The Bethesda, Maryland-based company purchases uranium taken from dismantled Russian nuclear warheads under a 1993 U.S.-Russian nonproliferation agreement.

The treaty was designed to lower the risk of the Russian uranium falling into the wrong hands and posing a security risk. The highly enriched mineral from the warheads is diluted in Russia prior to shipment to the United States.

USEC then sells the uranium to operators of nuclear plants that supply about 20 percent of electricity in the United States.

The company is the world's leading supplier of uranium to nuclear power plants. The U.S. government created USEC in the early 1990s as part of its restructuring of its uranium enrichment operation. Privatization was completed in 1998.

USEC sells the grade of uranium used in power plants, known as low enriched uranium, in both the United States and overseas. Sales of its Russian material are limited to the United States.

Chief Executive William Timbers said about half of the uranium used by U.S. nuclear plants currently comes from Russian warheads.

The program is scheduled to run for 20 years. During the first decade, about 8,000 nuclear warheads were dismantled with the uranium extracted and used in U.S. power plants.

PROFITABLE DISARMAMENT

"It has transformed the prior loss-making process of nuclear disarmament into an economically effective one," Valeriy Govorukhin, Russia's deputy minister of atomic energy, said in an interview earlier this year.

"For Russia, this contract has not only contributed to an increase in international security, but has also been an important source for economic growth," he added. USEC had 2003 revenue of $1.46 billion. It reported a modest profit of $10.7 million last year, compared with a 2002 loss of $3.3 million, and its stock has been climbing during the last 12 months.

The company's shares were trading around $8.10 on the New York Stock Exchange on Friday, near the upper end of its 52-week range of $5.20 to $9.

Timbers said additional Russian uranium would probably be available when the program is due to end, raising the possibility it could be extended.

Such a move would depend on the U.S. and Russian governments because the program was signed at a presidential level.

With power plants' demand for this uranium roughly equal to the supply, the United States would have to return to a method of electricity generation that has been out of favor for more than 20 years to justify expanding the U.S.-Russian program or developing similar ones.

"If there are to be more similar programs with other countries, there needs to be an expansion of demand (for uranium)," Timbers said. "We need additional nuclear power plants."

SAFETY CONCERNS

Nuclear power fell out of favor partly due to safety concerns following an accident in 1979 at the Three Mile Island plant in Pennsylvania.

Nearly 200,000 people fled their homes and local schools were temporarily closed after operator error resulted in parts of the core beginning to melt and traces of radioactive iodine were detected in nearby communities.

Massive cost overruns at the Seabrook nuclear plant in New Hampshire contributed to the bankruptcy of utility Public Service Company of New Hampshire in 1988, further dampening enthusiasm for embarking on such projects.

Sentiment has begun to change, however, as the United States seeks ways to meet growing demand for electricity amid increasing environmental concerns about the greenhouse gases emitted by the leading source, coal-fired power plants.