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Nuclear News - (04/12/00)
RANSAC Nuclear News, 12 April 2000


A. MPC&A

    1. Russia's First Tech Support Center Open in Novosibirsk,Lyubov Shalneva, Itar Tass (04/04/00)
B. Highly Enriched Uranium (HEU) Deal
    1. Russia To Keep Supplying Uranium to US at World Price,Interfax (03/30/00)
    2. USEC Must Shut Down One Of Its Plants By Next Summer,Associated Press (04/11/00)
    3. Uranium Co. Shareholders Take Ride, H. Josef Hebert, AssociatedPress (04/11/00)
    4. Trouble With Uranium Processing Co., H. Josef Hebert,Associated Press (04/11/00)
C.  START
    1. START-II Slated For Passage, RFE/RL (04/11/00)
    2. START II: Long Awaited Sensation, Igor Denisov and VitalyDavydov, Interfax (04/11/00)
D.  Nuclear Power Industry
    1. Construction of South Urals Nuclear Station Becomes MinistryProject, Interfax (04/04/00)
    2. Russian Position On Pu-Production Reactors Shifted Again,Thomas Nilsen, Bellona (04/11/00)
    3. News Briefing [DOE Sale of Enriched Uranium], UraniumInstitute (04/12/00)
E.  Nuclear Waste
    1. Russian Proposes Nuke Waste Import, Andrew Kramer, AssociatedPress (04/11/00)
    2. Russian Regions To Decide On Fuel Imports Project, IgorKudrik, Bellona (04/11/00)



A. MPC&A

1.
Russia's First Tech Support Center Open in Novosibirsk
        Lyubov Shalneva
        Itar Tass
        April 4, 2000
        (for personal use only)

Russia's first-ever Technical Support Centre (TSC) under the auspicesof the Russian State Nuclear Supervision Inspectorate (SNSI) is open hereat the Institute of Nuclear Physics of the Siberian branch of the RussianAcademy of Sciences.

The purpose of the TSC is to service instruments for the accounting,monitoring and physical protection of nuclear materials. The establishmentof the TSC is one of the stages of the implementation of the Russian-U.S.intergovernmental agreement signed in June 1995. The U.S. Department ofEnergy bears expenses to fit the TSC out.

Valery Denisov, head of the Siberian District of the FSNI, told Itar-Tasson Tuesday that bilateral cooperation is aimed primarily at refining theRussian national accounting and monitoring systems at enterprises, theproduction cycle of which is connected with the use of nuclear materials.

Chosing Novosibirsk as a place to establish the TSC was not fortuitous.The Siberian district of the SNSI, stretching from Omsk to Chita, affordsseven -- more than a half of nuclear fuel enterprises of the country'sMinistry of Nuclear Energy, among them the country's only uranium miningPriargun rock chemistry production amalgamation (Chita Region) as wellas two reactors, and two special complexes for the reprocessing and storageof radioactive waste.

The American partners have provided 25 sets of newest instruments ofso-called non-destructive monitoring, by means of which day-to-day inspectionsof nuclear materials are carried out within 10 to 15 minutes. The TSC hasbeen established expressly for the purpose of securing that the costlyinstruments, which excel world analogues in their technical possibilities,are always in serviceable condition and are used by SNSI specialists withmaximum effect. It is planned to establish three similar centers in Moscow,St.Petersburg, and Yekaterinburg.
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B. Highly Enriched Uranium (HEU) Deal

1.
Russia To Keep Supplying Uranium to US at World Price
        Interfax
        March 30, 2000
        (for personal use only)

Russia is not for the time being planning to raise the price at whichit sells uranium to the United States under a 20-year contract.  Russiawill continue to supply the uranium, which is derived from dismantled nuclearwarheads, at the world price, Vladimir Vinogradov, a deputy minister ofatomic energy, told Interfax. "Some people in our parliament think we arelosing money by  selling the uranium at a low price. But they areforgetting that Russia does not exercise a monopoly on this market andcannot therefore dictate its terms to others," Vinogradov said.  Atpresent, Russia is selling the uranium at $29 per kilogram, which is alittle above the world price. It is against this background that leadingwestern uranium companies like Cogema of France and Cameco of Canada arelowering their own prices for uranium.

Russia will supply the United States with 30 tonnes of uranium thisyear, about as much as in 1999, and is likely to sustain that sort of amountin the years to come, Vinogradov said. Russia will earn something like$550 million from the uranium deal in 2000. The deal, signed in 1993, involvesextracting 500 tonnes of high- enriched or weapons-grade uranium from dismantledwarheads, and diluting it into low-enriched uranium suitable for nuclearfuel. The contract is worth $12 billion.

