This file is no longer being updated.  For major recent developments, see the Nuclear Fuel Cycle Developments file.

Return to the Overview of the US-Russia HEU-LEU Program

This section does not cover issues relating to the privatization of the United States Enrichment Company and its subsequent financial difficulties. Please see the USEC website, http://www.usec.com/ for the status of LEU deliveries and related press releases. Additional coverage may be found in the Nuclear News bulletins on the RANSAC website at http://www.ransac.org.

3/31/2004: RUSSIA AND THE UNITED STATES ARE INTERESTED IN EXTENDING THE HEU-LEU CONTRACT
On 31 March 2004, Russian and US officials expressed interest in extending the US-Russia HEU Purchase Agreement beyond its expiration in 2013.[1,2] At a press conference in Moscow, head of the Federal Agency for Atomic Energy Aleksandr Rumyantsev stated that he is counting on the extension of the deal.[1]  On the same day in Yekaterinburg, deputy administrator of the National Nuclear Security Administration Paul Longsworth said he hopes that the agreement will be extended, but it depends on whether Russia discloses a surplus in its nuclear stockpile.[2]
Sources:
[1] "Glava Federalnogo agentstva po atomnoy energii Aleksandr Rumyantsev rasschityvayet prodlit kontrakt VOU-NOU," RIA Novosti, 31 March 2004; in Integrum Techno, http://www.integrum.com.
[2] Tatyana Pavlova, "SShA zainteresovany v prodlenii uranovogo soglasheniya s Rossiyey na period posle 2013 goda - administratsiya SShA po yadernoy bezopasnosti," ITAR-TASS, 31 March 2004; in Integrum Techno, http://www.integrum.com. {Entered 5/11/2004 DS}

3/9/2004: CONFLICT BETWEEN TEKHSNABEXPORT AND GNSS MAY UNDERMINE THE HEU-LEU DEAL
In a 9 March 2004 letter to Director of the Federal Agency for Atomic Energy Aleksandr Rumyantsev, US Secretary of Energy Abraham Spencer expressed concerns that the ongoing conflict between Tekhsnabexport (Tenex) and Globe Nuclear Services and Supply (GNSS) may have a negative impact on the implementation of the US-Russia HEU Purchase Agreement.[1] The conflict was initiated on 31 October 2003 when Tenex announced that starting 1 January 2004 it would halt deliveries of natural uranium to GNSS for shipping to the United States within the framework of the HEU-LEU deal. Tenex insists that the existing contract with GNSS contradicts Russia's national interests. Tenex claims that GNSS operations are non-transparent in terms of market distribution, end-users and quantities of the uranium allocated. Tenex also claimed that the financial standing of GNSS is unclear.[2,3] In retaliation, GNSS filed a suit in US circuit court to overrule Tenex's decision to halt delivery of uranium and initiated legal proceedings in a Swedish arbitrage court, which may take up to 18 months.[2]
Sources:
[1]"Konflikt mezhdu OAO 'Tekhsnabeksport' i GNSS 'mozhet podorvat reputatsiu Rossii kak nadezhnogo postavschika YaT," Nuclear.ru Web Site, http://www.nuclear.ru, 15 March 2004.]
[2] "Prodolzhaetsya razvitiye konfliktnoy situatsii mezhdu OAO 'Tekhsnabeksport i companiyey GNSS," Nuclear.ru Web Site, http://www.nuclear.ru, 3 December 2003.]
[3] "GNSS oprovergaet zayavleniye 'Tekhsnabeksporta' o prichinakh razryva kontrakta na postavku prirodnogo urana," Nuclear.ru Web Site, http://www.nuclear.ru, 28 November 2003.] {Entered 5/13/2004 DS}

1/14/2004: TENTH ANNIVERSARY OF THE HEU-LEU DEAL
On 14 January 2004, USEC Inc. and Tekhsnabeksport (TENEX) observed the 10th anniversary of commercial implementation of the US-Russia HEU Purchase Agreement. The project entails the conversion of 500 metric tons of Russian weapons-grade highly enriched uranium (HEU) into low-enriched uranium (LEU) fuel for nuclear power plants in the United States. In the first half of the twenty-year timeframe, a total of 200 metric tons of HEU, which is equivalent to 8,000 nuclear warheads, have already been recycled into fuel. The contract has been executed by the two companies on a commercial basis with no expenses to either government. Instead, the deal generates a significant income for Russia while supplying nuclear fuel for US power plants.
["Weapons-Grade Material for 8,000 Nuclear Warheads Eliminated Through the US-Russian Megatons to Megawatts Program," Joint Statement by USEC Inc. (USA) and Tenex (Russia) on the 10th Anniversary of the Implementation of the Megatons to Megawatts Program, Washington, DC, Moscow, Russia, 14 January 2004.] {Entered 1/27/04 DS}

11/10/2003: REQUEST FOR ADDITIONAL FUNDS TO PURCHASE DOWNBLENDED RUSSIAN URANIUM DENIED
Nuclear.ru reported on 10 November 2003 that a House-Senate Conference Committee did not allocate funds requested by the Bush administration to purchase additional quantities of downblended Russian HEU.  While the Senate supported the request, the House of Representatives denied it, arguing that taxpayer money should not be used for nuclear nonproliferation projects that were successfully funded by free market means during the last ten years. 
["Soglasitelnaya komissiya Kongressa SShA otkazala v finansirovanii dopolnitelnykh zakypok rossiyskogo NOU," Nuclear.ru Web Site, http://www.nuclear.ru, 10 November 2003.] {Entered 11/26/03 DS}

9/25/2003: RUSSIA REQUESTS INFORMATION ON LEU UTILIZATION IN THE US
On 25 September 2003, during a meeting between Chairman of the Accounts Chamber of the Russian Federation Sergey V. Stepashin and Comptroller General of the US General Accounting Office David M. Walker, Stepashin requested information on the U.S. use of Russian-origin LEU.  LEU is manufactured from HEU derived from dismantled nuclear warheads, shipped to the United States and then used to fabricate fuel for nuclear power plants.  Both parties discussed the overall implementation of the 10-year old HEU-LEU deal and possible parallel measures to assure the proper use of funds allocated by both parties for the project.
[Tatyana Belyakova,"Schetnaya palata RF prosit SShA predostavit informatsiyu ob ispolzovanii nizkoobogashchennogo urana iz Rossii," RIA Novosti, 25 September 2003; in Integrum Techno, http://www.integrum.com.] {Entered 10/16/2003 DS}

9/22/2003: CONGRESSMEN REQUEST ADDITIONAL PURCHASE OF DOWNBLENDED RUSSIAN URANIUM
On 22 September 2003, according to Nuclear.ru,three US House of Representatives members sent a letter to a House-Senate Conference Committee supporting the Bush administration's request to allocate $30 million for the purchase of additional quantities of downblended Russian HEU. The purchase of LEU on top of the amounts specified under the 1993 US-Russian HEU Purchase Agreement is considered the key component of the Accelerated Material Disposition Initiative. Additional LEU from Russia would be stored in US strategic reserves. A large share of the requested funds, $25 million, is planned for the acceleration of HEU downblending in Russia.
["Kongressmeny SShA predlozhili utverdit finansirovaniye dopolnitelnykh zakupok rossiyskogo NOU," Nuclear.ru Web Site, http://www.nuclear.ru, 24 September 2003.] {Entered 10/3/2003 DS}

2/27/2003:  NO MISUSE OF RUSSIAN AND US HEU DEAL FUNDS FOUND
Russia's Audit Chamber reported on its own investigations and parallel investigations conducted by the US General Accounting Office into the use of funds allocated by Russia and the United States to implement the HEU Deal.  The investigations did not uncover any irregularities in the use of these funds by either country.
[ITAR-TASS, 27 February 2003; in "Russia, US note adequate use of uranium utilization funds," FBIS Document CEP20030227000342.] {Entered 3/19/2003 CB}

2/17/2003:  RUSSIA NOT TO INCREASE LEU SHIPMENTS IN 2003
According to Vladimir Smirnov, Tekhsnabeksport director general, Russia will not increase the quantities of LEU shipped to the Unites States in 2003 from 2002 levels because the uranium market is currently slow.  If the uranium market should change significantly, Smirnov says, US and Russian officials will examine whether adjustments in the quantity of LEU shipped can be made.
["Russia Not to Increase Supplies of Low-Enriched Uranium to U.S. in 2003," Interfax, 17 February 2003.] {Entered 3/19/2003 CB}

11/17/2002: DEAL TO PURCHASE RUSSIAN HEU FOR US RESEARCH REACTORS NEARS COMPLETION
The United States and Russia are negotiating a deal involving the US purchase of Russian highly enriched uranium (HEU) to fuel several US research reactors, including one reactor at Oak Ridge National Laboratory’s (ORNL) Y-12 plant.  This deal fulfills one of the recommendations of the Expert Group on Accelerated Nuclear Material Disposition to use Russian HEU as fuel for US research reactors.  According to Bill Brumley, federal manager at the Y-12 plant, the proposal includes the US purchase of 250kg of HEU per year for up to 10 years.  The price of the purchase has not been decided. Officials hope, however, that the US and Russian governments can reach an agreement in December 2002, so that the contract can be signed in February 2003, and delivery of the first shipments can begin in May 2003.

The Y-12 plant will be responsible for receiving and maintaining the HEU shipments. The plant will not process the HEU, but will store it and distribute it on an as-needed basis.   Because this deal does not include dilution of the Russian HEU, it would represent the first US purchase of Russian HEU that does not involve "downblending."
[Frank Munger, "U.S., Russia near deal to ship uranium to Y-12," Knoxville News-Sentinel, 17 November 2002; in Lexis-Nexis Academic Universe, http://www.lexis-nexis.com.] {Entered 12/3/02 CB}

11/1/2002: RUSSIAN ACCOUNTS CHAMBER FINDS HEU-LEU REVENUES MISSING
An Accounts Chamber of the Russian Federation audit of LEU sales to the United States in 2000 and 2001 under the US-Russian HEU-LEU purchase agreement revealed that the federal budget had not received 4.4 million rubles (over $138,000 as of 1 November 2002) in sales proceeds. The results of the audit were made public at a meeting of the Chamber's board chaired by Sergey Stepashin on 1 November 2002. Due to a lack of regulations on depositing currency earnings, Tekhsnabeksport had transferred proceeds from the 2000-2001 LEU sales equal to $145.9 million to the federal budget both in rubles and US dollars. As a result, the corresponding bank had been charging currency conversion fees, which reduced the total state revenue. Also, the Chamber discovered that Minatom still had to negotiate with the US government the return of 87.4t of natural uranium feed component to reimburse Russia for LEU supplied by Tekhsnabeksport in 1993-1994.
["Schetnaya palata Rossii vyyavila narusheniya pri perechislenii v federalnyy byudzhet valyutnoy vyruchki ot realizatsii nizkoobogashchennogo urana," Business News Agency, http://www.abnews.ru/, 1 November 2002; in Integrum Techno database, http://www.integrum.com/] {Entered 11/11/2002 DA}

