May 24, 2013

Kentucky Uranium Plant Closed - Questions Arise

The reasons for the closing of the Paducah Gaseous Diffusion Plant in Kentucky doesn't sound right, as the reason given by Department of Energy officials was it "couldn't reach an agreement that was 'viable for us as responsible stewards for the taxpayers.'"

It was the only government-owned and operated uranium enrichment facility in the United States.

While it's good that it's leaving the government's hands, as the government doesn't belong in business, it does raise questions as to why it couldn't have been passed on to another private company.

Obviously, the wages and benefits of the workers were far beyond market rates, which is a big part of the problem, as they made on average $125,000 a year, including benefits.

With the government saying they couldn't reach an agreement, it smells of radical and irresponsible leaders within the steelworkers union, who apparently decided to dig in and not give back the outlandish wages and benefits they received from the taxpayers. In that regard it's no loss.

This is typical of workers receiving government compensation. It's all fine until market forces pressure prices down, as it did when the at the Fukushima plant in Japan, which was a part of the reason given for having to close the plant, as prices dropped and the huge production costs, including electricity and labor, couldn't support the business.

As for uranium demand, the idea there is no market for it is ludicrous. Go to this article on uranium and the current and future demand the there is.

What is probably meant is these workers were so overpaid the uranium they enriched was priced way above market prices. The result is the plant being shut down.

In the short term there was an uranium glut, but Japan is expected to start bringing its reactors back online, so that should help with that situation.

USEC (which operated the plant) spokesman Jeremy Derryberry said this was already in the wind before the Fukushima, meaning this closure wasn't only about too much supply and price.

Kentucky Republicans Mitch McConnell, U.S. Sen. Rand Paul and U.S. Rep. Ed Whitfield, issued a joint statement saying they were disappointed the DEO couldn't reach an agreement to allow the facility to operate for at least another four months.

Some workers will remain on the job in order to fill customer orders and manage inventory. The site itself will be turned back to the DOE in 2014.

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