CIAO DATE: 09/04

“Megatons to Megawatts”: The U.S.–Russia Highly Enriched Uranium Agreement

Andrew Prosser

Center for Defense Information

June 2004

The denouement of the Cold War saw a notable reduction in Russian strategic nuclear forces. However, the newly deactivated warheads from these weapons created another problem: a roughly 500 metric ton surplus of weapons–grade, highly enriched uranium (HEU). After the fall of the Soviet Union and its attendant economic downturn, a significant proliferation threat arose in the form of rogue Soviet military personnel or scientists selling HEU to state (or non–state) actors desirous of a nuclear capability. With this in mind, the governments of Russia and the United States sought to agree upon a way of safely disposing this extraneous uranium. What eventually emerged from this concern was the 1993 U.S.–Russia Highly Enriched Uranium Agreement, commonly referred to as “the HEU deal” or the “Megatons to Megawatts” program. This paper will profile and assess the HEU deal’s history and current implementation status.

Background

Uranium Enrichment

In nature, uranium primarily occurs as one of two isotopes: U²³⁸ and U²³⁵. The former is by far the more common form, but is too stable to be of utility as a fissionable material. Natural (unenriched) uranium is only 0.711 percent U²³⁵ by weight, a proportion that is too low to support the nuclear chain reaction. Thus, natural uranium must be “enriched” in order to fuel a nuclear reaction; that is, it must have its U²³⁵ component increased, usually to around 4–4.5 percent. This is known as low–enriched uranium (LEU), and is the form used in most nuclear reactors. In the case of the United States, all enrichment services — for both weapons and nuclear power use — were procured until recently from two government facilities at Paducah, KY, and Pikeston, OH. As part of the 1993 Highly Enriched Uranium agreement profiled here, the U.S. created a semi–private firm for the purposes of running these two plants, called the United States Enrichment Corporation (USEC). In 1998, the government completed privatization of USEC, which now operates the Paducah plant on lease from the Department of Energy (the Pikeston plant has since been mothballed). Paducah is currently the only domestic uranium enrichment facility.

Enrichment Process

The uranium enrichment process begins with triuranium octoxide (U₃0₈), which is mined as uranium ore, separated into a powder form, and known colloquially as yellowcake. “Natural” yellowcake, like all uranium so designated, is 0.711 percent U²³⁵. However, in order to further enrich natural uranium, it must be in the gaseous state. This prerequisite precludes the use of U₃0₈, and so a step called conversion is required.

During conversion, U₃0₈ is converted into uranium hexafluoride (UF₆), which is a powder at room temperature but sublimes at 134°F. Two conversion facilities exist in North America: ConverDyn’s in Metropolis, IL, and Cameco’s in Port Hope, Ontario. Additional facilities exist in Europe and in Russia.

The UF₆ is then ready for the enrichment phase, in which the U²³⁵ of natural UF₆ is concentrated to create low–enriched UF₆. Two processes currently exist for enriching uranium: gas diffusion, and the more efficient gas centrifuge. Both technologies are based on the slightly heavier molecular weight of U²³⁸ versus U²³⁵. In the uranium fuel industry, the enrichment process itself is usually billed separately from the cost of the natural UF₆ “feed” material. Often, LEU consumers will provide their own natural uranium feed to enrichment companies, but sometimes the enrichment companies will purchase the feed material themselves. However the feed is provided, the enrichment process concentrates the U²³⁵ in the feed material; this in turn leaves “tails” that have been depleted of U²³⁵ and are considered waste. The portion of the uranium with elevated U²³⁵ content is then marketed as low–enriched uranium, while the remaining depleted uranium is either disposed of, re–enriched to the level of natural uranium, or used in the manufacture of depleted uranium artillery shells or armor.

