Back in October, when I identified Shaw Group
Before getting to the American Centrifuge Plant debacle, let's look at how USEC operates today.
Utility customers pass along uranium hexafluoride (UF6) that they've sourced from suppliers like Cameco
The end result of this process is a batch of low-enriched uranium, along with some nasty depleted uranium byproduct. USEC also purchases about half of its low-enriched uranium from dismantled Soviet-era warheads under the megatons to megawatts program. Russia has made clear its intent to raise prices in the fairly near future.
Given the power plays involved, it would behoove USEC to quickly shift toward a less energy-intensive, centrifuge-based enrichment technology, variants of which are already employed by just about everyone else in the world, save for Areva (OTC BB: ARVCF). Hence, the importance of the American Centrifuge Plant.
Contract work provided by Fluor
At the end of the day, USEC's shift to centrifuge technology will be painful, but it will happen. You hear about certain banks being too important to fail, and given its unique position in the American energy ecosystem, I would argue that the same holds true here. Whether that makes USEC a compelling buy at today's depressed prices, I'm not prepared to say, but it's certainly watch-list-worthy.