How is it possible that the United States, which invented uranium enrichment, now finds itself with hardly any capacity to process uranium, dangerously vulnerable to interruptions in electricity generation, and highly dependent on foreign sources, notably Russia?

The answer lies in the continuing debate about what is properly a government function, and what is better left to the private sector.

We are torn. One side says that whatever the task, the private sector can probably do it better; companies can modernize, economize and operate more efficiently than the public sector can.

The other is that some parts of the economy are too basic, and too important, to be operated on a least-cost basis, and that only government can do that work. On that list is infrastructure critical to electricity, which is the mother’s milk of the modern economy. But other traditional pillars of prosperity are also up for debate under the Trump administration, including a postal system with universal service, a national passenger rail system, air traffic control, and weather forecasting. Despite the tension between the two approaches, government used to follow the idea that it had to do the work the private sector could not or would not, if the work was needed to make the rest of the economy function. At times, though, we have drifted away from that.

The demise of U.S. nuclear fuel processing capacity demonstrates that politicians ought to make more rational assessments of what the private sector shouldn’t be asked to take on. Companies can design, build and operate factories, but there is a limit to the financial and geopolitical risk they can be asked to take on. If it’s critical to the economy, government will have to provide a backstop.

The technology to sort out uranium atoms into ones that are easy and not easy to split in a fission reactor was invented here more than 80 years ago as part of the Manhattan Project. The easy ones, U-235, comprise just 0.7 percent of natural uranium ore. The balance is U-238, which has important uses in a reactor but can’t be used on its own to run the kinds of power reactors we have in the United States. The two atoms are chemically identical but U-238 has more mass (as the number suggests). Today, centrifuges do the work of separating the two atoms by spinning so fast that the uranium mixture inside is subjected to forces about 1 million times stronger than gravity.

The need for enrichment is expected to soar because reactor operators are delaying plant retirements (and even reversing them) and because reactors that now run on 5 percent enrichment may soon want 7 or 8 percent, so they can go longer between refueling or can use fuel that is coated with materials that improve safety (but which demand more reactive fuel). The advanced reactors moving towards commercial deployment with federal help mostly want enrichments just below 20 percent.

Mathematically, this isn’t as challenging as it looks. It takes more effort to get from natural uranium to 5 percent enrichment (from one part in 141 to one part in 20) than it does to get from 5 percent to 20 percent (one part in five).

But the enrichment industry is inflexible. It takes years to add capacity, and the companies in that business are reluctant to do that, because once the machines are up and running, it is very difficult to stop production.

“Can’t” or “Won’t” Should Be a Cue

Our current national nuclear strategy is asking enrichment companies to add capacity to fuel reactors that haven’t quite been invented yet, let alone deployed.

That is a tough ask for private companies, and that’s why the major enrichment companies aren’t private. The two leading companies are Orano, owned by the French government, and Urenco, a German, Dutch, and British consortium. Only the United States tried to turn the job over to the private sector.

It wasn’t always that way. The American civil nuclear age began with a government operation; the Atomic Energy Commission (AEC) opened three gigantic enrichment plants, which made high-enriched uranium for weapons and for the propulsion reactors in submarines and aircraft carriers.

The problem was that the government program inherited the original Manhattan Project technology, called gaseous diffusion. Originally, this was simply an activity of the AEC. Then it was re-organized into a separate program within the AEC (and then the Department of Energy, a successor agency) as the United States Enrichment Corp., or USEC.

USEC sowed the seeds of its downfall when it stopped offering enriched uranium to the nuclear energy programs of America’s allies, because it did not think it could keep up with projected demand. European customers went out and built their own, with the technologically-superior centrifuge system. Those use about 90 percent less electricity.

Even giving up on foreign customers, USEC needed to expand and modernize. The Nixon administration first proposed privatization, and the government hired Smith Barney to analyze the options. In 1990, the consultants came back with the idea that USEC could do the job better if it were freed from government restraints. As a government-owned, contractor-operated fleet of factories, all running on cost-plus contracts, there was no incentive to improve operations, the consultants said, and there was none of the flexibility that normally attached to private industry.

