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. Last Updated: 07/27/2016

Russia, U.S. Extend Key Uranium Deal

Ending months of tense negotiations over price, Russia and the United States have agreed to extend 1993's landmark "Megatons to Megawatts" deal under which America buys highly enriched uranium from dismantled Soviet warheads.

Sources close to the negotiations said Tuesday that America's official commercial agent in the deal, USEC Inc., and Tenex, a commercial arm of Russia's Nuclear Energy Ministry, signed an agreement last week that establishes price terms for the remainder of the project, due to end in 2013.

Russia earned some $500 million a year under the previous contract, which expired Dec. 31., but it is likely to earn less under the terms of the new contract, officials from both sides said Tuesday.

The new terms call for Russia to receive from its uranium the equivalent of about $70 per separative work unit (SWU) of fuel -- some two-thirds of current world spot prices and 22 percent less than it received from 1993 to 2001, the Financial Times reported Tuesday. However, the agreement allows for some price flexibility, depending on the behavior of the much-regulated yet competitive nuclear materials market.

The U.S. side had demanded a 15 percent price reduction since early last year, which former Tenex chief Revmir Frayshtut resisted, prompting the expiration of the old contract without having a new one in place.

But that resistance apparently left Tenex with Frayshtut, who was replaced in January by Vladimir Smirnov, like President Vladimir Putin, a St. Petersburg native.

Before the next shipment, usually about 3 metric tons of blended-down, bomb-grade uranium, can set sail, the governments of both countries must formerly approve the deal struck between Tenex and USEC, but representatives from both sides said they expected that to happen soon.

The next shipment is scheduled for next month.

Over the past seven years, the equivalent of nearly 5,600 nuclear warheads, or some 141.4 tons of high-enriched uranium, have been converted and used as fuel for nuclear power stations. By 2013 the figure is expected to reach 500 tons.

Fuel created from old Soviet nuclear weapons accounts for roughly half of U.S. nuclear power generation, the equivalent of 10 percent of all electricity consumed in the United States.

Both countries have repeatedly said that they view the program as too important for disagreements not to be resolved.