10/4/2002: US AND RUSSIAN OFFICIALS GIVE STATUS REPORT ON HEU PROGRAM
At a news conference on 4 October 2002, US and Russian officials stated that to date the "Megatons to Megawatts" program had transformed 150t of highly enriched uranium (HEU) - the equivalent of 6,000 nuclear warheads - into enough power plant fuel to provide 2 billion megawatt-hours of electricity. This is 1/3 of the total amount of HEU to be processed under the program.  According to Tenex General Director Vladimir Smirnov, Russia has earned $3.5 billion from the program since its inception in 1994.  Smirnov added that these earnings have been invested in such areas as research, environmental programs, nuclear power plant safety, and defense industry conversion.
["Russia Completes One Third of Uranium Deal with US," Interfax, 8 October 2002.] {Entered 10/16/02 CB}

6/20/2002: GOVERNMENTS APPROVE NEW HEU PURCHASE CONTRACT
On 20 June 2002, Nuclear.Ru reported that the new implementation contract for the HEU Purchase Agreement, initialed by USEC and Tenex in February 2002 (see the 2/25/2002 entry below), was finally approved by both the US and Russian governments.[1] The approval followed the signature of an agreement between DOE and USEC confirming USEC's status as the sole executive agent for implementing the HEU-LEU Purchase Agreement.[2] Under the new contract, USEC will continue to pay $90.42 per separative work unit (SWU) through 2002. Beginning in 2003 and for the duration of the contract, price per SWU will be determined by taking into account the average market price for uranium over the three preceding years to avoid negative impacts of world price fluctuations. Until 2013, USEC is obliged to purchase at least 5.5 million SWU, or about 30 metric tons of HEU, from Russia annually.[1,2] Nuclear Weapons & Materials Monitor reports that DOE officials did not comment on the allegations that former Russian Minister of Atomic Energy Yevgeniy Adamov was behind the Russian acceptance of the new pricing system.[3] These allegations reportedly caused the delay of US government approval (see the 3/18/2002 entry below).
Sources:
[1] "Pravitelstva Rossii i SShA odobrili usloviya novogo kontrakta, osnovannogo na 'rynochnom mekhanizme tsenoobrazovaniya', o postavkakh na amerikanskiy rynok rossiyskogo nizkoobogashchennogo urana v ramkakh Soglasheniya VOU-NOU," Nuclear.ru Web Site, http://www.nuclear.ru, 20 June 2002.
[2] George Lobsenz, "U.S. Approves New Pricing for USEC Russian Uranium Purchases," Energy Daily, Vol. 30, No. 119, 21 June 2002; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[3] "USEC-Techsnabexport Contract Approved by U.S., Russia Governments Action Follows Agreement on DOE-USEC Pact," Nuclear Weapons & Materials Monitor, Vol. 6, No. 13, 24 June 2002, p. 1. {Entered 8/19/2002 DA}
 
5/9/2002:  DOWNBLENDED HEU AGAIN BEING SHIPPED TO UNITED STATES
Nuclear.ru, citing a Minatom official, reported that shipments of downblended weapons-origin HEU from Russia to the United States had been renewed.  Shipments were halted temporarily during negotiations to replace the expired implementing agreement. The two executive agents finally initialed a new agreement in February (see the 2/25/2002 entry below).  According to the Minatom official, two HEU consignments were shipped to the United States in late April under the terms of the new implementing agreement.[1]  NuclearFuel reports that USEC also ordered a third shipment in late May. USEC had previously said they would order no more than two shipments while awaiting government approval of the initialed agreement.  At a press conference on 9 May 2002, Department of Energy Secretary Spencer Abraham said that the agreement had not yet been approved and noted further that final approval hinged on agreement on several domestic issues.[2]
Sources:
[1] "Rossiya vozobnovila postavki v SShA nizkoobogashchennogo urana...," Nuclear.ru Web Site, http://www.nuclear.ru/news/full/918.shtml, 8 May 2002.
[2] "S&P Lowers USEC's Credit Rating Again:  USEC Blames DOE 'Foot-Dragging' on Agreement," NuclearFuel, Vol. 27, No. 10, 13 May 2002. {Entered 5/10/2002 lgm}
 
3/18/2002:  APPROVAL OF NEW PURCHASE AGREEMENT MAY BE DELAYED AGAIN
Several problems have occurred since the new implementation agreement for the HEU Purchase Agreement was initialed by the US Enrichment Corporation (USEC) and Tekhsnabeksport (Tenex) in February (see 2/25/2002 entry below).  First, according to Nuclear Weapons & Materials Monitor, US Secretary of Energy Spencer Abraham said on 18 March that the Department of Energy (DOE) would not recommend approval of the initialed agreement until media reports of a possible conflict of interest raised by USEC's hiring of a consulting firm partially owned by former Russian Minister of Atomic Energy Yevgeniy Adamov while negotiations were underway had been thoroughly investigated.[1]  A second problem has arisen with USEC's efforts to resolve its longstanding dispute with DOE over contaminated uranium that DOE transferred to USEC at the time of its privatization.  There is uncertainty as to whether or not DOE and USEC must reach a final agreement on this matter before US approval of the initialed agreement can be given.[2]  Additionally, Russia objects strongly to the possibility of DOE replacing the contaminated uranium with material from the US national uranium stockpile.  According to Russia, such a replacement would violate a March 1999 agreement between DOE and Minatom to keep 11,000t of natural uranium from their respective stockpiles off the market to avoid causing distortions in the uranium market.[3]  In the meantime, a Minatom spokesman has said that although downblended HEU is available for shipping to the United States, Tenex is withholding shipment at the new prices pending final Russian government approval of the initialed agreement.[4]
Sources:
[1] "Media Reports Alleging Illegal Actions by USEC Being Evaluated by DOE," Nuclear Weapons & Materials Monitor, Vol. 6, No. 7&8, 31 March 2002, p. 10.
[2] "DOE, USEC Still Search for Off-Spec U Solution," NuclearFuel, Vol. 27, No. 7, 1 April 2002, p. 4.
[3] "U.S. DOE Offer to Clear Up Debt to USEC Stirs Strong Russian Objection," Nuclear Weapons & Materials Monitor, Vol. 6, No. 7&8, 31 March 2002, p. 10.
[4] "Rossiya poka ne budet prodavat uran," Izvestiya, 12 March 2002; in National Electronic Library, http://www.nns.ru/nel. {Entered 04/9/2002 lgm}
 
2/25/2002:  USEC-TENEX INITIAL NEW LONG-TERM DEAL
The latest round of negotiations in Moscow between the United States Enrichment Corporation, Inc. (USEC) and Tekhsnabeksport (Tenex), the Russian executive agent for the HEU Purchase Agreement, has led to the initialing of a long-term contract. Details of the contract have not been officially released, as both the Russian and US governments must first sign off on the agreement.  However, sources report that Tenex, contrary to previous assertions by the Russian government, did agree to substantially lower its prices over the remaining lifetime of the HEU Purchase Agreement.  According to Nuclear Weapons & Materials Monitor, while USEC will continue to pay roughly the same price in 2002 that was stipulated in the contract through 2001 (approximately $90 per separative work unit (SWU)), the price for 2003-2007 will be about 15% lower ($77/SWU).[1]  Beginning in 2003 and for the duration of the contract, the price for each successive year's deliveries will be determined by computing an average of the market price for uranium for the three previous years. In answer to allegations that the Russian Federation loses out on significant amounts of money, First Deputy Minister of Atomic Energy Vladimir Vinogradov argues that there is a great deal more involved in the contract than just the basic price.  Other items that require substantial expenditures of time and money, such as insurance, transportation, the process of exporting the uranium from Russia and importing it into the United States, are undertaken by USEC at no cost to Tenex.[2]
Sources:
[1] "Administration Shift Backing USEC, Rejecting Alternative Executive Agents for HEU Purchase Produces Initial Agreement," Nuclear Weapons & Materials Monitor, Vol. 6, No. 5, 25 February 2002.
[2] "Intervyu pervogo zamministra RF po atomnoy energii V. Vinogradova v svyazi s podpisaniem novogo kontrakta po Soglasheniyu VOU-NOU," Nuclear.ru Web Site, http://www.nuclear.ru, 6 March 2002. {Entered 3/19/2002 lgm}
 
1/30/2002: MINATOM EARNED $2.9 BILLION ON HEU-LEU DEAL
On 30 January 2002, Interfax reported that to date Minatom had earned $2.9 billion under the US-Russian HEU-LEU purchase agreement. According to Minatom, Russia exported 4,200t of LEU, equivalent to 141.4t of HEU, to the United States by January 2002. Minatom reported that the money had been spent on improving security at Russian nuclear power plants, environmental and conversion programs, and research projects.
["Minatom RF zarabotal po soglasheniyu VOU-NOU $2,9 mlrd.," Interfax, 30 January 2002.] {Entered 7/8/2002 DA}
 
1/24/2002:  NEW YEAR COMES AND GOES WITHOUT NEW CONTRACT
Negotiations to renew the contract between the US Enrichment Corporation (USEC) and Tekhsnabeksport (Tenex) for the purchase of Russian weapons-origin HEU remain stalemated as the two sides are unable to agree on an acceptable price for the Russian separative work units (SWU) involved in blending down weapons-origin HEU.[1]  The previous five-year contract expired at the end of 2001, but stipulated that the price then in effect be used for an additional year in the event of a failure to negotiate a follow-on contract on time.  According to a report by Interfax, USEC is seeking to reduce the price it pays for Russian SWU by 15% for the remainder of the HEU Purchase Agreement, set to end in 2013. As a result of the failure to reach agreement, USEC has so far declined to place any orders for 2002, and on 21 January Tenex suspended uranium shipments to the United States "for technical reasons."[2] According to NuclearFuel, Minister of Atomic Energy Aleksandr Rumyantsev has reportedly written to US Secretary of Energy Spencer Abraham to request a meeting in hopes that discussions at that level can break the stalemate.[3]
Sources:
[1] "Jan. 1 Passes With No USEC Tenex HEU Deal, Some Delays in Shipment Now Expected," NuclearFuel online edition, http://www.mhenergy.com, 7 January 2002.
[2] "Russia Suspends Uranium Supplies to U.S. For Technical Reasons - Techsnabexport," Interfax, 24 January 2002.
[3] "Russia's Minatom Said to Want Meeting With DOE in Light of Stalled SWU Talks," NuclearFuel online edition, http://www.mhenergy.com, 21 January 2002. {Entered 2/12/02 LGM}
 
