Centrus Energy's Competitiveness

Rosatom, a Russian government entity, which sells LEU through its wholly owned subsidiary TENEX;

Urenco, a consortium of companies owned or controlled by the British and Dutch governments and by two German utilities; and

Areva, a company largely owned by the French government.

Urenco reported installed capacity at its European and U.S. enrichment facilities of 19.1 million SWU per year at the end of 2015. Urenco has announced plans to continue a slow expansion at its Urenco USA facility with a target of adding an additional 1 million SWU by 2022.

Areva’s gas centrifuge enrichment plant in France began commercial operations in 2011 and more than 96% of the plant’s nominal capacity of 7.5 million SWU was reported to be in service at the end of 2015. Areva has announced that it will reach its full capacity of 7.5 million SWU per year by the end of 2016. In October 2011, the NRC issued an operating license to Areva for the Eagle Rock plant near Idaho Falls, Idaho. Areva’s original plan called for initial production in 2014 but Areva has placed its plans for the Eagle Rock plant on hold. Furthermore, under a new strategic plan, Areva suspended planned capacity expansions for its domestic gas centrifuge plant beyond 7.5 million SWU.

The production capacity for Rosatom/TENEX is estimated by the World Nuclear Association (“WNA”) to be approximately 27 million SWU per year. Imports of LEU and other uranium products produced in the Russian Federation are subject to the restrictions described below under Limitations on Imports of LEU from Russia.

All of our current competitors are owned or controlled, in whole or in part, by foreign governments. These competitors may make business decisions in both domestic and international markets that are influenced by political or economic policy considerations rather than exclusively by commercial considerations.

There are also producers of LEU in China, Japan and Brazil that primarily serve a portion of their respective domestic markets. China is emerging as a growing producer and has begun to supply limited quantities of LEU to foreign markets. China’s commercial SWU production capacity is estimated to be in the range of 4.5 to 4.8 million SWU per year at the end of 2015. Additional capacity is also under construction at the existing enrichment plants, which is expected to add an additional 3.0 million SWU per year by 2017, in order to meet Chinese internal SWU requirements.

In addition, GE Hitachi Global Laser Enrichment (“GLE”) has an agreement with Silex Systems Limited, an Australian company, to license Silex’s laser enrichment technology. The NRC issued GLE a license in September 2012 for a proposed plant in Wilmington, North Carolina. More recently GLE has expressed an interest in deploying enrichment capacity at the site of the Paducah GDP. In recent quarters, sponsors of the GLE consortium have written off their investment in the project, and the GLE project staff has been significantly reduced. All GLE activities at the Oak Ridge, Tennessee facility have been shut down, but work continues at the Wilmington Test Loop facility.

LEU may also be produced by down-blending government stockpiles of highly enriched uranium. Governments control the timing and availability of highly enriched uranium released for this purpose, and the release of this material to the market could impact market conditions. Given the current oversupplied nuclear fuel market, any additional LEU from down-blended highly enriched uranium released into the market would have a negative effect on prices for LEU.

LEU that we supply to foreign customers is exported under the terms of international agreements governing nuclear cooperation between the United States and the country of destination or other entities, such as the European Union or the International Atomic Energy Agency. The LEU supplied to us under the Russian Supply Agreement is subject to the terms of cooperation agreements between the Russian Federation and the country of destination or other entities.