The Russian atomic ministry has said the United States has received45 tons of uranium in the last six years. This is a tenth of the plannedtotal. Russia has received about $1 billion in return.
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2.
USEC Must Shut Down One Of Its Plants By Next Summer
        Associated Press
        April 11, 2000
        (for personal use only)

PADUCAH, Ky. (AP) -- The U.S. Enrichment Corp. will have to shut downone of its gaseous diffusion plants, in either Paducah or Piketon, Ohio,by July 2001, according to a new report from a financial analyst.

The report, written for Bank of New York Capital Markets by analystRichard Rossi, assumes that financially troubled USEC will have to closeone of the plants to save $65 million a year in power and labor costs.

The report does not speculate which plant will close. It said the keywill be which one gets a multiyear contract to buy electricity.

About 2,000 currently work at the Portsmouth Gaseous Diffusion Plantin Piketon and about 1,700 at the Paducah Gaseous Diffusion Plant.

No one in the public affairs department at the southern Ohio plant couldbe reached for comment early Tuesday. A message was left.

USEC incurred a $500 million debt when it sold stock to become publiclytraded in July 1998. Plant shutdown is among several assumptions made byBNY Capital in saying that USEC's debt is a good investment for bond buyers.

Other ``best-case'' assumptions are the completion of 850 announcedjob cuts at the plants, improved power contracts and a renegotiated dealto save money on enriched uranium bought from Russia.

``It is our understanding that the rating agencies want to see USECoperate as a viable business by lowering production costs, renegotiatingthe Russian (uranium) agreement and closing a plant,'' the report said.

According to USEC's privatization agreement, it may close a plant ifits long-term credit rating drops below investment grade. Without governmentintervention, that situation is unlikely to improve during the next year,the report said.

USEC is buying about 92 million units of enriched uranium from Russiain a nuclear disarmament deal worth about $8 billion over 20 years. Blendedfrom material in dismantled nuclear warheads, the uranium equals the approximateproduction of one of the plants. That means that USEC needs to run eachplant at only 25 percent capacity, according to BNY Capital.

But USEC is paying Russia, a competitor, more per unit of enriched uraniumthan the cost for which Paducah and Portsmouth can enrich it. The floodof uranium will increase USEC's production costs from $93 per unit thisyear to more than $110 next year, compared with the spot market price ofabout $80, the report said.

The report said USEC should reach a new contract in 30 to 90 days tobuy Russian uranium for less than $80, partly because Russia badly needsthe deal to prop up its economy.

USEC has $6.5 billion in long-term contracts to supply enriched uraniumto nuclear power plants through 2010. But running two plants ``will remainuneconomic'' as uranium prices drop because of a glutted worldwide market,the report said.
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3.
Uranium Co. Shareholders Take Ride
        H. Josef Hebert
        Associated Press
        April 11, 2000
        (for personal use only)

WASHINGTON (AP) - Stockholders in the company that took over the government'suranium business have seen their investment largely evaporate, but others,including legal and financial advisers and the company's chairman, havefared pretty well.

Wall Street underwriters, led by Morgan Stanley, well-connected Washingtonlaw firms, public relations firms and lobbyists altogether netted about$75 million from the $1.9 billion stock offering in 1998 for the new company,USEC Inc. (NYSE:USU - news)

One winner was USEC Chairman William ``Nick'' Timbers, whose totalcompensationpackage last year totaled $2.48 million, including salary, bonus, stockand stock options. When USEC was still government-owned in 1997, Timbersearned $325,000 and a $25,000 bonus as its chief.

A year ago, the USEC board voted to pay Timbers $1.2 million annuallyin salary and bonus. While the worth of his 100,000 shares of USEC stock,given to him at privatization, has fallen sharply, he's collected $151,250so far in dividends. Timbers also has negotiated a potential $3.6 milliongolden parachute should he resign or be replaced.

USEC spokesman Charles Yulish said Timbers' compensation package isin the median range among executives of similar-sized companies and, exceptfor the $600,000 base salary, is all pegged to company performance.

Morgan Stanley and five other Wall Street investment firms, the underwritersfor the stock offering, earned $42.5 million; J.P.Morgan Securities earned$11.5 million as USEC's adviser in the sale; the Washington office of lawfirm Skadden Arps took in $17 million; other law firms, accountants andpublic relations specialists, including lobbyists, made another estimated$3 million to $4 million, according to contracts reviewed by The AssociatedPress and interviews.

Yulish said the underwriters and other companies that worked on privatizationwere selected through bids and fees that were below market rate. ``We,the government, got a discount,'' he said.