1/22/2002: CHANGE OF COMMAND AT TENEX
According to a report in NuclearFuel, Tekhsnabeksport (Tenex) General Director Revmir Frayshtut submitted his resignation to the Russian government on 17 December 2001. His resignation comes amid speculation that a general housecleaning of the Minatom administration is underway to remove officials loyal to former minister Yevgeniy Adamov.  Rumors are also circulating that his resignation is connected with alleged improprieties in a payment scheme involving importation into Russia of spent fuel from Bulgaria's Kozloduy Nuclear Power Plant.  Kozloduy paid Tenex for this service through an offshore company headquartered in Liechtenstein and registered in the British Virgin Islands.  In addition, the Russian Audit Chamber has issued a report detailing Minatom mismanagement of spent fuel and radioactive waste storage facilities.  The report alleges that only 10.7% of funds earmarked for waste disposal between 1996 and 2000 were actually disbursed.[1]   Frayshtut's replacement as general director is Vladimir A. Smirnov, a businessman from St. Petersburg and a long-time associate of Russian President Vladimir Putin, who has had no previous connections with the nuclear energy sector.  One of the first items on Smirnov's agenda will be to find a way out of the impasse in the current negotiations on the continuation of the Russian-US HEU Purchase Agreement.[2]
Sources:
[1] Ann MacLachlan, "Fraishtout Gone; Ivanov, Shidlovsky Said Part of Bloodletting at Minatom," NuclearFuel, Vol. 26, No. 26, 24 December 2001, http://www.mhenergy.com.
[2] Mikhail Kozyrev, Aleksandr Bekker, Dina Vishnya, "From Paperclips to Uranium," Vedomosti, 22 January 2002; in "Vladimir Smirnov Named New Tekhsnabeksport Head," FBIS Document CEP20020122000611. {Entered 2/12/2002 lgm}
 
11/30/2001: CONSORTIUM SIGNS DEAL TO PURCHASE URANIUM FROM RUSSIAN WARHEADS
According to the Financial Post, Canada's Cameco, France's Cogema and Germany's Nukem have signed an amendment to their 1999 agreement with Tekhsnabeksport (Tenex) to purchase the natural uranium feed component returned to Russian custody by the United States as required by the HEU Purchase Agreement following the delivery of blended-down HEU derived from Russian nuclear warheads.  The amendment commits them to purchasing an annual amount of uranium equal to the US sales quota for Russian uranium. Over the life of the agreement, which lasts until 2013, Cameco and Cogema are committed to buying approximately 24,000t each, while Nukem will purchase about 8,200t.
["Cameco Secures Russian Warhead Uranium Supply," Financial Post, 28 November 2001; in "U.S.-Russia HEU Purchase Agreement," RANSAC Nuclear News, http://www.ransac.org, 30 November 2001.] {Entered 12/12/2001 lgm}
 
11/5/2001:   BUSH ADMINISTRATION  WANTS USEC TO NEGOTIATE LONG-TERM HEU CONTRACT
Despite the last minute approval by the Clinton administration of a new long-term contract negotiated by USEC and Tekhsnabexport (Tenex) in May 2000 (see the 1/22/2001 entry below), the Bush administration told USEC in October to go back to the drawing board and negotiate a new contract for one year only.[1]  Nuclear Weapons & Materials Monitor reports, however, that by the end of October, the administration's position had changed to the extent that they were directing USEC to negotiate a five-year contract with an option for an additional seven years. This directive came in spite of the fact that several U.S. utility companies had banded together to lobby the administration for the appointment of an additional executive agent (see the 8/28/2001 entry below) to administer the HEU Agreement after 2002.[2]
Sources:
[1] "USEC Told to Go Back to Table With Tenex for One-Year Deal," FreshFuel, Vol. 18, No. 631, 15 October 2001, p. 1.
[2] "Bush Administration Says No to USEC's Proposed HEU Contract With Russia," Nuclear Weapons & Materials Monitor," Vol. 5, No. 21, 5 November 2001, pp. 1, 15-17. {Entered 5/17/2002 lgm}
 
9/6/2001: BOOST IN TVEL CAPITAL SEEN LINKED TO US URANIUM EXPORT CONTRACT
According to Kommersant, sources at Minatom have suggested that TVEL acquire the Malyshev Mining Utility to increase its ability to compete with Tekhsnabeksport for the US-Russia HEU-exporting contract. (For more on the acquisition, see the 9/5/2001 entry under TVEL developments.)
["Nuclear War for U.S. Money. Ministry of Atomic Energy Enterprises Fighting for Uranium Export," Kommersant, 6 September 2001, p.2; in "Putin Edict on Boosting TVEL Capital Seen Linked to US Uranium Export Contract," FBIS Document CEP20010906000168.]{Entered 10/30/01 EC}
 
8/28/2001: US ADMINISTRATION CONSIDERS MULTIPLE AGENTS FOR HEU DEAL
Pressure from US utility companies for multiple agents to carry out the US-Russian HEU-LEU purchase agreement, coupled with an interest in development of advanced enrichment technology, has prompted the Bush administration to lean towards allowing for multiple executive agents, according to Nuclear Weapons & Materials Monitor. The US utility companies argue that USEC had monopolized the US uranium market, leaving no room for competition and market-driven pricing. They also claim that the absence of alternative agents jeopardizes both the domestic uranium supply and payments to Russia for the downblended uranium. One of the alternatives being considered by the US administration is allowing a consortium of domestic utilities to execute the HEU purchase agreement with Russia in exchange for their investment in the construction of an enrichment facility. A final decision on this issue has yet to be made, but the pressure to finalize it is mounting since the current contract between USEC and Tenex expires in December 2001. 
["Administration Considering Multiple Executive Agents to Carry Out U.S.-Russia HEU purchase," Nuclear Weapons&Materials Monitor, Vol. 5, No. 17, 28 August 2001, pp. 6-7.] {Entered 9/26/2001 ES}
 
8/3/2001: MINATOM NOT TO CHANGE ITS HEU-LEU AGENT
The Russian Ministry of Atomic Energy does not plan to change its executive agent--Tekhsnabeksport, or Tenex--in the US-Russia HEU Deal, according to First Deputy Minister of Atomic Energy Vladimir Vinogradov. He said that this issue had not been discussed at the ministry's top level lately and that media reports about the transfer of Tenex functions to Rosoboronprom were rumors. According to Vinogradov, 75% of Tenex shares belong to the state and the Ministry's goal is to increase state shares to 100%, thus changing the status of the company from a joint stock company to state ownership, as was decided at the Tenex shareholders meeting on 27 June 2001. This change will not affect the Tenex activity in implementing the HEU-LEU contract.
[Interfax Mining and Minerals News, 3 August 2001] {Entered 9/9/01 JP, Revised 10/12/01 ES}
 
7/23/2001: HEU DEAL PROCEEDING ON SCHEDULE
While the Russian Ministry of Finance has issued a report declaring that the United States is behind on payments under the HEU Purchase Agreement and that negotiations with regard to price and scheduling have been broken off, both Minatom and USEC, the US executive agent, maintain that the deal is going forward as scheduled. The current contract is set to expire at the end of 2001.  Negotiations for a new pricing contract have been frozen while the new US administration conducts its strategic policy review. One matter of contention for the new contract is the pricing policy for the LEU Russia delivers to the United States, specifically whether a fixed price or market price should be used. The outcome of the negotiations is very important for Russia, and for Minatom in particular, as receipts from the LEU sale constituted 29% of Minatom's hard-currency revenues and 10% of all non-tax revenues for the Russian government for last year.
[Mikhail Kozyrev, Maksim Trudolyubov, Aleksey Nikolskiy, "Propavshiy uran:  Minatom ne bespokoit nedostacha po VOU-NOU," Vedomosti, 23 July 2001, p.A3; in WPS Yadernyye materialy, No. 30, 25 July 2001.] {Entered 10/15/2001 lgm}

6/11/2001: PRESIDENT BUSH EXTENDS PROTECTION TO RUSSIAN PROPERTY RELATING TO HEU DEAL
On 11 June 2001, President Bush informed the US Congress that he is continuing an executive order from 23 June 2000 issued by President Clinton, which ensures that proceeds from the US-Russia HEU Deal and other property related to the deal cannot be seized by creditors. (For details on the 23 June 2000 order, please see the 6/23/2000 and 6/10/2001 entries below.) In his letter to Congress on the extension of guarantees to Russia, Bush said it is a "major national security goal to ensure that fissile material removed from Russian nuclear weapons . . . is dedicated to peaceful uses, subject to transparency measures, and protected from diversion to activities of proliferation concern."[1] Press secretary of the Russian Ministry of Atomic Energy Yevgeniy Bespalko said that Russia welcomes this decision of the US administration.[2] 
Sources:
[1] "Bush Continues Emergency Related to Russian Fissile Material," Press Release, US Department of State, 19 June 2001.
[2]  "SShA prodlili deistviye garantiy neprikosnovennosti dlya rossiyskogo urana," Interfax, 13 June 2001. {Entered 6/28/01 ES}
 
5/8/2001:  USEC'S HEU DEAL PRICING PLAN MAY THREATEN AGREEMENT
USEC, the only US supplier of enriched uranium for commercial nuclear power plants and the US executive agent in the US-Russian HEU Agreement, improved its economic performance recently, but may soon be facing tougher times. To remain financially viable, the company needs the White House to approve the new pricing policy for the HEU Agreement with Russia (see the 1/22/2001 entry below). According to an article in the International Herald Tribune, USEC's critics and competitors vehemently oppose the proposed revised agreement. They claim that such an arrangement would profit USEC at Russia's expense and may potentially harm the Megatons to Megawatts program if Russian officials become dissatisfied with prices and decide to reconsider the agreement. USEC President William Timbers has replied that the revised agreement has already been endorsed by the Russian executive agent and is supported by senior Russian officials. Timbers announced that the company expected the pricing agreement to become final before 2002.
[Peter Behr, "U.S. Firm in Eye of Uranium Storm," International Herald Tribune, 8 May 2001, http://www.iht.com.]{entered 6/01/001 GG}
 
4/2001: USEC REPORTS ON PROGRESS TO US SENATE FOREIGN RELATIONS COMMITTEE
A 3 April 2001 Uranium Institute News Briefing stated that the United States Enrichment Corporation (USEC) reported to the US Senate Foreign Relations Committee that 113 MT of highly enriched uranium (the equivalent to over 4,500 nuclear warheads) had already been converted to low-enriched uranium under the US-Russia HEU Agreement.  USEC also told the Committee that the HEU to LEU downblending program is 40% ahead of schedule. 
["Uranium Institute News Briefing 01.15," 4-10 April 2001, Uranium Institute Web Site, http://www.uilondon.org/uilondon/nb/nb01/nb0115.htm.] {Entered 4/30/01 GD}
 
2/19/2001: BUSH ADMINISTRATION TO REVIEW PROPOSED HEU DEAL PRICING CONTRACT
Nuclear Weapons & Materials Monitor reported on 19 February 2001 that the US National Security Council would review the proposed market-based pricing contract covering low-enriched uranium (LEU) purchases under the US-Russia HEU Agreement. The pricing contract was approved in the final days of the Clinton administration (see the 1/22/2001 entry below).  The decision to review the pricing of LEU and the proposed suspension of the US antidumping agreement with Russia was prompted by a letter from eight members of the US Commerce Committee who oppose the new terms of uranium imports from Russia.  USEC, the US company handling the import of Russian LEU under the HEU Agreement, had submitted an anti-dumping petition to the Commerce Committee.
["Proposed contract on HEU purchase to be reviewed by National Security Council," Nuclear Weapons & Materials Monitor, 19 February 2001.]  {Entered 4/2/01 GD}
 
