U.S. budget proposes scrapping plutonium disposal project

WASHINGTON, Feb 9 (Reuters) - The U.S. Department of Energy on Tuesday proposed scrapping a multibillion project in South Carolina to dispose of weapons-grade plutonium by turning it into fuel for nuclear reactors, and moved to bury the waste in New Mexico instead.

Senior administration officials said the decision would save billions of dollars while speeding removal of plutonium stored at the department’s Savannah River site in South Carolina.

Lawmakers from South Carolina and neighboring Georgia have vowed to block the department’s plan, concerned about the loss of jobs and warning that the switch could jeopardize a 2000 treaty with Russia to dispose of 34 metric tons of plutonium, the equivalent of 17,000 nuclear weapons.

CBI-Areva MOX Services, a joint venture owned by France’s Areva SA and Chicago Bridge and Iron NV, is building a plant at the Savannah River site that will mix plutonium with uranium to form safer mix-oxide (MOX) fuel pellets for use in commercial nuclear reactors.

DOE has been trying to change course for several years, but Congress keeps restoring funding for the project. This is the first year that DOE is proposing outright termination.

DOE’s budget for fiscal 2017, which begins Oct. 1, proposes $270 million to start shutting down the MOX facility, with total termination costs seen reaching $500 million to $700 million. The plan also includes $15 million for the New Mexico site.

“It is not a pretty picture,” said one of the officials. “You can’t keep throwing good money after bad.”

CBI MOX argues that the project is 70 percent complete and would cost $3 billion to complete, while the alternate approach being pursued by DOE could cost over $20 billion due to safety concerns and environmental impact studies.

The U.S. officials cited three DOE and independent studies which concluded it would cost at least $7 billion to finish the MOX plant, and up to $1 billion a year to run it through the 2050s.

The officials said the first plutonium could be stored at DOE’s Waste Isolation Pilot Project in New Mexico in 2023, compared to 2040 for the MOX site. They said they had not yet determined whether to dispose of all 34 metric tons of plutonium at the WIPP site, or another site elsewhere.

The senior officials said they were optimistic that Moscow would agree to the new approach since it had changed its own plan in 2010. (Reporting by Andrea Shalal; Editing by Richard Pullin)