Enrichment services — usually referred to as the “enrichment component” of LEU — are measured in separative work units (SWU), while the feed material (“feed component”) is measured in kilograms. Enrichment companies provide a number of different levels of enrichment service. The standard percentage for reactor fuel LEU is 4–5 percent U²³⁵; 1.5 percent for downblending of HEU; and 0.711 percent for restoration of depleted uranium tails. A number of public sector, private sector, and mixed sector firms around the world, including COGEMA (France), Urenco (U.K./Germany/Netherlands), and USEC (U.S.), provide enrichment services.

After LEU is synthesized, one of three things happens. During the Cold War, a large portion of LEU was further enriched into HEU, defined as any uranium enriched to over 20 percent U²³⁵. In actual practice, HEU was destined for nuclear weapons, and therefore enriched over 90 percent and converted into metallic form for use in warheads. The most common fate of LEU today is reactor fuel; it is fabricated into fuel pellets of uranium dioxide, and then organized into fuel rod assemblies. Finally, LEU can be used to lower the U²³⁵ proportion of HEU, in a process known as de–enrichment.

Uranium De–enrichment

Should it be desired that 90 percent U²³⁵ HEU be de–enriched and converted to LEU (as in the U.S.–Russia HEU agreement), the HEU undergoes four “reverse” phases. First, the HEU metal is chopped into small metal shavings, which are then oxidized into more stable, highly enriched (HE) U₃0₈. The HE U₃0₈ is then fluorinated to produce HE UF₆, which can then be transported to an enrichment facility for downblending. Downblending is simply enrichment in reverse; the highly enriched UF₆ is blended with 1.5 percent enriched LEU to produce a final product of ~five percent low–enriched UF₆, which is desublimated for storage in steel containers. This LEU can in turn be fabricated into uranium dioxide reactor fuel assemblies.

U.S.–Russia HEU Agreement — “Megatons to Megawatts”

The U.S.–Russia Highly Enriched Uranium Agreement, which was signed by Presidents Bill Clinton and Boris Yeltsin in 1993, sought to address the HEU proliferation risk engendered by the fall of the Soviet Union. Under the terms of the agreement, both the United States and Russia created government–owned corporations to act as the deal’s executors. The United States set up the United States Enrichment Corporation (USEC), while the Russian Federation created a commercial subsidiary of its Ministry of Atomic Energy (MinAtom), Tekhsnabeksport (“Tenex”). The original deal called for Tenex to downblend its HEU to LEU at MinAtom facilities. USEC would then buy the enrichment component of this LEU, accepting it in shipments over a 20–year period. The price negotiated came to approximately two–thirds of the 1993 market value of the entire quantity of LEU (the other one–third being the feed component). USEC would then be free to resell the enrichment component in compliance with relevant federal and international law. Tenex, on the other hand, would retain title to the feed component, and would be free to resell it, subject to relevant international agreements and Russian statutes.

These circumlocutions, though contrary to the laws of physics, are forced by the peculiarities of the uranium industry: though there is only one actual product shipped to USEC — five percent low–enriched uranium hexafluoride — USEC holds title only to the value of the services employed to enrich it; i.e., the enrichment component. According to the agreement, the actual material that has been enriched — the feed component — remains in Tenex’s legal (if not physical) possession. Obviously, it is impossible to physically separate raw materials from the work that has processed them into a finished product. Therefore, when USEC resells the enrichment component, it must provide its customers with the entire LEU product it received from Tenex. This leaves it in a barter debt: it owes the physical mass of the feed component to Tenex. The situation is resolved by USEC’s customers shipping an equivalent quantity of natural uranium feed back to USEC — which is then designated as Tenex’s feed component.

In addition, USEC would reimburse Tenex for the cost of the 1.5 percent LEU that the latter used to downblend the original HEU. The reimbursement was to be in the form of a barter payment of natural uranium, equivalent to the amount the Russians had used (even though Tenex would use 1.5 percent LEU, not natural uranium, for downblending). Tenex would then be free to resell this natural uranium as well.

