Areva plans to build $2 billion uranium plant in Idaho

French-owned energy services company Areva NC Inc. will build a $2 billion uranium enrichment plant near the eastern Idaho city of Idaho Falls, after winning tax concessions from the state Legislature.

The plant will be built near the Idaho National Laboratory, where scientists have done research into nuclear energy since the 1940s, the company said Tuesday.

A late-session push in the Legislature earlier this year extended a sales tax exemption for production equipment that handles nuclear fuel and capped property tax valuations at the proposed plant at $400 million.

Areva expects its new plant to begin enriching uranium by 2014. A program in which Russia has been converting weapons-grade uranium to uranium suitable for use in electricity-producing reactors and selling it to an Areva rival expires in 2013.

Meanwhile, an aging uranium enrichment facility in Paducah, Ky., now the only operating enrichment plant in the United States, is due to be shuttered because of high energy costs.

"Areva will join Idaho in its long established tradition of stepping up when the country needs something," Michael McMurphy, Areva NC's president and chief executive officer told a news conference here Tuesday. "It's needed for the existing nuclear fleet, not just new nuclear power plants."

There are 104 commercial nuclear reactors in the U.S., and the federal Nuclear Regulatory Commission took applications to build seven new commercial U.S. nuclear reactors last year, with 25 more licensing requests expected through 2009. As interest in nuclear power grows, there are two other uranium enrichment plants being built in the United States, one in southeastern New Mexico and another in Piketon, Ohio.

Areva NC, headquartered in Bethesda, Md., is a subsidiary of France's Areva Group. Areva also is building a similar, larger uranium enrichment plant in France, which gets 80 percent of its electricity from nuclear reactors.

Areva selected Idaho over sites in Washington state, Ohio, Texas and New Mexico.

The company cultivated support from Idaho lawmakers, local politicians and economic development officials, in part by promising thousands of construction jobs and about 250 full-time jobs averaging up to $70,000 annually when the plant is completed.

U.S. Sen. Larry Craig, R-Idaho, called Areva's decision to build its plant in Idaho "historic in character," comparing it to the 1955 Idaho National Laboratory experiment in which electricity from a reactor was used for the first time to power a city, nearby Arco. Craig said he was first contacted by Areva in early 2007.

"Immediately, the Idaho congressional delegation along with the governor's office began to work with Areva," Craig told reporters Tuesday. He said there were at least 10 meetings between May 2007 and January 2008 in which an economic development proposal was developed to lure to company to Idaho. "This is the culmination of that process."

U.S. Sen. Pete Domenici, R-N.M., was downcast at losing the uranium enrichment project. He learned from Areva Group CEO Anne Lavergeon Monday that Idaho had offered the best overall economic package, including the tax breaks, as well as the availability of water and utilities, and local support.

"To say I'm disappointed with this decision would be an understatement," Domenici said.

U.S. Rep. Doc Hastings, R-Wash., said his state, including Democratic Gov. Christine Gregoire, didn't do enough to win the plant.

"Idaho welcomed them with open arms while Olympia's response was lukewarm at best," Hastings said, adding he fears losing 600 existing Areva jobs in Richland, Wash.

Areva NC has worked at the Hanford nuclear reservation near Richland since 1996, providing engineering services and technical support for waste management and environmental protection.

Calculations by the Bonneville County assessor's office for The Associated Press earlier this year indicated the plant's tax assessment could be reduced to about $3.8 million annually under the $400 million cap. If the property's taxable value were $2 billion, its annual payments could be around $19 million, according to those calculations.

With the sales tax exemption, if Areva buys $500 million worth of centrifuges and other production equipment, the company would save around $30 million, based on Idaho's 6 percent sales tax.

"Everything was considered," McMurphy said on why Idaho was chosen. "We considered the site characteristics. We considered the technical aspects. And, of course, we're in business to make a profit. We did consider the economic package."

State Senate Majority Leader Bart Davis, R-Idaho Falls, said he was approached late last year about winning legislative support for the incentives.

"I was told we were competing with other states that were very aggressive in their economic incentives and this would be an important component," Davis told the AP. "We went after it."

Before the eastern Idaho plant is built, Areva still must get approval from local, state and national agencies, including a license from the Nuclear Regulatory Commission to construct and operate the facility. That could take three years, said Sam Shakir, general manager of Areva's enrichment program.

Company officials stressed the safety of the plant, saying Areva won't win federal approval if regulators aren't satisfied. Uranium at the plant will likely arrive from other states, Canada and France to be enriched, then shipped elsewhere for further fabrication before it's sent to commercial nuclear reactors in other states. Areva plans to use separate U.S. Department of Energy facilities to dispose of the depleted uranium that remains.

"It's not a very dangerous facility," Murphy said.

Still, Idaho-based nuclear watchdog Snake River Alliance, a critic of the proposal since it became public in January, called Idaho's selection a "shortsighted effort to expand nuclear power" at the expense of renewable energy.

"About 90 percent of what comes out of a uranium enrichment plant is depleted uranium hexafluoride waste, which is radioactive and chemically toxic," said executive director Andrea Shipley.