Sellafield secures its future with £4bn deal £4bn deal secures Sellafield's future

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A £4bn deal has secured the future of British Nuclear Fuels' controversial new reprocessing plant at Sellafield in Cumbria, it was revealed yesterday.

In an unexpected reversal of policies it has pursued for the past four years, the state-owned Scottish Nuclear has abandoned plans to store spent nuclear fuel from its reactors in Scotland. Instead, it will send a total of 1,698 tons of fuel for reprocessing at BNFL's Thermal Oxide Reprocessing Plant (Thorp).

BNFL is expected to sign an even bigger deal, worth about £13bn, with the company's English counterpart, Nuclear Electric, by the end of March. This will consign 3,060 tons of spent fuel from English reactors to Thorp for reprocessing.

The contract with Scottish Nuclear also provides that BNFL will store a further 1,044 tons of spent fuel at Sellafield until 2086. The contracts cover all spent fuel in the lifetime of Scottish Nuclear's two advanced gas-cooled reactor stations at Torness in the Highlands and Hunterston, Strathclyde.

At the end of 1994, two German nuclear utilities withdrew business from Thorp, but the Scottish consignments now agreed more than compensate for the cancelled contracts.

Scottish Nuclear had been pursuing the idea of keeping its spent fuel indefinitely in "dry stores" before eventually disposing of it underground, without reprocessing.

Last week, John Gummer, Secretary of State for the Environment, told Parliament that the Government had no objections to the proposed dry stores which the company wanted to build at Torness reactor.

Now Scottish Nuclear has abandoned this policy and will have to write off development costs of about £50m, nearly 10 per cent of last year's turnover of £537m.

As part of the total package, BNFL has offered to meet this cost for Scottish Nuclear. According to Robin Jeffrey, chief executive of Scottish Nuclear, the deal will save at least £45m a year.

BNFL has secured a full order book for the first 10 years of Thorp's operating life, during which it expects to make a profit of £500m after taking decommissioning costs into account. Scottish Nuclear had already placed contracts for reprocessing 618 tons during the first 10 years and 330 tons during the second 10 years. It has now contracted for a further 750 tons in the second period.

BNFL will also buy uranium for Scottish Nuclear and fabricate it into reactor fuel elements. Nuclear Electric owns a uranium mine in Wyoming, in the US, and its deal is believed to include only fuel fabrication, not uranium purchase.

Dr Greg Butler, deputy chief executive of BNFL, said, "Clearly this is a good day for Thorp and a good signal for overseas customers. A prudent customer has looked at dry store and decided that reprocessing is a good deal."

He said that the 1,044 tons to be stored at Sellafield would be kept under water and not in dry stores. "Scottish Nuclear says this is a better deal for them than dry storage. We'll make a profit from the deal and Scottish Nuclear will save the money they want to save."

Pat Green, of the environmental group Friends of the Earth, said yesterday: "It raises questions about how long before Nuclear Electric sign up for similar services."