Adds comment from Oklo, paragraph 10

By Timothy Gardner

WASHINGTON, Oct 22 (Reuters) - The U.S. Department of Energy expects to begin announcing by December 31 which companies will take about 19.7 metric tons of surplus Cold War-era plutonium for eventual processing into nuclear reactor fuel, a document showed on Wednesday.

Reuters reported in August that the Trump administration planned to offer the weapons-grade plutonium to companies as a potential fuel for reactors. The department issued a document on Tuesday, seen by Reuters, that indicates applications are due by November 21 and selections would begin by the last day of the year.

The plan, if successful, would follow through on an executive order signed by President Donald Trump in May ordering the government to halt much of its existing program to dilute and dispose of surplus plutonium, and instead provide it as a fuel for reactors. It would take companies several years at least to convert the plutonium into fuel.

The U.S. Energy Department holds surplus plutonium at heavily guarded weapons facilities. Plutonium has a half-life of 24,000 years and must be handled with protective gear.

The plutonium would be offered to industry at little to no cost, but companies will pay for processing and manufacturing the fuel.

The idea of using surplus plutonium for fuel has raised concerns among nuclear safety experts who argue it comes with proliferation risks and that a previous similar effort failed.

"It would be incredibly dangerous, complicated, and expensive to convert these impure plutonium materials into fuel that is safe enough for use in reactors," said Edwin Lyman, a physicist at the Union of Concerned Scientists.

Under a 2000 agreement with Russia, the U.S. initially planned to convert surplus plutonium to mixed oxide fuel (MOX) for reactors. But in 2018, the first Trump administration killed the contract for a MOX project that it said would have cost more than $50 billion.

Still, at least two companies are hoping to develop and invest in facilities to turn the plutonium into reactor fuel.

Bonita Chester, a spokesperson for Sam Altman-backed nuclear technology firm Oklo OKLO.N, said her company is reviewing the application and its planned small reactor called Aurora could run on the fuel.

Stefano Buono, CEO and founder of start-up Newcleo, said his firm was encouraged that the U.S. is making plutonium available and that it can bring "safe, efficient and secure operations to the U.S. nuclear ecosystem and to our partners."

(Reporting by Timothy Gardner, Editing by Franklin Paul and Diane Craft)

((timothy.gardner@thomsonreuters.com))