The U.S. Department of Energy said Wednesday morning it would put $280 million into a struggling uranium centrifuge project in southern Ohio.
Energy Secretary Steven Chu said the deal was intended to "strengthen U.S. national security" while "ensuring strong protections for the American taxpayers."
Shares in centrifuge-maker USEC, the company spun off of the Energy Department in 1998, shot up 28% at the market's opening, giving a much needed boost to a company in danger of delisting by the New York Stock Exchange. Its stock was trading back above $1.
When the 120-centrifuge "test cascade" is completed next year, the project "will fully demonstrate that the American Centrifuge technology is ready for commercial deployment," USEC President John Welch said in a statement. The company has plans to construct 33,000 centrifuges.
USEC said the research-and-development phase would create 1,000 jobs in southern Ohio, a battleground state in the presidential election, where President Obama said he supported the project in 2008. But the project faltered after the Energy Department put a $2 billion loan guarantee on hold, and some centrifuges were damaged by a power outage a year ago.
The taxpayer subsidy comes with strings attached. USEC will invest $70 million, and will relinquish management of the contract to a a subsidiary, American Centrifuge Demonstration LLC, whose board will include contractors Toshiba Corp. and Babcock & Wilcox. And DOE will have an ownership stake in the centrifuges, which will be built using technology owned by the government and previously licensed to USEC.
The project is one of the more contentious items in the defense authorization bill being debated in Congress. Supporters, including most members of the Ohio delegation, say it's critical to have a domestic source of uranium enrichment. Critics say the Department of Energy is playing favorites in the marketplace.
The government's purchase of centrifuges damaged in last year's failure "is a complete and total waste of taxpayer dollars," said Rep. Ed Markey, D-Mass. On Tuesday, he called for the Government Accountability Office to investigate what he called "the continued bailouts of a clearly failing company."