These tails are also known as depleted uranium because the material is  depleted in uranium-235 compared with natural uranium. Tails have historically been considered a waste product because  considerable enrichment processing is required to further extract the  remaining useful quantities of uranium-235. DOE Potentially Has Options for the Tails but Has Not Implemented Its December 2008 Plan for Selling or Re- Enriching Them

DOE’s potential options for its tails include selling the tails “as is,” re- enriching them, or storing them indefinitely. We found that  DOE generally has authority to carry out the re-enrichment and storage  options. As we said earlier, DOE issued a comprehensive uranium  management plan in December 2008 in response to a recommendation in  our March 2008 report. However, to date, DOE has not  done so and, according to DOE officials, has no current plans to sell or re- enrich this material. DOE’s Legal Authority to Sell the Tails in Their Current Form Is Doubtful

While selling the tails in their current unprocessed form is a potential  option, we believe that DOE’s authority to conduct such sales is doubtful  because of specific statutory language in legislation governing DOE’s  disposition of its uranium. Should Congress grant DOE the needed legal authority by amending the  USEC Privatization Act or through other legislation, firms such as nuclear  power utilities and enrichment companies would be interested in  purchasing at least that portion of the tails with higher concentrations of  extractable uranium-235 as a valuable source for nuclear fuel. DOE Could Re-enrich Its Tails

Although DOE’s legal authority to sell the tails in their current form is  doubtful, DOE has the general legal option of re-enriching the tails and  then selling the resulting natural or enriched uranium. Furthermore, DOE would have  to find a company with excess enrichment capacity beyond its current  operations, which may be particularly difficult if large amounts of  enrichment processing were required. Although DOE would have to pay for re-enrichment, it might obtain more  value from selling the re-enriched uranium instead of the tails if its re- enrichment costs were less than the discount it would have to offer to sell  the tails as is. DOE Could Store the Tails  DOE also has the general legal option to store the tails indefinitely. DOE has constructed new facilities at its Paducah plant and  its closed Portsmouth uranium enrichment plant to chemically convert its  tails into a more stable and safer uranium compound that is suitable for  long-term storage. As our March 2008 report noted, storing the tails indefinitely could prevent  DOE from taking advantage of the large increase in uranium prices to  obtain potentially large amounts of revenue from material that was once  viewed as waste. We stated that the assessment should contain detailed  information on the types and quantities of depleted, natural, and enriched  uranium the department currently manages and a comprehensive  assessment of DOE’s options for this material, including the department’s  authority to implement these options. In December 2008, DOE issued an “Excess Uranium Inventory  Management Plan.” Among other things, the plan states that DOE would  begin selling or re-enriching depleted uranium in 2009. However, the  department has not, to date, sold or re-enriched any of its depleted  uranium. DOE’s Depleted Uranium Inventory Is Potentially Worth Billions of Dollars, but Many Factors Could Greatly Change Its Value

At current uranium prices, we estimate DOE’s tails to have a net value of  $4.2 billion; however, we would like to emphasize that this estimate is very  sensitive to changing uranium prices, which recently have been extremely  volatile, as well as to the availability of enrichment capacity. Uranium  prices are very volatile, and a sharp rise or fall in prices could greatly  affect the value of the tails. Our March  2008 report therefore suggested that Congress consider clarifying DOE’s  statutory authority to manage depleted uranium, under the USEC  Privatization Act or other legislation, including explicit direction about  whether and how DOE may sell or transfer the tails.
Why GAO Did This Study

Since the 1940s, the Department of Energy (DOE) has been processing natural uranium into enriched uranium, which has a higher concentration of the isotope uranium-235 that can be used in nuclear weapons or reactors. This has resulted in over 700,000 metric tons of leftover depleted uranium, also known as "tails," that have varying residual concentrations of uranium-235. The tails are stored at DOE's uranium enrichment plants in Portsmouth, Ohio and Paducah, Kentucky. Although the tails have historically been considered a waste product, increases in uranium prices may give DOE options to use some of the tails in ways that could provide revenue to the government. GAO's testimony is based on its March 2008 report (GAO-08-606R). GAO updated the analysis in its 2008 report to reflect current uranium prices and actions taken by DOE. The testimony focuses on (1) DOE's options for its tails and (2) the potential value of DOE's tails and factors that affect the value.

What GAO Found

DOE's potential options for its tails include selling the tails "as is," re-enriching the tails, or storing them indefinitely. DOE's current legal authority to sell its depleted uranium inventory "as is" is doubtful, but DOE generally has authority to carry out the other options. (1) DOE's authority to sell the tails in their current unprocessed form is doubtful. Because of specific statutory language in 1996 legislation governing DOE's disposition of its uranium, DOE's authority to sell the tails in unprocessed form is doubtful, and under the rules of statutory construction, DOE likely lacks such authority. However, if Congress were to provide the department with the needed authority, firms such as nuclear power utilities and enrichment companies may be interested in purchasing these tails and re-enriching them as a source of nuclear fuel. (2) DOE could contract to re-enrich the tails. Although DOE would have to pay for re-enrichment, it might obtain more value from selling the re-enriched uranium instead of the tails if its re-enrichment costs were less than the discount it would have to offer to sell the tails as is. (3) DOE could store the tails indefinitely. This option conforms to an existing DOE plan to convert tails into a more stable form for long term storage, but storing the tails indefinitely could prevent DOE from obtaining the potentially large revenue resulting from sales at current high uranium prices. DOE issued a comprehensive uranium management plan in December 2008 that stated that the department would consider selling depleted uranium or re-enriching it to realize best value for the government and that it would begin selling or re-enriching depleted uranium in 2009. However, to date, DOE has not sold or re-enriched any of its depleted uranium and, according to DOE officials, has no current plans to do so. The potential value of DOE's depleted uranium tails is currently substantial, but changing market conditions could greatly affect the tails' value over time. Based on May 2011 uranium prices and enrichment costs and assuming sufficient re-enrichment capacity is available, GAO estimates the value of DOE's tails at $4.2 billion--about $3.4 billion less than GAO's March 2008 estimate. However, this estimate is very sensitive to changing uranium prices, which have dropped since GAO's March 2008 report was issued. GAO's estimate is also very sensitive to the availability of enrichment capacity. In particular, DOE would have to find a company with excess enrichment capacity beyond its current operations, which may be difficult if large amounts of enrichment processing were required. In its 2008 report, GAO suggested that Congress consider clarifying DOE's statutory authority to manage its tails. No action on this recommendation has been taken to date. Also, GAO recommended that DOE complete a comprehensive uranium management assessment. DOE issued a uranium management plan in December 2008 that addressed GAO's recommendation.