutdown one of the plants without violating a federal mandate. When USEC wasprivatized in July 1998, it signed an agreement with the U.S. Treasuryto keep the plants running until 2005 unless certain "significant events"occurred.

One loophole is that the long-term corporate credit rating of the firm"is or is reasonably expected in the next 12 months to be downgraded belowan investment grade rating," the agreement says.

"That would remove them from the obligation to run both plants," Millersaid. "It looks to me like an immediate and calculated effort, based onmy conversations with people before and after the board meeting."

Miller, who declined to reveal his sources, said they told him to watchfor certain financial developments.

"They (USEC executives) knew before they took this action what thecreditrating was going to be," he said. "It looks to me like a calculated efforton their part to provide themselves with additional flexibility from amanagement point of view by seeking to remove the obligations of theTreasuryagreement."

USEC spokeswoman Elizabeth Stuckle acknowledged that the rating haddipped below investment grade, but would not respond directly to Miller'sallegations or plant-closure speculation.

"We're focused on implementing the initiatives we announced(Thursday),"she said. "We're analyzing the Standard & Poor's downgrade."

Stuckle said after the board action Thursday that no decision had beenreached to close a plant and none of the significant events had takenplace.

The company blames low prices for enriched uranium, declining salesand higher production costs stemming from a glut of Russian enricheduranium.As a federally mandated agent, USEC is paying more for the Russianmaterial- $8 billion worth blended down from dismantled nuclear warheads - thanthe Paducah and Portsmouth plants can produce it for.

To balance production with anticipated purchases of Russian uranium,USEC will decrease output to about a quarter of each plant's capacity inthe next fiscal year, starting Oct. 1. The firm says the resulting jobcuts will save about $39 million annually amid growing global oversupplyof enriched uranium and strong foreign competition.

USEC said it will cut its $1.10 annual dividend in half as of March15 and buy back 20 million additional shares (for nearly $120 million attoday's prices) by June 2001. Last year, USEC authorized buying back 10million shares. Its stock has plummeted from $14.25 a share in July 1998to less than $6, but its dividend has been much higher than other firmsin the utilities industry.

USEC hopes that eliminating jobs, buying back stock, and negotiatingfor lower Russian uranium and plant power costs will help improve itssaggingeconomic situation. It earned $32.6 million during the last quarter, anincrease of $1.5 million, but predicts "substantially lower earnings nextyear compared with the current fiscal year."

Miller said USEC wants help from the Department of Energy and laborunions to help prop up the sagging company and ease the effects of jobcuts. There is much blue-collar skepticism because of the huge salariesthat USEC senior managers are earning (Chief Executive Officer WilliamH. "Nick" Timbers Jr. earned $2.4 million in salary and stock last yearand will be paid $1.2 million this year) and no specific commitment byUSEC to cut jobs at its Bethesda, Md., headquarters, he said.

"I suppose we will help," he said. "But the general reaction I'mgettingis we're prepared to do that as long as Nick Timbers is the first personto get a pink slip."

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D. Plutonium Disposition

1.
Moscow Takes Step to Ease U.S. Fears on Plutonium Use
        Judith Miller
        New York Times
        February 7, 2000
        (for personal use only)

In a major agreement aimed at safeguarding nuclear fuel that could beused to make weapons, Russia has promised to stop making plutonium outof fuel from its civilian power reactors as part of a $100 million jointresearch and aid package from the United States, Clinton administrationand Russian officials say.

While the administration has several collaborative programs thatenhancethe safety and security of plutonium produced by Russia's military, thisis the Energy Department's first major attempt to secure Russia's hugecivilian stockpile of plutonium, from which 3,000 nuclear weapons couldbe made.

"It's a bold initiative to reduce a 30-ton plutonium threat fromRussia'scivilian nuclear sector," Secretary of Energy Bill Richardson said in atelephone interview. His department is to make public Russia's moratoriumon plutonium reprocessing today when it unveils its budget for the nextfiscal year.

Administration officials and arms control experts were particularlypleased with the deal, more than a year in the works, because it comesat a time of growing strains in relations with Russia over its war inChechnya,policy toward Iraq, and access to Russian nuclear facilities.

The agreement is also likely to place added pressure on other nuclearpowers like Japan, Britain and France to follow suit, arms control expertssaid. Because of concerns about the environment and the spread of nuclearmaterials to countries like Iran, Iraq and North Korea, the United Stateshas not reprocessed fuel since 1978.