1/22/2001: CLINTON ADMINISTRATION GIVES LAST MINUTE APPROVAL TO NON-MILITARY URANIUM EXPORTS TO THE UNITED STATES
During the last days of the Clinton administration, approval was given to a proposal that would allow the import of Russian uranium from non-military sources.  The United States currently buys Russian downblended uranium from nuclear weapons as outlined in the 1993 US-Russia HEU Agreement.  USEC, the US executive agent of the Agreement, has been losing money due to a difference in world market prices for uranium and the price that the US government agreed to in the original Agreement.  Russia agreed to lower the uranium prices in the Agreement in exchange for increased US import quotas for Russian uranium outside the HEU Agreement. The new proposal, approved by Undersecretary of Energy Ernest Moniz, covers Russian uranium imports until 2006.  However, it must receive final approval by the Russian government and the incoming Bush administration.  Russia's Ministry of Atomic Energy reported that in 2000 Russia downblended 30MT of HEU worth $550 million.
["USEC poluchila razresheniye pravitelstva SShA na torgovlyu rossiyskim uranom," Interfax, 22 January 2001.]{Entered 3/28/01 GD}
 
12/2000:  GAO REPORT ON US PURCHASE OF RUSSIAN HEU
In December 2000, the US Government Accounting Office (GAO) issued a report on its assessment of the impact on the US uranium and nuclear fuel production industries of the 1993 HEU Purchase Agreement between Russia and the United States.[1]  Overall, the GAO concludes that while the HEU Agreement has been beneficial to US national security by removing more than 100t of weapons-grade material from Russia, the benefits have come at some cost.  Contrary to the expectation that the agreement would be budget-neutral, the US government paid Russia $325 million to purchase a portion of the natural uranium feed stock from Russia in order to ensure that deliveries continued.  Moreover, the United States is now dependent on Russian-derived LEU for 40% of its total annual nuclear fuel sales.  While agreeing that the United States Enrichment Corporation (USEC) Inc. has, to date, fulfilled all its obligations as executive agent for the United States, it also notes that there have been continuing problems throughout the life of the agreement, and strongly recommends that government oversight of the complex agreement be strengthened to ensure that the implementation of the agreement is compatible with national security interests.  The full report is available at the GAO Web Site under reports (GAO-01-148).[2]
Sources: 
[1] "GAO Flags Nuclear Fuel Problems," Chemical & Engineering News, p. 18, 8 January 2001.
[2] "Nuclear Nonproliferation:  Implications of the U.S. Purchase of Russian Highly Enriched Uranium," GAO Report No. GAO-01-148, United States General Accounting Office Web Site, http://www.gao.gov,  December 2000. {Entered 2/19/2002 lgm}
 
12/7/2000: KONVERSBANK REPLACES MDM BANK AS CONTRACTOR FOR US-RUSSIAN HEU DEAL
On 7 December 2000, the Russian Ministry of Atomic Energy announced that the bank service contract for the $12 billion US-Russian HEU Agreement has been transferred from MDM Bank back to Konversbank. Because the Atomic Energy Ministry did not trust its previous leadership, Konversbank lost the HEU-LEU account in the early 2000 (see the 2/15/2000 entry below). Recently the chairman of the MDM Bank board became the acting chairman of the Konversbank board, and Minatom intends to charge Konversbank with servicing up to 80% of nuclear complex funds.
[Aleksandr Semenov, "MDM Bank poteryal $12 mlrd. po sobstvennomu zhelaniyu," Kommersant-daily, 8 December 2000; in Integrum Techno, http://www.integrum.ru.] {Entered 6/01/01 GG}
 
10/10/2000:  USEC ANNOUNCES 100 METRIC TON HEU TO LEU MILESTONE
On 10 October 2000, USEC, the US company overseeing the US-Russian  HEU deal, announced that 100MT of weapons-grade uranium, the equivalent of 4,000 warheads, had been converted into low-enriched uranium (LEU) for use in commercial nuclear reactors in the United States.  Approximately 3,000MT of commercial reactor fuel has been created so far.  According to USEC President and CEO William Timbers, USEC is ahead of the original government schedule for implementing the contract.
["USEC Megatons to Megawatts Program Reaches Milestone: Equivalent of 4,000 Nuclear Warheads Converted to Fuel for Power Plants," Business Wire Web Site, 10 October 2000, http://www.businesswire.com.] {Entered10/17/2000 GD}
 
7/7/2000: DELIVERY OF RUSSIAN LEU TO THE UNITED STATES IN PROGRESS
On 6 July 2000 Vice-President of USEC Charles Yulish told ITAR-TASS that Russia has resumed shipping of LEU to the United States as part of the HEU Deal.  Yulish said that one batch of LEU has been shipped and the next one is expected to arrive the week of 10 July 2000.  Russia halted LEU deliveries in June 2000 over an attempt by a Swiss creditor to collect on Russian debts by seizing the proceeds from the HEU Deal.  In late June 2000 US President Bill Clinton issued an executive order guaranteeing Russia's proceeds immunity from creditors, thus clearing the way for Russia to resume LEU shipments to the United States.
["Rossiya vozobnovila postavki nizkoobogashchennogo urana v SShA," Praym-TASS, 7 July 2000.] {Entered 7/12/00 YF}
 
6/23/2000: SHIPMENTS OF RUSSIAN LEU TO THE UNITED STATES TO RESUME
US President Bill Clinton issued an executive order on 22 June 2000 guaranteeing that Russia's proceeds from the HEU Deal will not be attached to an unrelated lawsuit filed by a creditor, the Swiss company Noga, to cover Russia's debt. Clinton's order cleared the way for Russia to resume shipments of LEU to the United States. Russia halted its delivery of LEU over an attempt by Noga to seize the proceeds from the deal.  USEC spokeswoman Elizabeth Stuckle said that shipments will begin again the week of 26 June 2000.
["Clinton Clears Uranium Shipments," Associated Press, 23 June 2000; in RANSAC Nuclear News, 23 June 2000.]{entered 6/27/00 YF}
 
6/10/2000: LEU DELIVERY HALTED; RUSSIA WANTS PROTECTION FOR LEU
On 6 June 2000, Nessim Gaon, president of the Swiss company Noga announced his intention to have Russian low enriched uranium (LEU) impounded in the United States in order to cover Russia's debt to Noga.[1]  Vitaliy Nasonov, a representative of the Russian Ministry of Atomic Energy (Minatom), said that Minatom has stopped delivering LEU to the United States as of 6 June 2000 pending Minatom and USEC's efforts to lobby the US government for immunity from Noga's lawsuit.  Russia will not resume LEU delivery to the United States unless the US government guarantees that Russian LEU will not be seized as a result of the lawsuit.  Russia could lose $350 million in 2000 alone if it doesn't resume deliveries of LEU and retain its rights to the LEU stored in the United States.[2]
Sources:
[1] "Minatom trebuyet ot SShA ignorirovat isk kompanii Noga," Izvestiya online edition, http://win.www.online.ru/rproducts/izvestia-izvestia-year/, No. 107, 14 June 2000.
[2] Aleksey Ivanov, "Noga nastupila na uran," Kommersant online edition, http://www.online.ru/rproducts/commersant-daily-month/, 10 June 2000.{entered 6/27/00 YF}

5/27/2000: RUSSIA AND USEC CONSIDER CHANGES TO THE HEU DEAL
The Financial Times reported on 26 May 2000 that USEC and Tekhsnabeksport (Tenex) have begun negotiating new terms for the HEU Deal.  USEC has asked the Russian government to decrease the price for uranium fixed by the original contract, citing the fact that the price named in the contract is ten percent higher than the current market price.  Tenex agreed, on the condition that Russia would be allowed to sell more uranium. The additional enriched uranium would not come from dismantled weapons, and the profits from the sales of additional uranium would go directly to Tenex.  Many US congressmen objected to the results of the preliminary agreement; they believe that this arrangement, though financially beneficial to USEC, would undermine the interests of several US companies specializing in mining and processing of uranium.  If the new contract is approved, it could be signed at the Russian-US summit in June 2000.
[Nancy Dunne, "US mulls Russian uranium deal," Financial Times online edition, http://news.ft.com, 26 May 2000.]{entered 6/21/00 YF}
 
4/11/2000: HEU DEAL BRINGS RUSSIA MORE MONEY IN 2000
On 11 April 2000, Deputy Minister of Atomic Energy Vladimir Vinogradov said at a news conference that Russia expects to earn more from downblending highly enriched uranium (HEU) in 2000 than in previous years, as part of the HEU Deal.  Russia will sign a contract in 2000 on downblending 30MT of HEU.  The contract is valued at $550 million.  In 2000, the cost of each separative work unit (SWU) is projected to be $87, up from $85 in 1993-1999.  The enterprises responsible for downblending the uranium will receive 3.94 billion rubles ($137.7 million as of 11 April 2000) in 2000, compared to 2.5 billion rubles ($87.38 million as of 11 April 2000) earned in 1999.
["Rossiya budet poluchat bolshe za rabotu v ramkakh uranovoy sdelki s SShA," Interfax, 11 April 2000.]{entered 6/21/00 YF}

2/15/2000: MINATOM TRANSFERS HEU DEAL ACCOUNT TO MDM-BANK
Russian journalists report that Minatom has transferred the account for HEU downblending programs and the HEU Deal from Konversbank, in which Minatom is the majority shareholder, to MDM-Bank.  While Konversbank was founded in 1989 by Minatom to serve its own divisions, MDM-Bank is known to be less transparent, thus giving Minatom a freer hand to manage its finances.  Tekhsnabeksport, the Russian executive agent for the HEU Deal, will retain its account at Konversbank. Minister of Atomic Energy Yevgeniy Adamov did not comment on the transaction.
[Yekaterina Kats and Yelena Gosteva, "Na Putina rabotayet dazhe atom," Segodnya online edition, http://news.mosinfo.ru/news, 15 February 2000.]{entered 3/7/00 FW}
 
12/1/99:  USEC WILL CONTINUE AS EXECUTIVE AGENT FOR HEU DEAL
On 1 December 1999, USEC's board of directors voted to continue as executive agent for the HEU purchase agreement until the agreement expires in 2001. The board decided to continue in this role despite the fact that  both Congress and the Clinton administration denied USEC's recent request for additional funds to cover increased costs of implementing the HEU deal. US Secretary of Energy Bill Richardson released a statement expressing support for the decision. (The full text of Richardson's statement is available.)
["Energy Secretary Richardson on U.S.-Russia Uranium Agreement," Federation of American Scientists web site, http://www.fas.org/nuke/.../991201-ctr-usia1.htm, 2 December 1999.]{entered 1/11/00 FW} 

