The company said the plan would have to be part of an international agreement to buy the plutonium from Russia and render it safe - an arrangement costing potentially billions of pounds.
BNFL, a state-owned enterprise, is already building a pounds 250m mixed oxide fuel plant at Sellafield and would be willing to build an extension or a second plant to cope with the extra load.
The company said it would need guarantees that the fuel produced would be used in pressurised water reactors around the world. Derek May, director of corporate strategy, said that an international agreement would be needed, to include countries such as Japan, France and the US with reactors able to use the fuel.
'As long as there is military plutonium in the former Soviet Union which is not stored or re- used in some acceptable way, there is a physical threat to the world,' Mr May said.
BNFL's proposal, submitted to the Foreign Office four months ago, emerged as the company announced almost flat pre-tax profits of pounds 81m in the year to 31 March, compared with pounds 76m a year earlier. John Guinness, chairman, blamed the lacklustre performance on delays with the company's controversial Thorp reprocessing plant, which cost it pounds 78m.
BNFL will pay the Government an unchanged dividend this year of pounds 26m. Mr Guinness said that with Thorp up and running, the company expected pre-tax profits in the current year to be about pounds 160m.
Turnover last year rose pounds 84m to pounds 1.13bn, helped by a 30 per cent increase to pounds 417m from the company's Magnox reprocessing and nuclear generating businesses.
It also emerged yesterday that Neville Chamberlain, chief executive, received a 28 per cent pay rise last year to pounds 215,757. BNFL said that most of the increase came from a bonus of pounds 39,000. Mr Chamberlain received no bonus the previous year.
Mr Guinness said: 'I am disappointed that the Thorp delays have had a negative effect on our figures for the second year in succession, but with the obvious strengths in our other business areas, I am confident of a significant upturn in the business performance in the current year.'
He said BNFL had entered a new era in which the company would be seen as an international supplier of nuclear services. About half of Thorp's business is overseas and BNFL hopes that, with consultancy and other services, it will count among Britain's top 30 exporters in the next few years.
At present Nuclear Electric and Scottish Nuclear, the state-owned power generators, are by far BNFL's biggest customers. The company plans to reduce greatly its dependence on the domestic market by the end of the decade.
Mr Guinness said the world market for nuclear services would be about dollars 35bn by the year 2010. The company plans to attack the dollars 10bn US market for nuclear fuel reprocessing, which could generate dollars 500m of business annually for BNFL.
He called on the Government to end the moratorium on the building of nuclear power stations and to restate the commitment given in 1989 to a long-term nuclear power market in Britain.
BNFL was ready to be privatised should the Government so wish, he said. 'Our main driver ain't privatisation, it is running the business properly. We are privatiseable, but it is up to our shareholder to decide.'
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