But the sale hasn't been good news for USEC investors including HarvardUniversity, a Michigan state pension fund, an Ohio teachers union fund,and a private community development agency in Portsmouth, Ohio, near oneof the USEC plants.

Since the sale in July 1998, USEC's stock has dropped from $14.25 ashare to a low of $3.43, rebounding in recent weeks to $4.50 after a secondstock buyback by the company.

Not that it was all bad news for the shareholders. To attract buyers,USEC's stock until recently - when the company cut it in half - had anunusually high dividend of $1.10 a share.

Meanwhile, USEC's plant workers, some of whom also bought stock, arefacing the prospect of layoffs and the possible closing of one of the twoplants in Paducah, Ky., and Piketon, Ohio. USEC let 500 workers go shortlyafter it became a private company and will cut another 850 workers - 20percent of the remaining workforce - in June, on the day that government-imposedrestrictions on layoffs expire. USEC says the cuts are essential to reducecosts.

What did the taxpayer get?

The government received $1.9 billion from a $1.45 billion stock offeringplus $500 million from a loan taken out by USEC. Also transferred was $1.2billion in cash, but that already was the government's money since it reflectedprofits the government-owned USEC had earned and held in reserve.

In turn, the government gave USEC $700 million worth of uranium, mostof it now being sold on the open market, spent $325 million to bail outthe Russia uranium deal after privatization, and is still responsible formillions of dollars in environmental cleanup work at the USEC plants. Andit's no longer getting the profits from uranium sales, which averaged $287million a year in the four years prior to the sale.
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4.
Trouble With Uranium Processing Co.
        H. Josef Hebert
        Associated Press
        April 11, 2000
        (for personal use only)

WASHINGTON (AP) - Less than two years after the government sold itsuranium business, the private company it created to take on the job ismired in financial quicksand. The deal is also jeopardizing a crucial nuclearsecurity agreement with Russia, critics say.

USEC Inc.'s (NYSE:USU - news) first 20 months as a private company havebeen anything but smooth. Its stock has dropped 70 percent, its creditrating is in junk bond territory, and its earnings have nosedived.

Amid the financial turmoil, lawmakers and others are questioning thesale. A congressional investigation has been under way for a year, withthe first public hearings scheduled this week.

While investors have lost millions of dollars, some of the people whopushed hardest for an initial stock offering have profited handsomely.

``A number of lobbyists, company insiders and investment bankers madea killing financially,'' said Charles Lewis, director of the Center forPublic Integrity, a private government watchdog.

In all, Wall Street bankers, Washington lawyers and lobbyists - manywith close ties to the Clinton administration – earned more than $75 millionon the $1.9 billion sale, according to contracts and interviews.

Among those talking up the stock offering in 1998 on Capitol Hill andin the White House were Susan Thomases, a New York lawyer and confidanteof Hillary Rodham Clinton, and Greg Simon, formerly Vice President Al Gore(news - web sites)'s domestic policy adviser. The law firm of Skadden Arps,which represented President Clinton in the Paula Jones case, was USEC'slead attorney in the deal.

But no one pushed harder for a USEC sale on Wall Street than William``Nick'' Timbers, a former investment banker whose 1991 report for theEnergy Department touted the idea of privatizing the government's uraniumbusiness. Now USEC's chairman, he earns $1.2 million a year and so farhas made $151,000 from USEC stock dividends.

Participants and transcripts of private USEC board meetings indicateTimbers argued strongly against selling the government enterprise to privatebidders, pressuring instead for an initial public offering (IPO) of stock.Among the rejected suitors was defense giant Lockheed Martin, which hadoperated an enrichment plant as a government contractor.

Timbers also touted an experimental laser technology, known as AVLIS,that he predicted would be in operation by 2005 and reduce electricitycosts by 95 percent, helping make USEC profitable. But a year after thestock sale, AVLIS was abandoned as too expensive, prompting some stockholdersand critics to complain they had been misled - a charge the company denied.

USEC Vice President Charles Yulish, the company's spokesman, said thepayments to underwriters and legal advisers were in line with a sale ofUSEC's size. He dismissed criticism as part of a ``relentless conspiracytheory'' promoted by the domestic uranium mining industry and the unionrepresenting plant workers.

Timbers declined repeated requests for an interview. But he and otherUSEC executives have blamed the company's problems on declining uraniumprices, high enrichment costs, increased competition from European enrichmentcompanies and losses from the Russia uranium deal.

The company's problems are not just a matter of finances - they couldalso affect national security.

The government's enrichment plants - now operated by USEC in Paducah,Ky., and Piketon, Ohio - for years provided uranium for weapons and submarines.Now USEC sells enriched uranium for commercial power reactors, accountingfor a third of all such sales worldwide and revenue last year of $1.5 billion.

