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Battle heats up over U.S. plutonium cleanup program

WASHINGTON, July 7 (Reuters) - The battle over a project to convert excess U.S. weapons-grade plutonium into fuel for commercial nuclear reactors - part of a 2000 treaty with Russia - is heating up amid concerns the program’s multibillion-dollar costs could balloon further.

Critics are calling for an end to the project, citing years of delays and cost increases, while proponents say the program is now on track and any changes could jeopardize one of the few agreements with Russia that is still running smoothly.

Both sides have commissioned independent studies about the program, and the government, eager to save money to pay for other nuclear weapons priorities, is preparing to carry out its own assessment.

Reuters this week obtained an independent review commissioned by the company in charge of the program, which sharply rebuts a report completed in April by privately held Aerospace Corp for the Department of Energy. The Aerospace report said the project could cost $30 billion to complete, nearly ten times the estimate of the company, CBI-Areva MOX Services.

At issue is a plant under construction at the DOE’s Savannah River site in South Carolina that would take 34 metric tons of U.S. plutonium and mix it with uranium to form safer mix-oxide (MOX) fuel pellets for use in commercial nuclear reactors.

Russia has its own program to eliminate 34 metric tons of surplus plutonium. Together, the total amounts to the equivalent of about 17,000 nuclear weapons.

CBI-Areva MOX Services, a joint venture of U.S.-based Chicago Bridge & Iron NV and Areva SA, a French state-owned nuclear group, argues that the U.S. project is already 65 percent complete, and it will be done in 5 to 9 years.

The company estimates it will take $3.3 billion to complete work on the facility, on top of $4.5 billion already spent.

The Aerospace report came up with a higher estimate because it overstated costs and risks of the so-called MOX program and downplayed those of an alternate approach called “downblending,” according to the review funded by CBI and conducted by High Bridge Associates, a project management firm.

The report also did not factor in factors such as revenue from selling the fuel pellets to power plants, the review said.

Edwin Lyman, senior scientist at the Union of Concerned Scientists, said the U.S. government should stop wasting money on what he called a “pork barrel” project kept alive by parochial interests in Congress.

Lyman said it remained unclear which power plants would even buy the pellets, and it made sense to halt the project after years of mismanagement, cost overruns and schedule delays.

One source familiar with the program, who asked not to be named, said halting work on the project could prompt Russia to withdraw from the 2000 treaty as it has done with others, reversing nuclear non-proliferation efforts at a time of growing tensions with Moscow.

Reporting by Andrea Shalal; Editing by Andrew Hay