Australia-based Silex Systems Limited has decided against a potential majority stake in Global Laser Enrichment LLC, a subsidiary of Wilmington-based GE Hitachi Global Nuclear Energy.
In a statement from Silex’s board to its shareholders, Silex officials said that despite being in an advanced stage of negotiations with GE Hitachi about Silex’s potential acquisition of GE Hitachi’s 76 percent interest in Global Laser Enrichment (GLE), the board decided that there "remained too many risks associated with GLE’s business case, and that the investment in GLE and the ongoing expenditure that this would entail would not be in the best interests of shareholders.”
In February 2017, GE Hitachi and Silex officials announced that GLE -- a company launched in 2006 to develop uranium enrichment services capability -- could change ownership and was working on formal agreement
documentation that would potentially result in the sale of GE Hitachi's stake in GLE to Silex and other new investors. A restructure of GLE began in 2014.
GE Hitachi spokesman Jon Allen said in an email that GE Hitachi is “evaluating the impact of this development and will continue to work with the U.S. government and other key stakeholders to determine next steps.”
GLE is the exclusive licensee of the Silex laser enrichment technology, Silex officials said in the company's announcement June 12
. The GLE business has exclusive rights to commercially develop the Silex laser isotope separation process technology under an agreement reached with Silex Systems Limited in 2006.
The company said it has given notice to GE Hitachi with respect to termination of the term sheet signed in 2016 (and as amended on Aug. 31, 2017) under which Silex held an exclusive option to acquire GE Hitachi’s equity interest in GLE. Silex’s funding obligations for GLE’s operations under that term sheet at about $440,000 per month (or $600,000 Australian dollars) ceased upon notice of termination, Silex officials said in the release.
Unless circumstances change dramatically in the short-term, Silex also intends to give notice to GLE of termination of the Silex technology license, pursuant to the “Amended and Restated Technology Commercialisation (sic) and License Agreement,” signed in 2013, Silex officials said.
“This is a very disappointing outcome for the company,” Silex CEO Michael Goldsworthy said in the release. “The SILEX technology remains one of the most exciting developments in the nuclear industry for several decades, and after 20 years of cooperative development with the U.S., was just three years from reaching a key demonstration of full-scale 24/7 operation.”
“Unfortunately, the continuing decline in the nuclear fuel markets precipitated by the tragic events of Fukushima in 2011, in combination with unresolved issues relating to the GLE restructure and the associated cash burn, has forced the board to draw a line and make this decision” he added.
Other key issues challenging the GLE restructure and business case, which Silex was unable to resolve despite many months of interaction with key stakeholders, included the need to obtain external funding assistance to support the completion of GLE’s commercialization program currently being conducted in Wilmington, the release stated.
While progress had been made with third parties, including the U.S. Department of Energy, Silex officials said, “There was no clear path or timeline for such funding to be obtained at the time of the board’s decision.”
Issues also included project financing in connection with the first commercial project proposed for Paducah, Kentucky.
“We are particularly disappointed that so many opportunities will be lost by not being able to participate in the U.S. nuclear fuel market,” Goldsworthy said in the release. “For example, we were excited with the prospect of playing a key part in the remediation of the massive quantities of tails inventories stored at the DOE’s Paducah and Portsmouth facilities, through a pioneering laser enrichment facility, which would have created hundreds of high tech jobs in Kentucky and throughout the U.S."
“Furthermore, the opportunity to support the United States [in regaining] its leadership position in advanced nuclear technology has also been lost, and the unique ability to produce a highly flexible range of fuels for the next generation of advanced small modular reactors will now not be realized,” he added.
The news came just a week before General Electric Co., which holds the GE Power unit and its nuclear division, was removed from the Dow Jones Industrial Average. GE also announced in June the results of its strategic review, and its focus on GE's aviation, power and renewable energy units, which officials said will form a "new core of the company."
When asked about how GE's changes will impact GE Hitachi, Global Nuclear Fuel and GLE, GE officials said in an email, "Wilmington is a significant location for GE Power. There is no immediate impact expected at this site due to the GE alignment announcement."
GE Hitachi is a joint venture between General Electric and Hitachi that provides advanced nuclear technology and nuclear services for the industry, with headquarters in Wilmington.
"GE has been in the nuclear energy business for more than 60 years and GEH remains an important part of the GE Power portfolio," GE officials added.