In 1993, while still owned by the government, USEC became the U.S. agentfor the Russian uranium deal, a cornerstone of American attempts to getRussia to dispose of some of its huge nuclear weapons material while keepingit out of the hands of terrorists or rogue states.

But the arrangement has been a money loser because the contract requiresUSEC to pay Russia more for the uranium than the company can sell it forin the depressed market. Last fall, USEC sought $200 million in governmenthelp, but was rebuffed.

USEC has recently beefed up its lobbying corps, hiring former WhiteHouse Counsel Jack Quinn and former Senate Energy Committee Chairman BennettJohnston, D-La., among others. Critics speculate USEC may be preparinganother plea for government assistance if it fails to persuade Russia tocut its prices.

With growing uncertainty about the company's long-term survival, somemembers of Congress are concerned the government may yet have to step inwith a multibillion-dollar bailout. Even Sen. Pete Domenici, R-N.M., whoco-sponsored the privatization legislation, now refers to it as ``thisdisaster.''

Ironically, the government was making hefty profits - $1.2 billion between1994 into 1998 - when it owned USEC. But that was before the uranium marketwent bust because of declining demand and huge supplies, the company'sdefenders say. Critics contend USEC contributed to the downward spiralby signaling it would sell a large amount of the natural uranium it inheritedfrom the government to maintain cash flow.

``We sold a thriving government enterprise that isn't so thriving anymore,''said William Burton, an energy lawyer and a member of the presidentiallyappointed board that approved the sale. Burton opposed the sale, arguingthat its impact on the Russia uranium agreement had not been examinedsufficiently.

Since then, Energy Secretary Bill Richardson has privately told associatesthe privatization was a mistake. And last fall, he accused USEC of undercuttingthe Russia nonproliferation agreement by selling large amounts of its ownuranium stockpile.

USEC executives said the $25 million in sales over three months lastyear reflected several years of contracts. But the company's large uraniumholdings - $700 million worth - and its strategy to sell it on the openmarket are still of concern to nonproliferation experts.

Yulish disputed claims that USEC has sought to undermine the Russiadeal, noting that USEC has already accepted 81 tons of weapons-grade uranium- enough for 3,200 nuclear warheads - and is committed to accept 30 tonsa year under the agreement.

To reduce Russia's nuclear arsenal, the United States in the early 1990sagreed to help Moscow sell 500 metric tons of highly enriched uranium fromthe former Soviet weapons stockpile. Once diluted, the material is no longersuitable for weapons and would be sold as civilian reactor fuel with USECthe middleman.

But the USEC's emergence as an investor-owned company competing forprofits on the uranium market suddenly changed the deal's dynamics.

``The privatization left a crucial national security initiative - thepurchase of 500 tons of uranium from Russia - to the whim of the privatemarket,'' said Matthew Bunn, a nonproliferation expert at Harvard's JohnF. Kennedy School of Government. ``It was one of the most egregious nationalsecurity blunders of the Clinton team.''

Thomas Neff of the Massachusetts Institute of Technology, who conceivedof the U.S.-Russia uranium deal and sold it to the government, said thesale of USEC ``privatized national security.'' He predicted the governmentmay eventually have to bail out both USEC and the Russia deal.

But the race to Wall Street in 1998 was moving so fast that on the finalday of the USEC board's deliberations on July 22, 1998, ``any questionsraised that day were seen as obstacles,'' Burton recalled.

Budget crunchers and former Wall Streeters then running the TreasuryDepartment saw the sale in terms of income for the government, and Goreviewed it as a triumph for government reinvention.

``Budget balancing was one of the factors. The second thing was thatUSEC was pushing it,'' recalled Joseph Stiglitz, then chairman of PresidentClinton's Council of Economic Advisers and one of the few senior administrationofficials who strongly opposed the deal.

``I could see very little benefit and very big risks,'' Stiglitz saidin an interview. As a private company, USEC ``would have every incentive... to bomb the (Russian) deal.''

Neither the national security folks at the White House, nor the StateDepartment shared Stiglitz' concern.

