* Enrichment firm says laser method key to U.S. "energysecurity"
* Some nuclear experts worry about proliferation risks * They say laser enrichment plants smaller, harder to detect * Iran says it "possesses" laser know-how but won't use it By Fredrik Dahl
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VIENNA, Oct 11 (Reuters) - A new way of making nuclear fuelwith lasers may help cut costs and ensure energy security butcould also make it easier for rogue states to secretly buildnuclear weapons if they got hold of the know-how.
A debate about the benefits and dangers of using lasersinstead of centrifuges to enrich uranium underlines thesensitivities surrounding nuclear activity that can have bothcivilian and military applications.
Iran, whose underground centrifuge plants and history ofhiding nuclear work from U.N. inspectors have raised Westernsuspicions of a covert atom bomb programme and prompted Israelithreats to attack Iranian nuclear sites, says it already haslaser technology but experts doubt Tehran has mastered it.
Uranium can provide the explosive core of a nuclear warheadif refined to a high fissile concentration, explaining why anycountry or other actor interested in obtaining nuclear armsmight be eager to learn about technical advances in enrichment.
The U.S. Nuclear Regulatory Commission (NRC) last monthissued a license to a partnership between General Electric Co.
and Japan's Hitachi Ltd to build and run a laserenrichment plant for manufacturing reactor fuel.
It would be the world's first facility to refine uranium ona commercial scale using lasers, a technique "particularlysuited for nuclear proliferation", said Assistant Professor R.Scott Kemp of the Massachusetts Institute of Technology (MIT).
"It appears that they have allowed the license to go forwardwithout a serious review of the proliferation implications,"said Daryl Kimball, executive director of the Arms ControlAssociation, a Washington-based advocacy and research group.
An NRC spokesman said a State Department assessment in 1999concluded essentially that it was in the U.S. interest to bringthe Australian technology "here, where it could be properlysafeguarded, rather than having other countries develop it".
Citing an NRC letter to U.S. lawmakers two years ago, DavidMcIntyre added that NRC requirements - covering the facility'ssecurity and protection of classified information - "effectivelyprotect against the threat of proliferation".
Kimball disagreed. "History shows that even the best effortsto safeguard sensitive enrichment technologies can and willeventually fail."
IRAN "POSSESSES" LASER TECHNOLOGY
General Electric said Global Laser Enrichment (GLE) - theGE-Hitachi company which would build the plant in the U.S. stateof North Carolina - had "met - and in many cases exceeded - allregulations pertaining to safeguarding this technology."
GLE head Chris Monetta said the laser method "could be oneof the keys to the nation's long-term energy security."
However, some nuclear proliferation experts worry becauseplants enriching uranium with lasers could be smaller - andtherefore even harder to discover - than the traditionalfacilities with rows and rows of centrifuge machines.
Lasers could also refine fuel-grade uranium to possibleweapons grade in fewer steps than centrifuges, they say.
Those features could make laser enrichment an attractiveoption for any state wanting to develop covertly the capabilityto produce nuclear weapons, which the West is accusing Iran ofdoing with its centrifuge-based programme.
Tehran - which only disclosed the existence of its Fordowsubterranean centrifuge site in 2009 after learning that Westernspy services had spotted it - denies any nuclear bomb designs.
"The smaller physical footprint and lower energyrequirements would make a clandestine laser facility moredifficult to detect," said Jim Walsh, a research associate atMIT's Security Studies Program.
But Olli Heinonen, a former U.N. chief nuclear inspector,played down concerns that embarking on laser enrichment in theUnited States would cause the technology to spread elsewhere.
"Technology holders have been fairly good in recent years inprotecting their secrets. Proliferation mainly took in place inthe 1970s and 1980s due to poor export controls andlegislation," said Heinonen, now at Harvard University's BelferCenter for Science and International Affairs.
His former employer, the International Atomic Energy Agency(IAEA), has tried in vain to get more information about a 2010statement by Iranian President Mahmoud Ahmadinejad that Tehran"possessed" laser enrichment technology but would not use it.
"Iran had its own laser programme, and they have got a goodunderstanding about the process," Heinonen said, referring tomethods used before the GLE's newer technology.
GROWING NUCLEAR FUEL MARKET
But laser enrichment is more difficult to master thancentrifuges and the equipment used in Iran's research has beendismantled and placed in storage under IAEA monitoring, said theInternational Institute for Strategic Studies (IISS) think tank.
"Based on the IAEA assessment it appears unlikely thatIran's laser enrichment programme represents a seriousproliferation threat," IISS said in a 2011 report.
Centrifuges increase the ratio of the fissile isotope U-235by spinning at supersonic speed, enriching up to 5 percent forpower plants and 90 percent concentration for bombs.
Laser beams can also separate uranium isotopes, but MIT'sKemp said the technology had been pursued unsuccessfully fordecades. "Indeed we do not yet know whether" the technique to beused by GLE will work or not, he added.
Laser enrichment could produce half the refined uranium theUnited States needs each year for its nuclear reactors,according to the U.S. Energy Information Administration.
General Electric plans to build the first plant on itscampus in North Carolina, but it said a "commercialisationdecision", based on several factors, must still be made.
It would use lasers conceived by Australia-based SilexSystems Ltd and developed by experts of GLE, theGE-Hitachi partnership in which Cameco Corp. , theworld's largest uranium producer, also holds a 24 percent stake.
Silex said on its web site that the uranium enrichmentmarket was expected to grow to $20 billion by 2030 from $6billion now, highlighting the technology's commercial potential.
It said the method its scientists invented in the 1990s hadseveral advantages over other ways to refine uranium: higherefficiency, lower operating costs and less capital expenditure.
But Tom Clements of the Alliance for Nuclear Accountability,a non-governmental U.S.-based group, said such advantages alsoheld nuclear proliferation risks.
The NRC's approval of the license without a specificproliferation assessment "may well be a green light for theeventual spread of what could be a dangerous technology whichhas nuclear weapons applications," Clements said.
(Additional reporting by Roberta Rampton in Washington; Editingby Mark Heinrich)
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Keywords: NUCLEAR ENRICHMENT/LASER BOMB