11/2/99: MINATOM AND USEC RESOLVE CYLINDER DELIVERY ISSUE
USEC CEO William H. "Nick" Timbers and Russian Minster of Atomic Energy Yevgeniy Adamov met from 31 October to 2 November 1999 in Denver to discuss the delivery of product cylinders and other issues of implementation of the HEU Deal contract.[1]  USEC had earlier acknowledged delays in the delivery to Russia of cylinders used to ship downblended uranium hexafluoride, which Timbers said were caused by a manufacturing error on the part of a US supplier.[1]  Minatom had suspected that USEC deliberately delayed delivering the cylinders.[2] Timbers stated that a total of 428 cylinders would be shipped to Russia by 23 November 1993, which he said represented 103 percent of the total required for the UF6 deliveries scheduled for 1999.[1]  Adamov said that he would work to ensure that enough cylinders to fulfill the 1999 deliveries would be sent to St. Petersburg by 2 January 2000.  Adamov requested that payments for 1999 deliveries be accelerated in order to meet revenue expectations in the Russian government budget, and USEC agreed to waive the 60-day payment period specified in the contract and to accelerate payments.  Timbers further agreed to issue an order for deliveries in 2000 as soon as the parties sign an agreement on the storage of Russian natural uranium used to blend HEU down into LEU.  Finally, the two parties agreed to continue discussions on the adoption of market-based pricing for deliveries after 2001,[1] a contentious issue which Adamov had raised with United States government officials [2].
Sources:
[1] Nick Timbers, "Memorandum to John D. Holum, 2 November 1999," NuclearFuel, Vol. 24, No. 23, 15 November 1999.
[2] Michael Knapik and Wayne Barber, "Glitches in HEU Deal Coloring Debate in Washington Over USEC Subsidy," NucelarFuel, Vol. 24, No. 22, 1 November 1999.{entered 3/3/00 FW}

9/24/99:  USEC FILES ANTI-DUMPING SUIT WITH ITC
USEC filed a suit with the US International Trade Commission (ITC) on 24 September 1999, alleging that if the Russia continues to sell more enrichment services in the US market, the viability of USEC's gaseous diffusion plants could be put at risk.  The US-Russian HEU Deal requires the USEC to absorb large amounts of down-blended LEU, decreasing its productivity.  If the situation continues to deteriorate, USEC may be unable to fulfill the HEU agreement. USEC has also stated that if the ITC suspends the current antidumping agreements with Russia and Uzbekistan, its uranium sales would be harmed further.  Russia has responded that additional imports of Russian uranium would have little effect on the price, and that Russia also has a large interest in seeing prices of uranium stablize.
["USEC Warns About More Russian SWU," NuclearFuel, 4 October 1999, p. 16.] {Entered 11/1/99 MLB}

9/22/99: GAO ASSESSES HEU DEAL TRANSPARENCY MEASURES
In a report issued 22 September 1999, the United States General Accounting Office (GAO) found that while most of the transparency provisions of the US-Russian HEU purchase agreement have been implemented, a number of key measures were not yet in place, and US officials still lacked access to weapons dismantlement facilities.  Because the US government decided that part of the HEU should be downblended and shipped before transparency measures were fully worked out, roughly a third of the LEU delivered to the United States was shipped before the measures were implemented.  Russia agreed in 1996 to strengthen transparency measures in return for a $100 million advance payment on future LEU deliveries.  The most important strengthened measures include the use of portable US-manufactured equipment to confirm the presence of weapons-grade HEU at various stages in the dismantlement process and installation of US-made equipment for continuous monitoring during downblending. However, continuous monitoring equipment has been installed only at the Ural Electrochemical Combine in Novouralsk, and the possible installation of this equipment at the other two blending facilities in an unresolved issue.  US officials report that these measures provide confidence that weapons-grade HEU is being downblended into LEU and have given them unprecedented access to facilities in Russian closed cities; however, they will not be confident that all the LEU shipped to the United States was downblended from weapons-grade HEU until continuous monitoring equipment is operational at all three Russian blending facilities.  The United States proposed additional transparency and access provisions in March 1998, but while one Russian facility has expressed interest in a demonstration project, no progress has been made on an agreement to implement these enhanced measures. The full text of the GAO report is available in the NIS Nuclear Profiles Russian Full-Text Documents section.
[United States General Accounting Office, "Nuclear Nonproliferation: Status of Transparency Measures for U.S. Purchase of Russian Highly Enriched Uranium," GAO/RCED-99-194, 22 September 1999.]{Entered 12/9/99 FW}

 3/24/99: ADAMOV AND RICHARDSON SIGN HEU FEED ACCORDS
On 24 March 1999 at the Department of Energy's (DOE) headquarters in Washington, DC, US Secretary of Energy Bill Richardson and Russian Minister of Atomic Energy Yevgeniy Adamov quietly signed an agreement regarding the disposition of the HEU feed component, resolving several longstanding disputes for the United States, Russia, and the Western consortium (Cameco, Cogema, and Nukem).  The accord will last 15 years (the remaining lifespan of the HEU Agreement), and will allocate about 9,000MT (24 million lb U3O8 equivalent) of natural uranium hexafluoride (natural UF6) among the various parties on an annual basis.[1]  Foremost among the resolved disputes is a commercial contract for the natural uranium feed component with the Western consortium (Cameco, Cogema, and Nukem).  The consortium, which signed the purchase contract with Minatom on 25 March 1999, will have the exclusive option to purchase about 72 percent of the annual feed component stocks, or about 17.3 million lb U3O8 equivalent per year.[1]  Of that 72 percent, the companies' maximum possible shares are as follows: Cameco--45 percent (7.8 million lb U3O8), Cogema--45 percent (7.8 million lb U3O8), and Nukem--10 percent (1.7 million lb U3O80.  In 2002, these percentages will change to 42.5 percent, 42.5 percent, and 15 percent, respectively.  If the consortium were to exercise its options completely, the deal would be worth $2.8 billion at a spot market price of $10.75/kg.[2]

A key element of the HEU feed accords is the creation of uranium stockpiles in the United States and Russia.  The United States has promised to create a stockpile of no less than 22,000MT natural uranium equivalent, or 58 million lb U3O8, consisting of 30 million lb of DOE uranium and 28 million lb from the unsold 1997 and 1998 allotments, which the United States has agreed to purchase from Minatom for $325 million.  Russia will create an equivalent stockpile, to consist of uranium that the consortium has elected not to buy. (The United States and Russia signed a fissile material export agreement, making possible the repatriation of Russian material, which was previously illegal.)[1]  Under the agreement, Russia may make annual withdrawals from its stockpile of up to 2,580 MT of natural uranium for downblending HEU to LEU; for sale (directly or through Tekhsnabeksport) to the consortium; or, provided that Russia maintains a minimum stockpile of 22,000MT, for sale as LEU under existing contracts to countries listed in the Annex to the Assurances Agreement.[3]  As part of the HEU feed accords, Russia agrees to send inventory reports to the United States by 1 May annually.  The accords also give the United States the right to conduct one annual inventory of the uranium storage cylinders to verify Russian inventory reports.  Additional verification measures may be agreed upon subsequently.[4]

Two issues are still unresolved that could affect the smooth functioning of the 1993 HEU Deal: the US Department of Commerce procedures for monitoring the US feed quota in the United States and the outcome of several lawsuits filed by the Pleiades Group Ltd., which formed the company GNSS-Delaware with Tekhsnabeksport in 1997.  Pleiades argues that its contractual agreements are legally binding and that it has rights to sell some of the feed.  Tekhsnabeksport says that since the Russian government never legally approved the contractual arrangement, it is invalid.[1]

According to the New York Times,  a second part of the agreement sets up centers in Russia and the United States to enhance nuclear safety.  The US center, which will be located in the Idaho National Engineering and Environmental Laboratory in Idaho Falls, Idaho, will cost the United States about $1 million to open and up to $2 million annually to operate.  No site for the Russian center has been determined, but it will be located in Moscow.  A third part of the agreement provides Russia with assistance to help Minatom create a Russian nuclear crisis center similar to DOE's Emergency Operations Center in Washington DC.  (However, the text of the agreements published in NuclearFuel on 5 April 1999 does not mention the establishment of such centers.)  Adamov signed the accord hours after the NATO forces began bombing Yugoslavia.[5]  Russian Prime Minister Yevgeniy Primakov and US Vice-President Al Gore were to sign the accord on 25 March during Primakov's scheduled visit to Washington, DC, but Primakov canceled the meeting after learning on 22 March that NATO bombings were imminent.[5,6]
Sources:
[1] Michael Knapik, "With the Blessing of the U.S. and Russia, 3 Companies Sign HEU Feed Deal with TENEX," NuclearFuel, 5 April 1999, pp.1,2,11,12,13.
[2] "Three Companies Sign Contract for Option on Russian Feed: Gov't Officials Sign Agreement," FreshFUEL, 29 March 1999, pp.1,2.
[3] Agreement Between the United States Department of Energy and the Ministry of the Russian Federation for Atomic Energy Concerning the Transfer of Source Material to the Russian Federation, 24 March 1999.
[4] Annex to the Agreement Between the United States Department of Energy and the Ministry of the Russian Federation for Atomic Energy Concerning the Transfer of Source Material to the Russian Federation, 24 March 1999.
[5] Judith Miller, "U.S. and Russia Sign Uranium Sales Deal," New York Times, 27 March 1999, p.A1.
[6] Ian Lebedev, ITAR-TASS, 23 March 1999; in "Minister Views Russia, US Agreement on Uranium Fuel," FBIS Document FTS199903230001050. {Entered 4/23/99 KJ}

10/21/98: CONGRESS APPROVES $325 MILLION FOR PROPOSED FEED PURCHASE
On 21 October 1998, the US Congress passed a bill allowing the United States to spend $325 million to buy 11,000MT of uranium--equivalent to the feed component contained in the 1997 and 1998 deliveries of blended-down HEU--which will then be kept off the market by DOE for an extended period of time.[1,2] The bill was signed into law by President Clinton.[2]  The goal of the proposed purchase is to halt or reverse the decline in world uranium prices caused by the privatization of  USEC (see 7/23/98 entry, below). The proposed purchase is also meant to serve as an incentive to Russia to come to an agreement with the Cameco-Cogema-Nukem consortium on the HEU Feed Deal, as the purchase will not take place unless such an agreement is reached.[2,3]  Representatives of Minatom and the Western consortium companies met in Paris in late October, after the bill was signed, to discuss a 10-year purchase contract.[1,2] NuclearFuel quoted a source as saying that the US proposal "takes a big problem off the table," but there is no guarantee that the proposed purchase would result in uranium prices that satisfy both Russia and the consortium. The consortium is prepared to offer Russia a certain per-kilogram price at present, with possible additional payments in the future, should the market price rise. This does not suit Russia because export law requires that payment in full be received 180 days after the receipt of an export. Possible solutions to this impasse include further payments by the United States, either to Russia or the consortium, in order to mitigate the market risk, or the amendment of Russian export law to allow an exception to the 180-day rule for the HEU Feed Deal.[2]
Sources:
[1] Walter Pincus, "$525 Million for Russian Nonproliferation Deals Added to Bill," Washington Post, 1 November 1998, p. A 12; in online edition http://www.washingtonpost.com/.
[2] Michael Knapik, "Kazakstan Looking For SWU Quota, HEU Feed Talks Held in Paris, Spot U Price Declines," NuclearFuel, Vol.23, No. 22, 2 November 1998, pp. 1, 10-12.
[3] Michael Knapik, "USEC Reports Higher Costs, Says Earnings in FY-99 Won't Meet Analysts Expectations," NuclearFuel, Vol. 23, No. 21, 19 October 1998, pp. 1, 15-16. {Entered 6/28/99 VT}
 