And in 1998, it was sold to investors.

But the privatized USEC botched the modernization. It dabbled with centrifuge technology and laser enrichment and failed at both.

Then diplomacy made the problem worse. In 1993, USEC became the “executive agent” for a 20-year deal between Washington and Moscow to have the U.S. buy Russian uranium that had been enriched for weapons use in Soviet times.

The Megatons-to-Megawatts deal was a lifeline for Boris Yeltsin, then Russia’s president, and for USEC, which could dilute the enriched uranium to meet the specifications of utility customers, using some of the massive stock of uranium that had been stripped of half of its U-235. But it put off the day of reckoning for how to meet American needs. And when the deal ended, the solution was to buy enriched uranium from the Russian state nuclear monopoly, which controls about 40 percent of the world enrichment market.

USEC eventually closed its obsolete enrichment plants, and went bankrupt. But it was re-organized into a new company, called Centrus, which is still in business.

Damage from USEC’s failure, though, lingers. With Russian capacity in the market, the world is oversupplied. Without Russia—which is the American goal after the invasion of Ukraine—the market would be “savagely undersupplied,” in the assessment of David Leistikow, vice president of Centrus.

Reactors are expensive to build and staff. They can only run on uranium, and it’s almost impossible for them to economize on fuel. Running out of fuel would be monumentally stupid.

In 2024, Congress has set up a timetable for banning imports of uranium enriched in Russia, although there is some flexibility, depending on when substitute sources enter the market. But there are reasons for other producers to be cautious about expansion, including the possibility of a Trump-Putin agreement that lets the Russians back into the market. And, above all, when will the hundreds of new advanced reactors actually come online as customers for an expanded domestic uranium industry?

Reversing the Decision

Centrus drew the federal government back into the business in the form of Department of Energy support for its fledgling centrifuge complex. And now Washington is moving more seriously into uranium enrichment, by providing a guaranteed market for higher-enriched uranium, at an intermediate stage of fuel production.

In December, before President Biden left office, the Energy Department announced that it had picked six companies that it could contract with to purchase enriched uranium, one of them using lasers, “in order to encourage the build-out of new uranium production capacity in the United States.”

Congress allocated $2.72 billion to the department to support enrichment. But the department has not actually signed contracts yet.

We’ve gone from public to private and now to private operations with an extensive public support structure, because private alone did not work.

Some privatizations have worked, notably rocket launches, and operation of the internet. Notably, both involve technologies that were once too complex for the private sector but are now well within commercial capabilities. Having a technology that is commercially accessible is necessary for successful privatization, but not sufficient.

The private sector may yet achieve improvements in centrifuge technology. Centrus has recently opened a centrifuge complex in Ohio that it says does the same work with substantially less energy. There is also the possibility that lasers could do the work even better. But, Centrus will likely still require the public sector for investment and to serve as a primary customer as they ramp up enrichment operations.

We have billions of dollars tied up in reactors that need enriched uranium, and an economy that won’t work without their contribution to the grid. We’re planning billions more in nuclear investments. Preferring the private sector to run certain aspects of our economy is fine, but some things simply will not be done unless the public sector acts.

The United States stockpiles crude oil, diesel fuel, antibiotics, and, reportedly, some rare earth materials. It stockpiles high-enriched uranium for the Navy’s propulsion reactors. It ought to be stockpiling low-enriched uranium for power production. Uranium keeps (half-life of U-238 is 704 million years), it doesn’t take up much space, and isn’t expensive to store. An LEU reserve’s operation would stabilize the production system and end a threat to the generation of electricity. And it would help bring about the transition to advanced reactors that is a bi-partisan priority.

Congress has allocated enough money to start, but the Energy Department needs to get contracts signed, and to expand the program.