``If this (sale) had been done in the light of day, it never would havehappened,'' insisted Richard Miller, a lawyer for the Paper Allied-IndustrialChemical and Energy Workers Union, which represents USEC plant workers.
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C. START

1.
START-II Slated For Passage
        RFE/RL
        April 11, 2000
        (for personal use only)

State Duma Chairman Gennadii Seleznev said on 10 April that the DumaCommittees for International Affairs and Defense will call on deputiesto consider ratification of the START-II treaty on 14 April. Earlier on10 April, the International Affairs Committee voted 11-7 in favor ofratificationof the treaty. According to Interfax, observers believe that the treatywill attract more than the 226 votes needed to pass. Fatherland-All Russiafaction leader Yevgenii Primakov supports the treaty, and his faction isexpected to cast all of its 47 votes in favor. Unity, People's Deputy,Yabloko, Union of Rightist Forces, and most of the Russian Regions factionare also expected to support the treaty, while the Communists andAgro-IndustrialGroup will likely vote to reject it. Liberal Democratic Party of Russialeader Vladimir Zhirinovskii said that his faction, which has 17 members,will vote against the treaty, but his group often changes its positionjust before voting.
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2.
START II: Long Awaited Sensation
        Igor Denisov and VitalyDavydov
        Interfax
        April 11, 2000
        (for personal use only)

MOSCOW. April  11 (Interfax) - What is going to happen on Fridayis a  kind of long  overdue  sensation:  the State  Duma  will  debate ratification of START II and maywell ratify it.
 
In less  than seven years since its signing and five years sinceit was sent  to the Duma this treaty which is of fundamental importancefor Russian -  U.S. relations  Moscow has on several occasionsbeen about to ratify it  but each  time something  happenedthat made this impossible. Once it  was the  NATO plan of eastward expansion, then it was the NATO operation in Yugoslavia whichRussia regarded as aggression.
 
A pretext  could be  found this time, too. In particular,communist leader Gennady  Zyuganov has  said that  the U.S. plans  to  set  up  a national anti-missile systemmake it impossible for the Left to vote for ratification of START II.
 
In its  present form the treaty benefits only the United Statesand is unacceptable to Russia whose defenses can be harmed, he argues.
 
Russian generals believe, however, that the opposition's case againstthe treaty has no leg to stand on.
 
Col. Gen.  Vladimir Yakovlev, the commander of the strategic rocketforce, has  told Interfax  that by  2007,  when the  treaty  is  to  be implemented,   Russia'sheavy multiple-warhead intercontinental missiles will come to the end oftheir service life.
 
"Whether Russia does or does not ratify START II, heavy missiles ofthe RS-20  and RS-18  type will  have to  be decommissionedby 2007," he said.
 
In effect,  "START II  has become  a treaty  underwhich the United States [alone] will reduce its offensive weaponry," Yakovlevsaid.
 
Those who  fear that  the United  States will pull a  fast one  on Russia with  the building  ofan anti-ballistic missile system have also been answered.  "Ratificationof START II in a package with the New York agreement of  1997 on the setting up of a nonategic missile defense system would  benefitRussia in every respect," Russian Security Council Secretary Sergei Ivanov said  on Monday after a meeting President-elect Vladimir Putinhad in the Kremlin with Duma party leaders.
 
Russia and  the United  States have  agreed that the ABM Treaty of 1972 implies  that a  nonategic missiledefense system can be built, he said.  By ratifying  the passageRussia would send the world a signal that it opposes U.S. opting out ofthe ABM Treaty.
 
The support  in the  State Duma  for ratification of START  II and protocols on extending the deadline for the implementationof the treaty and on  making a  distinction between  astrategic and a  nonategic missile defense  system will  besufficient next Friday,  parliamentary observers say.
 
The entire pro-Putin Unity group which has 81 seats in the Duma andits kindred  People's Deputy  group (58  seats) are expectedto vote for ratification. Because former Prime Minister Yevgeny Primakov,the leader of  the  Fatherland  -  All  Russia, is  a  staunch  supporter  of  the ratification,his group may cast all its 47 votes in favor of it.
 
The Union of Right Forces with 33 seats and Yabloko, 21 seats, willobviously vote for ratification. At least one half or even two thirds ofthe Russia's Regions group may support the ratification , experts say.
 
If these  groups turn up in force, 260 to 270 votes can be castfor the ratification while the minimum to see it through is 226 votes.
 
The Communist  Party's 95  and the  AgroindustrialGroup's 36 Duma members are expected to vote against.
 
The only  unknown quantity is the position of the liberal democratswho have  17 seats  in the Duma. Its leader Vladimir Zhirinovskysaid on Monday that  his  supporters  would  oppose the  ratification  but  his position may  change. On the other  hand, this  will not make much of a difference.
 
In effect,  if the  turnout is  good, 240  to 250Duma members will support the ratification.
 
What is  obvious is  that  the  Kremlin's arguments  in  favor  of ratification are  very much what it  said a year ago, two years ago and three years  ago.What  has changed? Why does the anti-American rhetoric of the Leftnot work this time?
 