9/22/98: RICHARDSON, ADAMOV SIGN "JOINT REPORT" ON HEU DEAL PROBLEMS
On 22 September 1998, US Secretary of  Energy Bill Richardson and Russian Minister of Atomic Energy Yevgeniy Adamov signed a "joint report" that provides a framework for resolving HEU-Deal problems arising from the privatization of USEC. The proposal includes the following provisions: the United States government shall defer sales of DOE uranium for the duration of the agreement, "oversee" uranium sales by USEC Inc., arrange for Russia to receive an advance against future deliveries, help repatriate part of the Russian-owned feed component, and share market analyses with the Cameco-Cogema-Nukem consortium; the Russian government shall continue deliveries in accordance with schedule for 1998 and sign an agreement with the Western consortium for sale of the feed component at a fair price.[1,2] This final provision is somewhat ambiguous, though Washington Nuclear Corp. stated that it means "Russia agrees to conclude a contract at prices lower than it originally agreed to." The Western consortium says it could pay between $15 and $19 per kilogram of uranium as UF6, considerably less than the price agreed upon in June (see the 8/98 entry, below). The Uranium Exchange Company called some provisions of the report "bizarre," stating that they would reduce the operational efficiency that privatization was supposed to give USEC, and USEC said it was "not quite sure what the language in the report means," but emphasized its willingness to cooperate fully on the issue.[2]
Sources:
[1] "U.S., Russia OK Framework to Resolve Snags in HEU Sale," Post-Soviet Nuclear & Defense Monitor, 1 October 1998, p. 7.
[2] Michael Knapik, Sergey Rybak, "DOE's Efforts to Advance HEU Deal Called Helpful But Not Sufficient," NuclearFuel, Vol. 23, No. 20, 5 October 1998, pp. 5-7. {Entered 6/16/99 VT}
 
9/2/98: HEU DEAL ISSUES DISCUSSED AT PRESIDENTIAL SUMMIT
Russian President Boris Yeltsin and US President Bill Clinton discussed the HEU Deal at their 2 September 1998 meeting in Moscow.[1] While no post-summit briefings indicated progress toward allaying Russian concerns involving the deal,[2] Yevgeniy Adamov, acting Minister of Atomic Energy following the most recent cabinet reshuffle, announced at a press conference on 4 September that the two presidents "agreed to control the [HEU feed component] issue at the government level."[1] The sale of the feed component has always been a contentious issue, and has encountered difficulties arising from the recent privatization of USEC (see 7/23/98 entry, below). According to a 24 August 1998 report by NuclearFuel, Adamov suggested in a letter to US officials that shipments of downblended HEU would cease until Russia received payment for the feed component.[3]
Sources:
[1] "Statement signed for uranium deal with U.S.," Nuclear News, October 1998, pp.66-67.
[2] Michael Knapik and Wayne Barber, "HEU Feed Deal Talks Shift to London; DOC Continues Shikoku Investigation," NuclearFuel, 7 September 1998, pp. 2, 16-17.
[3] Michael Knapik, "AVLIS Component Fails Early in New Test," NuclearFuel, 24 August 1998, pp. 1, 10-11. {Entered 12/20/99 LBN}

8/10/98: CRITICISM OF USEC PRIVATIZATION CONTINUES
Opponents of USEC privatization continue to criticize the now-complete arrangement. Thomas Neff, one of the founders of the HEU deal, estimates that the USEC could benefit by some $1.5 billion between 1998 and 2005 if it abandons the HEU deal, and noted that USEC's shareholders may push for the company to increase profitability by doing just that.
[Michael Knapik, "USEC Completes Privatization Process, Says 1998 Net Income Lower because of HEU Deal," NuclearFuel, Vol. 23, No. 16, 10 August 1998, 1,15-16.] {Entered 12/10/99 LBN}
 
8/98: CONSORTIUM WANTS TO REVISE COMMERCIAL TERMS OF FEED PURCHASES
The privatization of USEC has caused Cameco, Cogema, and Nukem to re-think their agreement, with Russia on purchasing Russia's HEU feed component. The agreement was reached in June 1998 and approved by the Duma on 17 July.[1,2] (See 6/16/98 entry, below.)  The consortium agreed to pay $34 per kilogram at that time, though the market price has since dropped to $28. USEC's plan to sell 78 million pounds of uranium will cause uranium prices to drop further, making the Russia-consortium deal disadvantageous to the three western companies. The New York Times reported on 5 August that Cameco had dropped out of the deal,[2] though other media reports indicated that all the parties wished to meet for further negotiation at the 9-11 September 1998 Uranium Institute meeting in London.[1,3] NuclearFuel reported that the consortium would seek a per-kilogram uranium price of less than $20, noting that Russia finds that rate unacceptable.[3]
Sources:
[1] Michael Knapik, "Shikoku Electric Tells DOC That U Deals Were 'Normal Commercial Transactions,'" NuclearFuel, Vol. 23, No. 17, 24 August 1998, pp. 1,11.
[2] Matthew L. Wald, "U.S. Privatization Move Threatens Agreement to Buy Enriched Uranium From Russia,"  New York Times, 5 August 1998, p. A6.
[3] Michael Knapik and Wayne Barber, "HEU Feed Deal Talks Shift to London; DOC Continues Shikoku Investigation," NuclearFuel, Vol. 23, No. 18, 7 September 1998, pp. 2, 16-17.{Entered 6/14/99 VT}
 
7/23/98: USEC BEGINS TRADING STOCK: POSSIBLE REPERCUSSIONS FOR HEU DEAL
On 23 July 1998, USEC Inc. began trading on the New York Stock Exchange, despite last-minute lobbying for postponement by prominent critics of the privatization scheme, including HEU deal architect Thomas Neff; Major General William Burns, who negotiated the deal; and Senator Pete Domenici.[1,2,3] Several experts believe that USEC privatization may lead to the collapse of the US-Russia HEU deal, as USEC's first priority will be its own corporate interests, rather than the national security considerations on which the HEU Deal is based. USEC's planned sale of 78 million pounds of uranium (11.6 million pounds of which was transferred from DOE in May) is likely to depress uranium prices, and will compete directly with the material extracted from nuclear weapons.[3,4]  The Clinton administration requested from Domenici that $200 million be set aside to subsidize the purchase of Russian uranium if problems arose following privatization, to which Domenici responded, "you would be much wiser to solve the problem by not creating it; reduce the amount of uranium transferred to the Enrichment Corporation before it is sold."[1] (Domenici initially supported privatization of USEC, but opposed it after the magnitude of USEC reserves came to light.[3])  Domenici ultimately refused to allocate the requested $200 million.[1] Some privatization critics estimate that if USEC drops out of the HEU deal, the United States may have to pay up to $1.5 billion to buy Russian uranium, nearly negating the revenue from USEC privatization.[3] USEC CEO William Timbers and USEC Board Chairman William Rainer assured the US government that USEC's actions as a private company would be aimed at ensuring a stable market and fulfilling its commitment to the US-Russian HEU deal.[1] The Clinton administration argues that it is in USEC's interest to maintain its role in the HEU deal, but privatization opponents are skeptical.[3]  Russian Minister of Atomic Energy Yevgeniy Adamov wrote a letter to Domenici stating that Russia considers the privatization of USEC to be a deviation from the agreement, and expressing doubt that USEC would be able to fulfill its HEU-deal obligations after privatization. Adamov stated that Russia expects the United States to ensure implementation should USEC drop out of the agreement, and noted that privatization could adversely affect the Russian parliament's willingness to work with the United States on nuclear arms agreements.[1,2]
Sources:
[1] Michael Knapik, "USEC Inc. Stock Begins Trading at $14.25; Timbers Backs HEU Deal, Healthy U Market," NuclearFuel, Vol. 23, No. 15, 27 July 1998, pp. 1, 15-16.
[2] George Lobsenz, "USEC IPO Imperils Arms Control Accords, Top Russian Warns," The Energy Daily, 27 July 1998; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com/.
[3] "USEC Stock Sale Successful, But Will It End the US-Russian HEU Pact?" Post-Soviet Nuclear & Defense Monitor, 5 August 1998, pp. 2-4.
[4] Julian Steyn, "Uranium: adequacy in a maturing marketplace," Nuclear Engineering International, September 1998, pp. 12-14. {Entered 6/10/99 VT}
 
6/16/98: RUSSIA CHOSES COGEMA, COMECO AND NUKEM FOR FEED SALE
According to Russkiy Telegraf, the Russian Ministry of Atomic Energy (Minatom) and three Western companies, Cogema, Comeco and Nukem, have signed an agreement in principle on the sale of Russian uranium stockpiled in the United States. Although its final provisions are yet unknown, the main provisions have already been approved by the governments of Russia, Canada, and the United States. The new agreement does not differ significantly from its previous version, and provides for the return to Russia of a substantial amount of uranium. In addition, all shipments may be effected directly through Tekhsnabeksport. The previous attempt by Minatom to reach an agreement in December 1997 with the same parties ended in failure. Russkiy Telegraf reports that the scale and complexity of the deal may mean that it will take several months to sign the final contract.
[Aleksey Zayko, "Prodayetsya uran so sklada v SShA," Russkiy Telegraf online edition,  http:/www.mosinfo.ru:8080/.../06/data/0616-17.html, No. 103, 16 June 1998.] {Entered 6/8/99/VT}
 
6/15/98: RUSSIA CONSIDERING TWO OPTIONS FOR FEED SALE
While Russia would still prefer to sell the feed component directly to the US Enrichment Corporation (USEC), the unlikeliness of this scenario has caused Russia to consider two competing proposals for selling the feed component, which were advanced by Global Nuclear Services & Supply (GNSS, the Tekhsnabeksport-Pleiades joint venture) and the Western "trio" of Cogema, Cameco, and Nukem.  According to Naseer Hashim, senior vice president and general counsel of both GNSS and Pleiades, the GNSS proposal is supported by three investment banks in the United States, France, and Switzerland (two of which are believed to be Banque Paribas and the Union Bank of Switzerland). Hashim said these banks were ready to finance the feed inventories in storage at USEC in order to return money to Russia immediately. One uranium market analyst said that selling feed only through GNSS could result in Russia receiving more money than would be the case under the Western trio's proposal. However, the US government's concern about Pleiades' involvement presents an obstacle to implementation.  Some sources believe that Russia's urgent need for money will result in the sale of a considerable amount of the feed component to the Western trio. Under this option, Russia will be able to repatriate 2,500 MT of feed annually, and some remaining quantities might be sold through GNSS. Although the Western trio and Russia signed a "protocol" at their last meeting in Moscow earlier this June, it is not clear whether the deal will be finalized. However, one source believes that the chances are good. Pleiades, in turn, is determined to protect its contract rights and "excellent" relationship with Minatom and Tekhsnabeksport; thus it is probable some concessions to GNSS will be made, which the trio could tolerate. In order to resolve the problem more efficiently, Adamov engaged the ministries of Finance, Foreign Economic Relations, and Foreign Affairs in the discussions,  fired several Minatom officials biased toward either option, and reassigned some Tekhsnabeksport officials closely involved with the feed issue.
[Michael Knapik, "Russia Considering Two HEU Feed Sale Proposals," NuclearFuel, 15 June 1998, pp. 2,18.] {Entered 6/7/99 VT}
 