Problems With the 1993 Deal

Several problems soon arose with the HEU deal. Perhaps the biggest short–term headache was the looming privatization of USEC. Based on market trends, it became clear that the price agreement negotiated in 1993 was overly generous to Russia. Though the U.S. Department of Energy could force USEC to pay these higher prices while the latter was a government subsidiary, it would have no such power after privatization. What proved beneficial to national security was at odds with the profit motive. USEC, therefore, lobbied to have price controls set according to market standards. When denied this request, USEC resorted to slowing the pace of deliveries, greatly annoying its Russian counterparts.

For its part, Russia also created concerns for the agreement. Russia demanded a “price floor,” below which it would not ship LEU to USEC; this price floor proved unreasonable, however, as it was usually well above market price. In addition, Tenex could not ship the feed component back to Russia: according to U.S. law, enriched uranium could be exported only to nations with which the U.S. had signed a fissile material export agreement. No such agreement existed in 1993. Therefore, Tenex was forced to attempt to sell the feed component from USEC’s warehouses in Paducah, or if it could not find a buyer, to await payment from USEC in 2013. The 1996 act that privatized USEC transferred the title on the feed component from Tenex to the Russian government, and ordered USEC to buy the 1995 and 1996 allotments. However, this did not address the basic price issue.

The situation grew even more precarious by 1998, when USEC completed its privatization. USEC administrators openly questioned whether USEC had any incentive to remain part of the deal (under whose terms it could withdraw). On the Russian side, negotiations to sell the feed to a consortium of commercial enrichment companies had stalled. It was under these conditions that U.S. Energy Secretary Bill Richardson and Russian Atomic Energy Minister Yevgeny Adamov met in 1998 to attempt to resolve the remaining disputes. The agreement born of their negotiations, termed the HEU Feed Deal, was signed in March 1999 and answered many of the extent questions. It allowed for the reimportation of the feed component to Russia, and provided for both American and Russian LEU stockpiles for commercial sale or government use. It also codified a new compensation system for the enrichment component; the new terms were significantly more favorable to USEC, as they were firmly linked to market price (plus a 10–15 percent discount). Even these new terms have proven insufficient to make USEC’s portion of the deal profitable; however, the company is no longer hemorrhaging money, and deliveries have, since 1999, proceeded on schedule for 2013 completion. The day after the HEU feed deal was signed, Tenex announced that it had signed a commercial deal with Cameco, COGEMA, and NUKEM — known collectively as the Western Consortium — to purchase most of the feed component.

Status and Prognosis

The Bush administration has continued the commitment of the Clinton administration to the HEU deal and the HEU feed deal. In 2003, the administration requested $30 million for a direct purchase of an additional amount of down–blended Russian HEU; however, the House denied funds in November of that year, saying that it saw no reason to use public funds to pay for what had been done previously with private funds (a reference to USEC’s involvement). Though the White House’s record on nuclear nonproliferation programs has been, in general, spotty, the HEU deal’s clear benefits and accomplishments — according to USEC, 201.5 metric tons of HEU have been disposed so far — have won the administration’s support to date.

Sources:

“Backgrounder. . . to the agreement concerning the disposition of uranium derived from Russian nuclear weapons,” Cameco, Inc., Dec. 20, 2001.

“Cameco Announces Deal For Uranium Derived from Russian Nuclear Weapons,” Cameco, Inc., Dec. 20, 2001.

Kent A. B. Jamison, “Russia: Overview of the US–Russian HEU Agreement,” Nuclear Threat Initiative, June 1999.

Matthew Bunn, “Reducing Excess Stockpiles: U.S.–Russian HEU Purchase Agreement,” Nuclear Threat Initiative, March 5, 2003.

“About the Program: U.S.–Russian Megatons to Megawatts Program,” USEC, Inc., 2004.

“Chronology: U.S.–Russian Megatons to Megawatts Program,” USEC, Inc., 2004.

“Russian–U.S. HEU Agreement,” U.S. Department of Energy and Russian Ministry of Atomic Energy, February 18, 1993.