The answer  seems obvious.  The new  Russian presidentwho is still being criticized in the West for what is going on in Chechnyais sending a clear signal to Western leaders that he is in control of thesituation in the  country, that his supporters are in control of theDuma and that the  new  Russian  Cabinet  will not  embrace  anti-Americanism,  anti- Westernism orisolationism,no matter how much some desire this.
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D. Nuclear Power Industry

1.
Construction of South Urals Nuclear Station Becomes Ministry Project
        Interfax
        April 04, 2000
        (for personal use only)

A project to construct the South-Urals Nuclear Power Station (YUAES)has been  included in the  Nuclear Ministry's program of potential  projects adopted for realization by 2010. The project requireslarge investment and thus, its realization will not begin any sooner thanin five years, Deputy Nuclear Minister Bulat Nigmatulin, said during avisit to Chelyabinsk. One energy block with 800 megawatt capacity is estimatedto cost$ 1 billion. YUAES will be created on fast neutron reactors, wherereserves of military plutonium subject to destruction will be used up.So far 270 million rubles (at 1994 prices) have been spent. In 1987-1989a construction site was prepared 10 km from Ozersk, a heat and water supplywas laid, a division was constructed for assembling the reactors and twolarge pits were excavated, into one of which the laying of the foundationwas begun. Chelyabinsk region does not get enough energy from Chelyabenergo,with the deficit totaling around 1 million kilowatt-hours.
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2.
Russian Position On Pu-Production Reactors Shifted Again
        Thomas Nilsen
        Bellona
        April 11, 2000
        (for personal use only)

The recent Russian proposal to halt the conversion of the Pu-productionreactors in Siberia is changed back to basics, plus 20 years of additionaloperation.

The surprising February proposal by the Russian Ministry of NuclearEnergy to close down the three Siberian plutonium producing reactors andreplace them with an alternative energy source would not last for long.When U.S. officials came to Moscow in late March they thought they woulddiscuss the idea of building new fossil fuel energy sources, but were insteadconfronted with a new proposal to keep the reactors in operation for another20 years. This time the proposal is based on a new technical study to convertthe reactors to operate with a different type of low-enriched uranium,writes the U.S. newsletter Post-Soviet Nuclear & Defence Monitor.

The reactors in question are the three remaining military RBMK reactors- two in Seversk and one in Zheleznogorsk - that have been for more than30 years the core part of the plutonium production for nuclear warheadsin the Soviet Union. A halt in the plutonium production has been a commongoal for the post-Cold War agreements between the United States and Russia.But since these reactors also serve as a local heat and electricity sourcefor the nearby settlements, it has been out of question for the Russiannegotiators to just stop them without any alternatives.

The first proposal in the joint U.S. - Russian discussions was to convertthe reactor cores to be fuelled with high enriched uranium, preventingthe spent fuel to contain weapons grade plutonium after reprocessing. Theproposal was heavily protested by the Russian State Nuclear Regulatory,GAN, which claimed that such alternative would pose a far-to-high safetyrisk for the ageing reactors. To meet some of the critics, the new proposalincludes a 20 percent power reduction during the reactors operation. Reducedpower leads to less heat generating and therefore less chances of the reactors'graphite blocks of swelling. The reactors are in principal of the samedesign as the Chernobyl reactor that blew up in 1986, but far older.

Yuri Vishnevsky, the head of GAN, said earlier that the ageing Severskreactors had already twice exceeded their service lifetime and the safetyrisks posed by the continued operation were rather obvious. Vishnevskyhas the first hand knowledge on this topic, he participated in the designand construction phase of the RBMK reactors. GAN has so far not commentedon the latest proposal from Minatom to convert to low-enriched uraniumand continued operation for another 15 years after the conversion periodthat would last for five years. Most likely, Minatom has not yet informedthe civilian inspectors, adding another stone to the problematic relationshipbetween the two strugglers on the Russian nuclear arena.

In compliance with the U.S. - Russian agreement to halt the plutoniumproduction, the U.S. side was through its CTR program obliged to help buildingof fossil-fuel substitutes for the reactors. This agreement was renegotiatedin 1996 to instead convert the reactors' cores. But, revived in Februarythis year the fossil-fuel option was said to be far much cheaper than earlierestimated and therefor again considered being the right solution. Thatlasted for less than two months.

"One can only guess why core convention is again proposed by Minatom.We think they [Minatom] have figured out that the fossil-fuel option wouldnot create any jobs for their ministry," says Konstantin Kozlov, localactivist in the Tomsk Ecological Student Institute. The city of Tomsk isjust some few kilometres from the closed nuclear city of Seversk. In Seversk,the majority of the population works at the Minatom nuclear industrialsites, for decades kept secret for the surrounding society.

