We start out first of all with the consideration of our own private ownership legislation which has come into being and recognize that through that there is the possibility of direct private dealings between suppliers in this country and customers abroad, be they governments abroad or be they private customers abroad.

Also, in certain of these nations they, too, are providing legislation which is in essence a private ownership type of legislation in those countries and therefore they will want to enter into transactions on a company-to-company or private-individual-to-private-individual basis.

Representative HOSMER. But those transactions would be under the ceiling?

Dr. TAPE. Those transactions are all recognized as being under the ceiling and within the framework provided by this agreement.

Representative HOSMER. In other words, if some U.S. utility decided to close down its nuclear plant, clean up its core, it could sell the contained U235, say, to a Japanese or Philippine purchaser under that agreement?

Dr. TAPE. It could be done as a private transaction.

Representative HOSMER. That is the kind of thing you have in mind? Dr. TAPE. I was thinking more of fuel suppliers where a fuel frabricator would undertake to get its own U235 and fabricate fuel elements; the fuel elements could then be transferred. This could be done under this new language.

Representative HOSMER. Are you contemplating some kind of business developing in this country of buying and selling U235 on a more or less brokerage basis?

Dr. TAPE. I think you are aware of an organization which has announced that it would undertake such transactions. When you say am I contemplating, I certainly am not as such but I can see that private enterprise left to its own devices, this could very well occur. There could be enriched uranium available which was not then needed by the owners, and a brokerage system could find a customer for more immediate use.

Representative HOSMER. Would that then more or less take the place of these direct sales that are being made? Could the brokerage business go to the AEC and buy a certain number of kilograms and possibly store it someplace and hold it for sale?

Mr. KRATZER. I think in principle this could happen but I would want to point out it is always open to the other government or the authorized private parties in the other country to deal directly with the Commission in obtaining the material which we are committed to supply by these agreements.

I do not think anyone is going to pay a brokerage charge unless they obtain some useful service by doing so, so long as they can get the material directly from the Commission at our published prices.

It is my belief that in general the private transactions will come about as an incident of some service provided by private industry: fabrication, conversion or reprocessing of material which under our private ownership legislation they become the owners of.

The fact that they are transferring it on a private basis under the agreement would really be merely incidental to some other useful service which they perform.

Representative HOSMER. Dr. Tape, then this implies, I rather suspect, difference in attitude and regulation as to ownership, on the one hand, and custody and possession of the fissionable material, on the other hand.

Is that correct?

Dr. TAPE. Are you referring now

SAFEGUARDS

Representative HOSMER. I am referring to just a brokerage outfit which may own some of this fissionable material. But what about the safeguards?

Dr. TAPE. Safeguards are, of course, aimed at the possessors of the material. So, I think it is quite clear that there can be a differentiation between the owner of record, if you wish, as contrasted to the possessor of the material as far as application of safeguards is concerned.

The important thing to us is that we want to know who has it, where it is, and what arrangements are being applied for safeguards. Representative HOSMER. We are not going to be involved in any loose handling procedures relative to the material itself?

Dr. TAPE. No, sir.

SEPARATIVE WORK

Representative HOSMER. Now this 161,000 kilograms of enriched uranium for Japan, 17,500 kilograms for the Philippines, a couple of hundred kilograms for the Danes, add up, again, against the capacity of our separation plants. I believe that the estimate is some time around 1975 these will be operating at capacity and new separative facilities will be required.

Do these agreements mean that the day is going to become earlier than 1975?

Dr. TAPE. No; they do not. The calculations and estimates which we have made take into account this kind of requirement. The earlier estimates as to the time new plant would be required, let us say toward the late seventies, were based on our analyses of what might be the U.S. involvement in supplying enrichment services on a worldwide

basis.

Mr. Hosmer, I would like to refer the committee to our May 24 letter to the committee which set forth our estimates of committed separative work-committed to date-versus our estimates of what the situation would be in the future. This is in response to an earlier request you had for an annual updating of this kind of commitment, and I think the letter and the charts and graphs shown there will indicate that the Japanese commitment is well within the estimates that we made at that time.

(The correspondence referred to follows:)

U.S. ATOMIC ENERGY COMMISSION,
Washington, D.C., May 24, 1968.

Hon. JOHN O. PASTORE, Chairman, Joint Committee on Atomic Energy, Congress of the United States. DEAR SENATOR PASTORE: Enclosed is the initial annual report on Outstanding and Anticipated Commitments for Uranium Enriching Versus Projected Enrichment Capability. This report covers all outstanding and anticipated commitments for the separative work component of all uranium required for Government programs or to be distributed by AEC to domestic and foreign customers by sale, lease or through the provision of enriching services.

This report was prepared in response to the request of the Joint Committee that AEC establish a mechanism for recording such data on a current basis and for reporting at least annually to the Joint Committee.

In addition to the report, which has been prepared on an unclassified basis so as to permit distribution to the public, we have included for the information of the Joint Committee a classified supplement which shows more detailed data on classified programs. These data are the basis for the total requirements in the category designated "Defense and Other Government Requirements." These requirements are not necessarily firm over the period of the projection; however, since they are largely defense oriented, they are considered as "commitments" for the purpose of this report.

