The Guardian
The Observer

1.5bn BNFL sell-off at risk

Whitehall fears environmental report on nuclear reprocessing will bring plant's finances into question

Oliver Morgan, Industrial Correspondent

Sunday August 29, 1999

A row over an investigation ordered by the Government into the environmental impact of nuclear fuel reprocessing could jeopardise plans for the £1.5 billion privatisation of BNFL.

Whitehall officials fear the study - announced last week by the Radioactive Waste Management Advisory Committee, which answers to the Department of the Environment - will be seen as an investigation into the financial viability of reprocessing at BNFL's Sellafield plant in Cumbria. They insist the committee has no economic remit.

However, the officials are being directly contradicted by members of the committee, who say the economics of reprocessing are inextricable from any investigation.

One committee member told The Observer : 'You can't extricate the economic consequences of reprocessing. To get a proper evaluation of the waste management implications, you have to examine the economics. It is likely that this view will hold sway.'

An economic evaluation would pose considerable problems, as two members of the committee - which comprises academics, scientists, nuclear experts and economists - have published research this year with Friends of the Earth that claims that reprocessing is uneconomic.

Nuclear analysts Fred Barker and Mike Sadnicki, both members of the RWMAC study, concluded that reprocessing at Sellafield's flagship Thorp plant should be halted and that a new £300 million plant to turn dangerous plutonium into fresh mixed oxide fuel (MOX) should not be given Government approval to start operating. Although BNFL has expanded overseas by buying the nuclear fuel and engineering business of United States-based Westinghouse, Thorp and MOX are vital to its commercial future. Any conclusion from a Government body that cast doubts over them would seriously dent the commercial case for privatisation.

BNFL has a £12 billion order book with foreign nuclear generators - mainly in Japan and Germany - covering Thorp's first 10-year operating period up to 2004.

But in the subsequent two decades orders are down to 58 per cent and 43 per cent of capacity. Forward contracts for the MOX plant represent some 7 per cent of the business BNFL is hoping to attract.

The Friends of the Earth report argues that recycled fuel is too expensive to be commercial, and that Japanese and German customers will retreat from sending fuel for reprocessing in the future.

They concluded that ending reprocessing and switching to a strategy of storing spent fuel would save up to £1.1 billion on Japanese and German contracts alone.

One RWMAC member said: 'The economics of reprocessing break down. First of all you create three streams of waste in reprocessing the spent fuel, and I believe this will be more expensive in itself than simply storing the spent fuel.

'But in addition, the argument that reprocessing saves the economic cost of mining fresh uranium by using reprocessed fuel does not hold. The nuclear generating firms don't want to use reprocessed uranium or MOX because it is both more expensive and less reliable.'

BNFL said: 'The inquiry is a matter for the Government.'