A deal worth about £14bn - one of the largest commercial agreements ever negotiated between two British companies - was signed yesterday by Nuclear Electric and British Nuclear Fuels. The package of contracts secures the future of BNFL's reprocessing facilities at Sellafield in Cumbria until 2009.
The deal comes hard on the heels of a separate package, worth £4bn, which BNFL agreed with Scottish Nuclear last month. Both represent guaranteed work for BNFL's controversial thermal oxide reprocessing plant (Thorp) well beyond the first 10 years of its operations.
Dr Robert Hawley, chief executive of Nuclear Electric, and, Neville Chamberlain, his counterpart at BNFL, signed a series of 14 individual contracts at Nuclear Electric's London offices yesterday. The deal has been broken down into separate contracts so that it would not be affected if the Government decided to privatise and restructure the nuclear industry.
Dr Hawley said that the deal "means the bulk of our future fuel costs are fixed and we've established a sound basis for future trading, especially if we're privatised".
Nuclear Electric is trying to persuade the Government to privatise it by splitting its nuclear assets. The ageing first-generation Magnox reactors would remain in public ownership, because of their inherited liabilities for decommissioning and reprocessing, whereas the newer advanced gas-cooled reactors (AGRs) and the pressurised water reactor (PWR) at Sizewell would be floated.
Nuclear Electric would offer to operate the Magnoxes under a management contract, even though it was no longer their owner. The company is actively trying to prolong the operating lifetimes of its Magnox reactors from 34 years to 37 and has hopes that the Nuclear Installations Inspectorate may permit it in principle to operate them up to the age of 40. Since all the capital cost has long since been paid off, they would be rich generators of cash for the company.
Pending life extension to 40 years, this means that Wylfa in Anglesey will be the last Magnox to close, around 2007, and that fuel will be sent to the older of the two reprocessing plants at Sellafield until 2009.
The series of contracts covers the supply of fresh fuel, as well as reprocessing services for both Magnox and AGRs, but it excludes any fuel services for the new Sizewell B PWR. (BNFL secured the order for the initial fuel loading under an earlier contract.)
BNFL is rumoured to be in negotiation with its German customers over the fate of plutonium separated from German spent nuclear fuel during the first 10 years of Thorp's operation. Instead of sending the plutonium back to Germany, BNFL would mix it with uranium to form fresh "mixed oxide" (MOX) fuel elements, which could then be used directly in German reactors.
A combination of public protests and objections by local government have led to the virtual mothballing of Germany's MOX fuel fabrication plant before it started operating. Since BNFL is already building a fabrication plant at Sellafield, this move would neatly solve the problem of unwanted plutonium for the German utilities.