Quoted by Post-Soviet Nuclear & Defence Monitor, an unnamed U.S.official said the final review of the new proposal will be presented tothe Americans at another Moscow meeting to be held on April 12-13.
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3.
News Briefing [DOE Sale of Enriched Uranium]
        Uranium Institute
        April 12, 2000
        (for personal use only)

[NB00.15-21] The US Department of Energy is to sell enriched uraniumproduct from stock to research reactor operators at market prices. Thechange could halve the price of HEU product. US policy on selling HEU toforeign research reactors remains unchanged - the US will only supply HEUif the operators have pledged to convert their reactors to LEU fuel assoon as appropriate fuel is available.
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E. Nuclear Waste

1.
Russian Proposes Nuke Waste Import
        Andrew Kramer
        Associated Press
        April 11, 2000
        (for personal use only)

MOSCOW –– The Ministry of Atomic Energy said Tuesday it wants to import20,000 tons of nuclear waste to Russia to boost the country's economy,but parliament would first have to cancel a law forbidding most of suchimports.

Under the proposed program, countries exporting nuclear waste to Russiawould pay $21 billion over 10 years. Most of the waste would be spent fuelrods from civilian nuclear power plants in Europe and Asia, Minister ofAtomic Energy Yevgeny Adamov said.

The expected earnings are nearly equal to Russia's entire federal budgetin 1999.

"The deal is extremely beneficial for (the ministry), and we are intendingto carry it out," Adamov said.

Deputy Minister Valentin Ivanov said the plan is at a stage of "marketresearch" to study global demand among countries eager to unload theirwaste, and lobbying parliament. About 200,000 tons of nuclear waste isnow stored at temporary sites worldwide.

The ministry plan proposes recycling the waste at the Mayak facilityin the Ural Mountains.

The process extracts usable nuclear material for new fuel rods whileimproving safety by reducing the material's potential to be used in weapons,said Ivanov, the ministry's top nuclear scientist.

The spent fuel would travel across European Russia or Siberia by railin armored wagons.

Both Russian and foreign environmental groups object to the plan, whichhas been under discussion for several years, saying Russia is already awashin nuclear waste from domestic sources.

"This is an extremely dangerous and cynical deal to generate billionsof dollars which will add to the enormous environmental problems that alreadyexist in Russia," Greenpeace nuclear campaigner Tobias Muenchmeyer saidin a press release.

A 1992 law forbids importing nuclear materials from foreign countriesother than former East Bloc nations with existing contracts.

Russia now imports spent fuel rods from Ukraine, Bulgaria, Slovakiaand Hungary for reprocessing, a system established during Soviet times.

Meanwhile, Adamov said his ministry plans to make $550 million reprocessingSoviet bomb-grade material into civilian reactor fuel this year under aU.S.-sponsored program begun in 1993. The program aims to reduce availablebomb-grade material and reduce the risk of theft.
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2.
Russian Regions To Decide On Fuel Imports Project
        Igor Kudrik
        Bellona
        April 11, 2000
        (for personal use only)

Minatom's lobbyists failed to amend Russian legislation in favour ofspent fuel imports in Moscow, ask regions for assistance.

Several Russian regional legislative bodies discussed in early Aprilan initiative from the Federation Council, the upper chamber of the Russianparliament, to consider and approve amendments to the environmental legislationin favour of spent fuel imports. The Russian Ministry for Nuclear Energy,or Minatom, is the agency that has been actively promoting the idea thepast couple of years but has failed to get a break-through so far.

Minatom after 'easy money'
In December 1998, Russian Nuclear Minister, Yevgeny Adamov, forwardeda letter to his American counterpart, head of the Department of Energy,Bill Richardson. Adamov was wondering if the United States had any interestof sending its spent fuel to Russia for storage or/and reprocessing. Earlierthe same year, information leaked to press that Minatom was having preliminarytalks with Germany and Switzerland regarding shipments of both radioactivewaste and spent nuclear fuel to Russia.

In spring 1999, Minatom released a 10-pages paper justifying the needfor spent fuel imports. The paper said that the world spent fuel marketwould allow Russia to import around 20 thousand tons of spent nuclear fuel.The earnings are estimated to be as high as $21 billion. $10,5 billionwould be spent on management of the spent fuel shipped in, while $3,3 billionwould go to the state budget. The remaining $7,2 billion could be used,according to Minatom's plan, on various social and environmental programs.

The customer-countries listed in the paper were preliminary Asian statesand Iran, where Russia is building a nuclear power plant despite heavycriticism from the U.S. and Israel. The paper also said that some Europeancountries could be hooked and involved into the project seeking cheaperprices - than provided by UK's BNFL in Sellafield and French Cogema inLa Haug - and "services of higher quality." With "higher quality" Minatommeant the offer that would assume neither the return of spent nuclear fuelto the countries of origin, nor the return of the waste should the fuelbe reprocessed. Both the plants in Sellafield and La Haug send the reprocessingwaste back to the country where fuel came from.