6/98: ECONOMIC CRISIS IN RUSSIA MAY ACCELERATE HEU FEED PROBLEM RESOLUTION
The deteriorating economic situation in Russia may speed up the conclusion of the US-Russia HEU Feed Agreement. Since the economic crisis has pressured Minatom and Tekhsnabeksport to find a solution to the problem of selling the feed component under the US-Russia HEU Deal, an interministerial commission gave them the task of resuming negotiations with Cameco, Cogema, and Nukem in early June 1998. According to NuclearFuel, the Russian ministries of Finance, Foreign Economic Relations, and Foreign Affairs have recently discussed how to proceed with the deal.[1] Since annual worldwide demand for uranium is projected to rise from 65,000MT to 73,000MT, and Russia's  annual consumption of uranium (4,000MT) exceeds annual uranium extraction (currently 2,360MT), Russia's chief hope for meeting demand is to convert excess weapons-grade uranium and plutonium from dismantled warheads into reactor fuel, as well as develop new uranium mines. However, the Russian nuclear industry does not have money for these projects at the moment. Minatom can only get the money on the foreign market by selling stocks of downblended weapons-grade uranium, which it is having difficulty doing.[2]
Sources:
[1] Michael Knapik, Sergey Rybak, "Discussions With Western Companies Set to Resume Over HEU Feed Sales," NuclearFuel, 1 June 1998, pp. 4-5.
[2] Aleksey Zayko, "Minatom: vpered v proshloye," Russkiy Telegraf, online edition,  http://www.mosinfo.ru:8080/.../0609-22.html,No. 100, 9 June 1998. {Entered 6/4/99 VT}
 
5/20/98: RUSSIAN MPS MIGHT LOBBY FOR DISSOLUTION OF 1993 HEU DEAL
On 20 May 1998, Ivan Nikitchuk, deputy chair of the State Duma's Committee for conversion and high technology, said that Russia will lose $148 billion from the US-Russia HEU Deal over the coming 20 years. While the market price of the uranium was $160 billion, said Mr. Nikitchuk, the deal was worth only $12 billion. The committee's deputy chairman, Aleksander Pomorov, said that in 1993-1995 the United States had paid only 63 percent of the true value of the contract. According to Pomorov, the members of the commitee will lobby for the cancellation of the 1993 US-Russia HEU Deal.[1] On 27 April 1998 Novyye Izvestiya reported that the members of the committee also intended to pass a law banning the export of fissile materials. They claimed that Russia was selling uranium extremely cheaply, that this uranium might be used for military purposes by a potential opponent, and that Russia was squandering strategic material, of which it might not have enough. The source mentioned that the United States buys Russian LEU fuel at $780 per kilogram, but the feed component that it must give back to Russia stays in the United States because exporting it is forbidden by US law. If this situation continues, in 20 years there will be 150,000MT of Russian uranium on US territory.[2]
Sources:
[1] "Interfax Business Report," Interfax, Vol. 95, No. 1766, 21 May 1998; in "Interfax Business Report," FBIS-SOV-98-141.
[2] "Ne Zhelaya Znat, Chto Tam Broda Net," Novyye Izvestiya, 27 May 1998, p. 4; in "Deputaty Vvyazyvayutsya v Uranovuyu Voynu," WPS Yadernyye Materialy, No. 8, 31 May 1998. {Entered 6/2/1999 VT}
 
5/19/98: 1,187MT OF LEU ALREADY SHIPPED TO UNITED STATES
From 1 January to 19 May 1998, Russia shipped 150MT of LEU (derived from 4.3MT of HEU) to USEC, bringing the total amount of material USEC has received to 1,187MT of LEU (derived from 40.3MT of HEU from approximately 1,834 dismantled warheads). According to NuclearFuel, USEC expects to receive 723MT of LEU (derived from 24MT of HEU) in 1998.
[Michael Knapik, Sergey Rybak, "Discussions With Western Companies Set to Resume Over HEU Feed Sales," NuclearFuel, 1 June 1998, pp. 4-5.] {Entered 6/29/99 VT}
 
5/16/98: MINATOM WANTS TO REVIVE 1993 HEU DEAL TERMS
According to Russkiy Telegraf, Minatom is not satisfied with the procedure for bringing the feed component back to Russia because a large amount of it will still remain on US territory. Minatom also reportedly does not want to deal with the feed component. Hence, Minatom wishes to go back to the initial terms of the 1993 HEU Deal. In order to do this, Minatom reportedly plans to lobby for the US government's support, in particular during a planned meeting between Yevgeniy Adamov and US Senator Pete Domenici.[1] In an article published in Rossiyskaya gazeta on 16 May 1998, Viktor Mikhailov, Russian first deputy minister of atomic energy, said that Russia was not satisfied with the current state of cooperation with the United States on implementation of 1993 HEU Deal. For example, according to the 1994 implementing contract, one separative work unit (SWU) costs $82, whereas in USEC's long-term contracts the price per SWU increases to $110-120, and the difference goes to USEC's pocket. Mikhailov said Russia considers the profit illegal. According to Mikhailov, the United States violated the Vancouver Memorandum and the implementing contract, and began to pay for Russian LEU only 63 percent in dollars and 37 percent in natural uranium, on a barter basis. Moreover, Mikhailov states that the proposal by Cogema, Cameco, and Nukem to buy the feed component at "dumping prices" of $30-32 per kilogram would have led to 15-20 percent losses in profits for Russia, as well as the loss of quotas for the sale of natural uranium on the US market. As of 16 May 1998, Minatom has already signed or is in the process of signing contracts at prices over $40 per kilogram on some of the 5,400 MT of feed received as 37 percent payment for 540 MT of LEU delivered in 1997. Mikhailov said that the sale of this feed would be implemented "on a competitive basis," and the western trio is welcome to participate. Mikhailov stated that Russia is interested in markets in Europe, Japan, and Southeast Asia.[2]
Sources:
[1] Aleksey Zayko, "Russian Uranium Finds Its Way Home. Canadians Will Be Its Conveyors," Russkiy Telegraf, 16 May 1998, p. 4; in "Russia Seeks Solution to Uranium Export Problem," FBIS Document FTS19980519001002.
[2] Viktor Mikhailov, "Obogashcheniye cherez uran," Rossiyskaya Gazeta, No. 93 (1953), 16 May 1998, p. 2. {Entered 6/3/1999 VT}
 
4/14/98: KIRIYENKO SUPPORTS URANIUM SALES
At a Duma session on 14 April 1998, in response to a question by Deputy Nikitchuk, prime minister candidate Sergey Kiriyenko said that since Russia has enough HEU to ensure its security, selling excess uranium to nuclear countries should be no different than selling weapons. Kiriyenko doubted if HEU-LEU agreements with the United States undermine the national security of the Russian Federation. He said that every such agreement must be thoroughly examined, and if it threatens national defense capability, "appropriate measures will be taken." If not--"this practice should be continued."
[Yadernyy Kontrol, No. 3, May-June 1998, p. 12.] {Entered 6/7/99 VT}
 
4/9/98: MIKHAILOV PROVIDES DETAILS ON HEU CONTRACT
In an article on the Megatons to Megawatts contract, First Deputy Minister of Atomic Energy Viktor Mikhailov said that Russia's Central Bank has granted Minatom two years to deliver to Russia the proceeds from the sale of natural uranium received as reimbursement from the United States.  (Minatom is reimbursed for the natural uranium it uses to downblend its warhead highly enriched uranium (HEU), and then may sell the reimbursed uranium on the open market.)  However, Mikhailov said Russia does not directly use natural uranium to dilute its weapons-grade HEU to low-enriched uranium (LEU), but uses LEU enriched to 1.5 percent U-235 for dilution.  By doing this, Russia obtains 30kg of LEU per 1kg of HEU--dilution with natural uranium would produce only 24kg of LEU per 1kg of HEU.  Russia expends 3kg of natural uranium and one work unit (SWU) to obtain each kilogram of 1.5 percent enriched LEU.  During 1997, Mikhailov said that Russia supplied 540MT of LEU to the United States and was paid in cash, as agreed, for only the SWU component.  The remaining payment, a reimbursement of 5,400MT of natural uranium, resides in USEC storage facilities as uranium hexafluoride (UF6).  Mikhailov said that the 1998 LEU sales to the United States will add another 7,200MT of natural UF6, bringing the total amount of Russian-owned natural UF6 to 12,600MT by 1999.  Mikhailov said that Russia has concluded, or is in the process of concluding, contracts for part of this natural uranium at prices over $40 per kilogram.
[Viktor Mikhailov, "Voyna za milliardy: Proyekt VOU-NOU: megatonny yadernoy vzrivchatki - v megavatty elektrichestva," Gorodskoy kurer online edition,  http://www.sar.nnov.ru:80/~courier/14/txt/0140301.htm, No. 14, 9 April 1998.]{entered 1/8/99 KJ}

4/7/98: THE UNITED STATES IS READY TO COOPERATE WITH RUSSIA ON FEED DISPOSITION
On 7 April 1998, the United States government officially responded to Russia's proposal to renegotiate an arrangement for feed disposition, which indicated that the Ministry of Finance and Minatom wanted the United States to accept and pay for in full the LEU obtained from Russian downblended weapons-grade HEU.[1,2] Although Washington can not buy the feed as it did in 1995 and 1996, it wishes to "work with Russia to find a way to dispose of the uranium." Such cooperation may include participation of the US government  in contract negotiations on the sale of the feed component with the Western consortium, which is considered by Washington to be the best potential partner, and "encouragement of continued diplomatic and bilateral communications."[1] In order to satisfy Russia's demands to facilitate the transfer of the feed component to Russia, the United States is analyzing the possibility of utilizing the general language in Section 64 (Foreign distribution of source materials) and Section 111 (Distribution by the Department of Energy of source materials) of the US Atomic Energy Act (AEA), or to swap obligations with Canada, so that Russia could take back natural UF6 of non-US origin.[1,2] With respect to the AEA, it is theoretically possible to avoid Section 123, which obligates the parties to sign a cooperation agreement, by declaring that the transaction is in the national security interests of the United States. Swapping obligations with Canada involves stripping the US obligations from the natural UF6 feed component once it arrives in Canada and attaching it to Canadian material entering the United States. Canada is reported to have a procedure by which the Russian natural uranium could be sent back to Russia.[1] The United States is trying to discourage Russia from selling the uranium through Global Nuclear Services & Supply (GNSS) owned by Pleiades Group Ltd and Tekhsnabeksport. According to Naseer Hashim, a senior vice president and general counsel of GNSS, Pleiades and Tekhsnabeksport competed with USEC for six months "for the right to market the uranium from the HEU deal." The United States believes that the best option for Russia will be "to negotiate directly with companies that have existing contracts." However, Cogema, Comeco, and Nukem, which would like to renegotiate sales contract, may object if Russia decides to involve other companies in the deal.[2]
Sources:
[1] "United States Prepared to Work with Russia on Disposition of HEU Feed Component," Fresh Fuel, Vol. 14, No. 457, 27 April 1998, pp. 1-3.]
[2] Michael Knapik, "U.S. Preparing a Response on the HEU Feed, Relooking at AEA Language on U308 Exports," NuclearFuel, Vol. 23, No. 8, 20 April 1998, pp. 3, 11-12. {Entered 6/1/99 VT}
 