You will note that we have stated the commitments and capabilities in terms of separative work. We believe that use of this common denominator provides the only convenient basis for realistic comparison of over-all supply and demand. The bulk of the requirements is, of course, for civilian power. The details of civilian power requirements were published in a report entitled: "Forecast of Growth of Nuclear Power-WASH 1084", copies of which have been provided to the JCAE. The separative work requirements tabulated in WASH 1084 are on a calendar year basis, and in the enclosed report they are presented on a fiscal year basis. Because of the continued growth of nuclear power throughout the period covered, the calendar year requirements are slightly higher than those for the corresponding fiscal year.

You will note in Figure I and in Table II that the separative work committed to date represents only a small portion of the existing capability. These commitments consist of projected Government requirements, the requirements specified in Agreements for Cooperation and amounts ordered by or covered by outstanding allocations to domestic licensees.

It will also be noted that the existing commitments to foreign customers for central station power are much higher than those to domestic customers for such requirements. The Joint Committee was advised on March 13, 1967, that, since long-term supply contracts were now available pursuant to the Private Ownership of Special Nuclear Materials Act, no further allocations would be made to domestic licensees. Thus, commitments to foreign customers generally consist of long-term needs, whereas for domestic licensees, except for those to whom allocations had been made before March 13, 1967, no long-term commitments have yet been made. Negotiations for enriching contracts are in progress with a number of domestic firms and it is expected that several agreements will be executed within the next few months.

In Figure I of the report we have included a case based on the "high" forecast for civilian nuclear power growth which is 120% of the "most likely" forecast. The amount of separative work available as used in Figure I assumes the "most likely" growth. Thus, it should not be compared directly with the "high" forecast because a different mode of operating the gaseous diffusion plants would be developed if the trends indicate that the “most likely" growth will be exceeded significantly.

In projecting the available capability, the effects of a cascade improvement program have been included. It is recognized that such improvements are subject to authorization and funding in future years. We expect to include these in future budget submissions.

We will maintain on a current basis the information to be included in these annual reports and plan to submit future reports shortly after the beginning of each calendar year. Any suggestions the Committee may have for improving the format of subsequent reports or otherwise increasing their usefulness would be appreciated.

Cordially,

GLENN T. SEABORG, Chairman.

REPORT ON OUTSTANDING AND ANTICIPATED COMMITMENTS FOR URANIUM ENRICHING VERSUS PROJECTED ENRICHMENT CAPABILITY, MARCH 1968

This report contains the statistical representation of the projected balance between the total outstanding and anticipated commitments for uranium enriching and the capability of the Atomic Energy Commission's gaseous diffusion plants to meet these needs. The information is presented in terms of separative work, which is the basic output unit of the enriching facilities.

1 Omitted: on file with the JCAE.

2 See app. 9, p. 269.

COMMITMENTS FOR URANIUM ENRICHING

The commitments for uranium enriching reflected herein are based on the most recent AEC projection of demands for enriched uranium, including Government requirements and distributions by sale, lease or through the provision of enriching services. Separative work requirements are calculated on a "net" basis: i.e., credit is allowed for the return of enriched materials, such as irriadiated power reactor fuels, for use as diffusion plant feed. The requirements are categorized as: Domestic Central Station Power, Foreign Central Station Power, Other Civilian Requirements, and Defense and Other Government Requirements. The separative work requirements for central station power are presented in detail for the "most likely" forecast of the growth of nuclear power through 1980. This corresponds to installed nuclear power generating capacities of 145,000 electrical megawatts in the United States, and 87,000 megawatts abroad which are assumed to utilize U.S. enriching facilities. Graphical representation is also included (see Figure 1) for a case based on the "high" forecast for civilian nuclear power growth, which is 120% of the "most likely" forecast. The "high" forecast is included to illustrate the current estimate of maximum demand on diffusion plant capacity. The "most likely" requirements are based on a gaseous diffusion plant tails assay of 0.20% U-235 through 1980; the "high" requirements are based on a tails assay of 0.20% U-235 through FY 1975 and 0.22% thereafter (0.22% represents a better optimization of tails assay in the later years for the "high" requirements). These requirements also assume plutonium recycle in thermal reactors starting in CY 1974.

The Other Civilian Requirements consist primarily of the demands for highly enriched materials for domestic and foreign research and test reactors, engineering test reactors, critical facilities, etc.

The Defense and Other Government Requirements include projected net separative work requirements for weapons and for the Navy, Army and Space programs, as well as for production reactor support. The latter are based on continued operation of seven AEC production reactors.

PROJECTED ENRICHMENT CAPABILITY

The major assumptions used in projecting enrichment capability are: a. Gaseous diffusion plant power usage levels as shown in Table I.

b. A diffusion plant operating mode developed to meet the "most likely" nuclear power requirements in an optimum manner. (If the actual growth of nuclear power should appreciably exceed the "most likely" forecast, the optimum mode of operations would call for a more rapid increase in power usage levels with a corresponding increase in the amount of separative work available.)

c. A major gaseous diffusion cascade improvement program (CIP) will be implemented with installation of improved equipment during the period FY 1972 through FY 1977. (Separative work obtainable from a possible power uprating program is not included since sufficient data relative to this program are not available at this time.)

d. The inventory of preproduced enriched uranium will be reduced to zero by the end of FY 1980. (Studies are currently being made to determine, from operational considerations, an appropriate level for a "flywheel" inventory of enriched uranium to assure meeting delivery commitments.)