These extra services would have to be paid for - $1200 per kilo; whilethe regular price is around $1000 per kilo of spent nuclear fuel.

Russia's stock of spent nuclear fuel amounts to 14,000 tons, excludingfuel from nuclear powered submarines and nuclear icebreakers. Most of thefuel (in particular of RBMK type) is stored onsite at Russia's nine nuclearpower plants.

Russia's only reprocessing plant, Mayak, in Chelyabinsk County has annualcapacity of 400 tons but has been at the level of 100-150 tons the pastyears. The plant is run down and needs upgrade to go up to its design capacityand reprocess other type of fuel than VVER-440, BN, maritime reactors andsome research reactors. Mayak operates two storage facilities with a totalcapacity of 2,500 tons.

The reprocessing plant under construction in Krasnoyarsk County, RT-2,needs, according to Minatom, $1,96 billion of investments to be put online.The wet storage facility built at Krasnoyarsk-26 (now Zheleznogorsk) cantake 6,000 tons of VVER-1000. The storage will be 50 per cent full by 2001.

The offensive plan worked out by Minatom suggests building 23,600 tonsof extra storage space. It would include 3,000 tons of wet storage and9,000 tons of dry storage at Zheleznogorsk; 1,600 tons at the Mayak plant;10,000 tons of container type storage at an unspecified location (probablyat Zheleznogorsk as well).

But almost all the building plans can be carried out, given Minatomstarts earning money on importing foreign spent fuel.

Lobbying failed
Minatom started to work hard on separating the issues of spent fueland radioactive waste in the bill amending the Law on Environmental Protectionof the Russian Federation. The current version of the law (Sec 3, Art.50)says that any import of radioactive materials is prohibited. Once 'spentfuel' and 'radioactive waste' are separate issues, fuel will be considereda resource eligible for import.

In February 1999, the Minatom's lobbyists in the State Duma, the lowerhouse of the Russian parliament, started the amendment process. The initiativereceived support among all the Duma factions, but yet the attempt turnedto be a failure after protests by the Duma Environmental Committee andNGOs.

In late April 1999, a group of Duma members came up with a draft ofLaw on Industrial Storage and Reprocessing of Spent Nuclear Fuel. The lawwas to remove all the legal roadblocks towards import of foreign spentfuel. The State Environmental Committee, former Ministry of Environment,refused to approve the draft twice but was eventually forced to do thatin September 1999.

In August 1999, Minatom made a lousy attempt to persuade the RussianCabinet to accept the project and put pressure on the State Duma to makeall the required amendments. The attempt was yet another failure. The Cabinetmembers were to look at the proposal and prepare their recommendations,what they never did. The new meeting regarding this issue was to be heldprior to the presidential elections on March 26, but it was cancelled.

Regions asked for help
Having lost all the rounds so far, Minatom decided to act using the"voice of people." A number of Russian regional legislative bodies receiveda letter from the Federal Council Committee on Science, Culture, Education,Health and Environment. The letter suggested discussion of the proposedamendment of the Law on Environmental Protection. The regional legislativebodies of Russia have the right to initiate amendments of the federallegislation.The incentive offered to the regions was additional working places andmoney to the local budgets - all deriving from spent fuel imports.

In Nizhny Novgorod - the area with high concentration of nuclear-relatedindustries – the discussion ended with a request to Minatom for more detailedbusiness planning of the project, environmental group Dront reported. Theproject as it is now was not approved.

In Voronezh County, the southern Russia, the local legislators unanimouslyvoted to support the amendment, Ecodefence reported. The EnvironmentalCommittee of the legislative body in Murmansk County gave a preliminarynegative answer. The question is yet to be put on the agenda for the wholecouncil.

Tomsk County was also asked to take its stance in this issue, but noresult is available for today. Krasnoyarsk County was also reportedly involvedinto the discussion, but the results are yet unclear.

Administration still indecisive
According to unofficial returns, the Russian President-elect has notyet decided whether to support the fuel imports project. The EmergencySituations Minister, Sergey Shoygu, who also heads pro-presidential Unityparty, is said not to be favouring the project. The current chairman ofthe Duma Environmental Committee, Vladimir Grachev, is a member of theUnity faction in the parliament. He stated earlier that he would not supportthe amendments.

Thus, the initiative from the regions is currently the only hope ofMinatom to get the administration endorse the project. Once it is done,it would be no trouble to get the required bill approved by the State Duma.But the regions seem to be as indecisive as the administration so far.
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