 3/30/98: RUSSIA SEEKS NEW APPROACH TO FEED COMPONENT SALES
On 30 March 1999, Russia informed the United States through diplomatic channels that it wanted the United States to consider accepting and "paying for in full" the LEU blended down from ex-warhead HEU. Although Russia expressed satisfaction with the implementation of the 1993 US-Russia HEU Deal and a strong wish for a rapid settlement of the feed component dispute, and Tekhsnabeksport began direct negotiations with Cameco (part of a consortium including Cogema and Nukem), Moscow has not yet rejected selling the feed through Global Nuclear Services & Supply (GNSS) owned by Pleiades Group Ltd and Tekhsnabeksport. Pleiades is of interest to Minatom and Tekhsnabeksport because it is "politically well connected in Washington and has good business credentials." However, this variant is less acceptable for the United States because of suspicions that some of the proceeds from the sale of uranium might be diverted from the Russian Treasury. Russia, meanwhile, proposed more options--for example, marketing the uranium directly as it is produced, or returning large amounts of it over the period 1998-2001 for storage in Russia. With respect to the latter option, Tekhsnabeksport proposed that 33,800 MT of feed from the 1997-2004 deliveries to USEC (67,700 MT total) be returned to Russia. According to Tekhsnabeksport, this transaction will prevent destabilization of world markets, maintain a reasonable price level, provide feed for HEU dilution over the next 15 years, and resolve the payment issue for storage of Russian-owned natural uranium at USEC's Portsmouth enrichment facility. Russia is also looking into possibility of selling uranium to Japan through GNSS, starting from 200-300 MT in a couple of years, with quantities increasing thereafter.[1] The Russian side also suggested that the US executive agent USEC should be replaced by the US Department of Energy (DOE), which means returning to the original government-to-government agreement under which the United States bought the feed directly.[1,2] In 1997, Tekhsnabeksport rejected the Western consortium's draft agreement under which it would market most of the feed because it allegedly contained such "humiliating" conditions as a recognition of $100-million advance payment as an external debt of the Russian Federation to Canada, France and Germany and Russia's responsibility to pay shipment fees to any destination, including Japan. The United States, in turn, has its own view on the issue of selling the uranium feed, including such options as auctioning the uranium, offering all companies holding existing uranium supply contracts with utilities a chance to buy some of the feed, or returning some quantity of the feed to Russia for "certain specific uses." Although the United States refused to sign an agreement allowing shipments of feed back to Russia, it proposed that Russian feed component be delivered to a Canadian site, which would enable Minatom to bring back the feed to Russia. Although it will be difficult for DOE to secure an additional $12 billion worth of Russian feed over 20 years if it becomes a new agent, some sources said that it could assist Minatom with finding marketing agents or holding an auction for the feed component.[1]
Sources:
[1] "Russian Government Proposes New Approach  for Selling HEU Feed Component to U.S.," NuclearFuel, Vol. 23, No. 7, 6 April 1998, pp. 3, 4-6.
[2] "United States Prepared to Work with Russia on Disposition of HEU Feed Component," Fresh Fuel, Vol. 14, No. 457, 27 April 1998, pp. 1-3. {Entered 5/27/99 VT}

3/23/98: GORE-CHERNOMYRDIN TALKS SOLVE ISSUES, ASSURANCES SOUGHT
On 9 March 1998 in Washington, DC at the semi-annual meeting of the Gore-Chernomyrdin Commission (GCC), US Vice-President Al Gore and Russian Prime Minister Viktor Chernomyrdin met for the first time since the dismissal of Viktor Mikhailov as Russian minister of atomic energy.  (Mikhailov was reassigned as first deputy minister of Minatom, but US government sources believe that he is no longer working on matters connected with the 1993 HEU agreement.)  Sources from Western consortium companies said that if there is to be a change in how Minatom sells its reimbursed natural uranium, they should know by mid-April.  A report from the GCC's Energy Policy Committee said that the United States noted that Minatom had requested its next advance of $100 million to further implement the HEU contract.  From Minatom's perspective, Russia noted, the remaining issues include selling the reimbursed natural uranium feed component and lifting trade restrictions on Russian uranium trade with the United States.  The committee's report also noted that the controversy regarding the contents of a cylinder was resolved. (see 10/1/97 entry)  Both Russia and the United States agreed to ship the cylinder from the port of Camden, New Jersey, where it has sat for the past several months, to USEC's Portsmouth, Ohio diffusion plant, where the other Minatom cylinders are stored.  Before the GCC meetings, Senator Pete Domenici wrote Gore expressing concerns over the handling of USEC privatization and implementation of the 1993 HEU contract.  In a letter dated 23 February 1998, Gore replied that his delegation to the GCC would seek an official, authoritative response from high levels about the changes in Minatom's approach to marketing its uranium to the United States.  Gore also said that the United States will begin sending monthly reports to Minatom and the Russian Ministry of Finance concerning the disposition of all transactions related to the reimbursed natural uranium, including participants, timing, volumes, and values.  The United States will compile information from the Department of Treasury, the Commerce Department, and USEC to make the reports.  The purpose for such reports is to increase transparency between Minatom and other Russian ministries, and between US agencies and their Russian counterparts.
[Michael Knapik, "No Bounce Yet for Spot U Price in U.S.; Gore Answers Domenici; GCC Reports," NuclearFuel, 23 March 1998, pp. 14-16.] {Entered 1/5/99 KJ}

3/17/98: PLEIADES CUT OUT OF URANIUM DEAL
During the spring of 1997, the US firm Pleaides Group, Ltd. (led by Alexander Shustorovich, a close friend of former Russian Minister of Atomic Energy Viktor Mikhailov) was cut out of the deal to sell the reimbursed natural uranium feed component on the open market due to resistance from the Russian State Duma and Russia's Oneksimbank.  Pleiades had promised to pay for all of Russia's reimbursed feed component within two and half years after the first delivery.  However, Pleiades seized upon an opportunity to buy the Russian feed another way and re-entered the natural uranium feed deal via a different avenue.  Part of Russia's uranium is exported to the United States through the Swiss-based company Global Nuclear Service and Supply (GNSS), which was owned partly by Minatom's Tekhsnabeksport (51 percent) and partly owned (49 percent) by the US firm Nuexco of the Concord group of companies.  On 23 September 1997 Concord's owner, Oren Benton, declared bankruptcy, and put up his share of GNSS for auction.  Since Oneksimbank services part of Tekhsnabeksport's accounts, it also had a claim on bidding for the remaining shares of GNSS.  However, the auction was put off indefinitely.  GNSS then established a subsidiary in Delaware and allowed Pleiades to buy the GNSS shares for $245,000, creating GNSS-Delaware.  In December 1997, Tekhsnabeksport received permission from Russia's Central Bank for a two-year deferment in paying for the uranium feed component and announced all reimbursed feed would be sold through GNSS.[1]  On 7 March 1998 the Minatom press service issued a report confirming Minatom's desire to increase sales of uranium via the GNSS.[2]
Souces:
[1] Yulia Latynina, "Inside Russia: Uranium Next Field of Battle for Oligarchs," Moscow Times online edition, http://www.moscowtimes.ru, 17 March 1998.
[2] Aleksey Zayko, "Russkim Uranom Budut Togorovat Amerikantsi," Russkiy Telegraf, 7 March 1998. {Entered 1/5/99 KJ}

3/13/98: SEN. DOMENICI MAKES SUGGESTIONS TO MINATOM ON URANIUM SALES
On 13 March 1998, Senator Pete Domenici, chairman of the Budget Committee and the Appropriations Subcommittee on Energy and Water Development, wrote to Russian Minister of Atomic Energy Yevgeniy Adamov offering suggestions on how the US-Russia HEU Deal could be "repaired," especially with regard to the sale of the feed component from the blended-down HEU. In his letter, the senator expressed concern over Russia's recent difficulties in securing due payment for the feed component under the US-Russia HEU Deal of February 1993. Domenici also expressed disappointment with Minatom's inability to efficiently market its uranium, which led to $150 million loss in 1997, and he predicted the loss of more than $200 million in 1998.  The senator said that organizational difficulties in Russia and small remaining sales opportunities on the uranium market accounted for such losses. He suggested that in order to sell and be paid for large quantities of uranium, Russia should sell part of it to western producers who are already established on the market and have long term contracts with customers, since they would be able pay Russia immediately. Domenici reminded Adamov that in 1997 Western producers offered Russia to buy large amount of uranium at prices $2 to $4 per kilogram above prevailing market prices, but Minatom and Tekhsnabeksport rejected the offer. He expressed hope that Russia would now start using this mechanism to "maximize its earnings" under the HEU Deal.
["Sen. Dominici Offers Suggestions to Minatom on HEU Feed, Weapons Plutonium," NuclearFuel, Vol. 23, No. 7, 6 April 1998, pp. 4-6.] {Entered 5/27/99 VT}
 
2/2/98: MINATOM ASSIGNS NATURAL URANIUM QUOTA TO GNSS
According to US Deputy Assistant Secretary of Commerce Joseph Spetrini, the Russian Ministry of Atomic Energy (Minatom) has assigned all of 1998's two million pound quota of reimbursed natural uranium feed to Global Nuclear Services and Supply Co. (GNSS).  Spetrini also reported in late January 1998 that the US Enrichment Corp. (USEC) had transferred some feed to GNSS's account in January 1998.  However, another government official (not named) seemed to contradict that information saying that the United States was still looking for clarification from "higher levels of the Russian government" as to who holds jurisdiction over the reimbursed natural uranium.  According to Russia's Council of Ministers Decree 861 (dated 25 August 1993), the natural uranium feed component would be taken from state resources or assets, and funds from the sale of downblended HEU would first go to a central government account.  Proceeds from the sale of the reimbursed natural uranium component would then be taken out for government use, while the balance (the enrichment and conversion proceeds) would go to Minatom.  However, for the first three years of the deal Minatom kept the uranium proceeds, maintaining that the central government was not funding Minatom.  Moreover, Russian budget documents indicate that, beginning in 1998, the government intended to return to the deal's original mechanism, keeping for itself the proceeds from the uranium sales.  Thus, Minatom (or Tekhsnabeksport as its agent) would only receive the commissions derived from the deal's exports.  In December 1997 Tekhsnabeksport and Minatom officials ended negotiations with a Western consortium (Cameco of Canada, Cogema of France, and the US subsidiary of the German company Nukem) and said that they would market the uranium feed through GNSS.  Furthermore, the officials said Russia's Central Bank accepted a two-year lag between payment of proceeds to the bank and delivery of the natural uranium feed.  Previously, all diluted HEU could not leave Russia without having a secured buyer, and by law all proceeds had to be paid to Russia's Central Bank within 180 days of delivery.  Acknowledging these apparent discrepancies, Minatom officials said they were obtaining approvals from "all relevant bodies" concerning the new arrangement.
["Minatom Assigns Entire NatU Quota to GNSS," FreshFUEL, vol. 14, no. 455, 2 February 1998, pp. 1-2.]{entered 11/4/98 FW}
 
1/12/98: US SEEKS ASSURANCES OF MINATOM PLANS FOR FEED COMPONENT SALES
NuclearFuel reported on 12 January 1998 that the United States will ask the Russian government for written assurances of stating that it approves of the sale of the reimbursed natural uranium fe