BNFL dealt new blow by Thorp fiasco

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BNFL is facing a mounting crisis at its £1.8bn Thorp reprocessing plant at Sellafield, where repeated failures to cope with nuclear waste have led to massive cost increases and delays.

The nuclear group has admitted to The Independent on Sunday that it will not finish reprocessing the nuclear fuel it has contracted to deal with by the current deadline of March next year. Though BNFL has not confirmed how late it is running, its figures show it may take an extra three years to complete its existing reprocessing contracts.

The problems are set to prompt arguments with Thorp's customers, including the German and Japanese governments, and could lead to BNFL receiving hundreds of millions of pounds less than it was due under the deals.

The Thorp plant was built in the early 1990s and started operating in 1994. It agreed contracts to reprocess 7,000 tonnes of spent nuclear fuel which it said it would complete within 10 years.

The successful operation of Thorp depended on it disposing of its own waste, which is being turned into glass blocks in a process called vitrification. BNFL built two vitrification lines at a cost of £240m. However, these have become increasingly unreliable, holding up Thorp's reprocessing.

Three years ago, Hugh Collum, BNFL's chairman, admitted that Thorp was behind schedule and agreed a year's extension with customers, saying the work would be completed by March 2005. BNFL also built a third vitrification line to deal with the problem. This has cost the state-owned company £320m.

However, it has not solved the problem. A Nuclear Installations Inspectorate report, published last month, stated: "The site vitrification performance ... means that Oxide fuel reprocessing will continue to be significantly constrained for the foreseeable future by vitrification throughput."

Thorp was supposed to reprocess up to 900 tonnes of fuel each year. Figures obtained by The Independent on Sunday show that in its best year, 1999-2000, Thorp's throughput was 890 tonnes. However, this fell to 362 tonnes the following year and was just 502 tonnes last year.

This year BNFL has set a target output of 671 tonnes, though Thorp has rarely met its output targets. Even if it is successful, there will still be 1,955 tonnes of waste left to reprocess at the end of March, around three years' work.

"We are going to go beyond year 11 on the base load," admitted a BNFL spokesman, who refused to speculate on how much longer it would taketo complete its waste reprocessing contracts.

When BNFL built Thorp, it predicted it would make a £500m profit on its reprocessing deals, but this has been eaten up by the extra vitrification line and increased running costs at Thorp.

Now BNFL is facing large losses as it renegotiates the deals it has with its customers. The Germans, in particular, are understood to be keen to negotiate a discount on their £1.2bn contract with BNFL, which covers the reprocessing of spent fuel from its reactors and the purchase of Mixed Oxide Fuel from the £470m MOX plant built next to Thorp at Sellafield.

The Thorp problems are another blow to BNFL, which earlier this month revealed a £1.09bn loss for 2002-03. A couple of weeks ago Patricia Hewitt, the Trade and Industry Secretary, confirmed that the part-privatisation of BNFL, which has been the Government's plan for over five years, would not now go ahead. The plant will be transferred to the new Nuclear Decommissioning Authority, the £50bn body which is being set up to deal with cleaning up Britain's nuclear legacy.

BNFL had hoped to secure a contract to manage Thorp when it passes to the NDA, but the plant's problems will make this less likely.