Part of the accord -- $25 million for long-term joint research thatis most attractive to Russia -- is contingent on an end to new sales andtransfers of nuclear technology to Iran. Washington believes that thosetransactions are helping Tehran acquire nuclear weapons.

"The money for this research will be in our budget," said Ernest P.Moniz, the Undersecretary of Energy, who was in Moscow last week todiscussthe agreement. "It's now up to Russia to decide if they want it."

But the bulk of the money will be given in exchange for Russia'sdecisionto halt reprocessing nuclear fuel from its 29 civilian power reactors.That will include, if Congress approves, $45 million to better securespentfuel already stored at Mayak, a once closed nuclear complex in thesouthernUrals, and to build a large dry storage site elsewhere in Russia.

Yevgeny Adamov, Russia's atomic energy minister, insisted in atelephoneinterview from Moscow that despite the agreement, Russia would not stopcompeting to sell new light-water power reactors to Iran.

At the same time, he said, Russia has lived up to the commitments madeto Washington last year not to provide sensitive material or technologyto Iran. But it was willing in principle to discuss additional safeguardsand "more commitments for greater transparency to remove Americanconcerns."

Mr. Adamov also stressed that Russia was not abandoning its belief thatplutonium, which is produced by all nuclear reactors, could eventuallybe used to fuel a generation of "safe" reactors, not yet developed, thatwould produce waste more difficult to recycle into weapons.

"We're talking in terms of decades," for the moratorium on plutoniumreprocessing, he said. "At least two may be enough."

Russia, officials said, already possesses about 150 metric tons ofplutoniumand 1,200 metric tons of highly enriched uranium, both of which can beused in nuclear weapons.

Given that, said Thomas Graham Jr., a former arms control negotiatorwho now is president of the Lawyers Alliance for World Security, an armscontrol group in Washington, "it is important to stop the accumulationof material that some rogue nations would love to get their hands on."

"This is a very important agreement," he added.

In 1998 alone, Energy Department officials said, Russia's 29 civilianreactors produced 798 metric tons of spent fuel. Normally, Russia wouldsend this material to Mayak for reprocessing -- that is, the separationof plutonium, which can be used in weapons, from the rest of the fuel.

But under the new agreement, the plutonium will not be separated out.Instead, the unreprocessed material will be stored at a new site somewherein Russia that the United States will finance.

The location and ultimate cost of the site are still not determined,but Mr. Adamov said he was leaning toward Krasnoyarsk-26, a once closednuclear city where the Russian military made plutonium.

William C. Potter, the director of the Monterey Institute's Center forNonproliferation Studies, in California, particularly praised anallocationof $3 million in the aid package aimed at helping Russia reacquireSoviet-erafuel from countries like Belarus, Ukraine and Yugoslavia. He fears thatthe material is vulnerable to diversion or military use.

Since the end of the cold war, the United States has spent billionsof dollars to protect nuclear materials in Russia and the former SovietUnion and to prevent them from falling into the hands of Iran, Iraq orother aspiring nuclear powers. As of this year, Washington has spent about$1.2 billion to help prevent the loss or theft of material that could beused in nuclear weapons.

At Mayak, the United States is already financing the construction ofa warehouse to protect bomb-grade plutonium extracted from nuclearwarheads.A recent American visitor there said that some plutonium was still beingstored in milk-pail-size canisters in a wooden storage shed secured mainlyby a padlock.

Since 1993, Washington has bought 500 metric tons a year of highlyenricheduranium from Russian weapons, sales worth more than $400 million a yearto Russia. The uranium, which is blended down and sold as reactor-gradefuel for power production, meets about half of America's nuclear powerfuel requirements.

The new aid package for Russia would provide $45 million for the drystorage site and security upgrades for the stockpiled civilian plutoniumand $30 million for new efforts to safeguard material from the militarysector.

It would also provide $20 million for collaborative research intodevisingreactors and fuel that cannot be used to make weapons, and $5 million forresearch into the design and development of a permanent geologicalrepositoryto store used fuel. Administration officials stressed that only those lasttwo items, which are longer-term projects, hinge on an end to Russiannuclearsales to Iran.

Mr. Adamov said on Saturday that Washington would be "wrong" to believethat a $100 million assistance package would prompt Russia to forgorevenuefrom future reactor sales, each of which could be worth up to $1 billiondollars.

"These are huge orders for our industry, and we'll aggressively pursuethese orders and win them," he said.

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