WASHINGTON -- When southern Ohio's uranium-enrichment plant was privatized in 1998, critics assailed the deal because a valuable stockpile of government-owned natural uranium simply was handed over to the company.

Now, in an ironic twist, the Piketon facility's operator says that as much as a third of the uranium -- an amount worth about $200 million -- might be contaminated and therefore useless on the commercial market.

USEC, which operates the soon-to-be-closed plant, wants the federal government to replace the tainted uranium.

"The material transferred was to conform to the specification for natural uranium, and USEC expects (the U.S. Department of Energy) to replace any nonconforming material once the testing program is concluded,'' the company said. The problem was mentioned in a news release announcing USEC's second-quarter earnings.

It's too early to say what should be done, an Energy Department spokeswoman said yesterday.

"The department plans to work with USEC to confirm the contamination and the extent of the problem,'' Lisa Cutler said. "Only after that would it be appropriate to start to explore possible technical and policy remedies.''

Almost 25 million pounds of natural uranium given to USEC by the government -- of a total of almost 75 million pounds -- might be contaminated with a radioactive material called technetium, USEC said.

The company said it reported the problem to the Energy Department in December.

The uranium-enrichment process turns natural uranium into a more-fissionable material that is used as fuel for commercial nuclear-power plants.

Technetium, a byproduct of fission, might have gotten into the uranium after the material was stored in contaminated cylinders, one expert thinks. Those cylinders used to hold reprocessed uranium run through reactors at the Hanford nuclear site in Washington state as part of a flawed, Cold War-era government recycling program.

Ironically, it was this sort of reprocessed uranium that exposed workers at Piketon's Portsmouth Gaseuous Diffusion Plant and a sister plant in Paducah, Ky., to dangerous radiation. Last year, Congress approved a bill compensating workers made ill by such exposures.

USEC, the country's sole producer of enriched uranium, plans to shut down the Piketon plant in June. That would leave USEC -- and the nation -- relying on the Paducah facility as the only domestic manufacturer of enriched uranium. A proposed $630 million plan to keep the Piketon plant on standby was approved by the Clinton administration in the fall but now is being reviewed by the Bush administration.

As predicted by a number of critics, USEC has struggled financially since the $1.9 billion privatization.

But taxpayers aren't responsible for bearing the cost of USEC's tainted uranium, said Thomas L. Neff, a Massachusetts Institute of Technology professor. He is a uranium-enrichment industry expert who criticized the privatization as contrary to national-security interests and a boondoggle.

Neff and other critics, including Sen. Pete Domenici, R-N.M., said the transfer of uranium was an overly generous giveaway that threatened the stability of the world uranium market and a U.S.- Russian deal to rid Russia of nuclear weapons.

USEC might have been given 30 million pounds of uranium more than envisioned by the legislation that authorized the privatization. Domenici, chairman of the Senate Appropriations Committee's energy subcommittee, made that charge shortly before privatization was made final in July 1998. He could not be reached for comment yesterday.

But Neff said there was no warranty on the uranium.

"It is unlikely the government will replace it,'' Neff said. "Why should the taxpayers take on another liability and give them (USEC) another asset?''

In any case, he said, much of the uranium in the government's stockpile is tied up by an agreement with Russia not to market natural uranium.

jriskind@dispatch.com