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British Nuclear Fuels Limited (BNFL), a state-owned company runs all Britain’s Magnox (Magnesium oxide) nuclear power plants, most commissioned in the 1960s.  The seven newer advanced gas-cooled reactors[1] and the newest of all, Sizewell B, a pressurised-water reactor design were wisely sold off by the Tories, and are now owned and run by the private company, British Energy. 

That left BNFL running the 11 original Magnox reactors[2] as well as the Sellafield reprocessing plants. The latter includes the THORP (Thermal Oxide Reprocessing Plant), which extracts plutonium for bombs and fast-breeder reactors from the waste of conventional nuclear plants. 

Tony Blair appears to be preparing to privatise BNFL.  Until recently, this was easier said than done because BNFL had nominal assets of only £356 million and liabilities of £35 billion, mainly the decommissioning cost of the Magnox plants.   However, the government has set up a new agency, the Liabilities Management Authority, to assume the decommissioning liabilities.   This leaves BNFL as a profitable nuclear power generator and service company, which will run the Magnox power stations and be paid to decommission them as they reach the end of their lives.   So far so good.  

However, BNFL has another problem, THORP itself.   This is struggling for the usual iGreen reason that things are getting better.  No-one wants plutonium for bombs any more, and only the Japanese wants to use THORP for reprocessing fuel for fast breeder reactors.  Even they seem a bit reluctant, because uranium is plentiful and its price so low that the economic advantages of fast breeders, which create their own fuel, are diminishing.   

There is still a role for THORP dealing with general nuclear waste but many of the utilities, which use its facilities, would save money by just storing the waste in secure sites.  They just need to buy off the NIMBYs! 

Meanwhile BNFL has invested £473m in another plant the MOX (Mixed OXide) fuel processing plant.   This will take the plutonium from THORP and convert it into mixed oxide, which can be used in conventional nuclear power stations.   The trouble is even after all that money has been spent, no one really knows whether this is commercially viable.   The managers of BNFL think so.  But they would, wouldn’t they?  

The managers argue that there is a bright future for nuclear power in an era where global warming is perceived to be a problem, and that reprocessing reduces the amount of nuclear waste needing long-term storage.  

However, others are less sure.  British Energy, which has 20-year contracts costing £300m annually for reprocessing, might prefer to just store their spent fuel.  There are also all the usual nuclear uncertainties, such as regular legal challenges to the shipment of nuclear waste, the recent politically motivated  legal challenge to the MOX operating licence by Ireland, Greenpeace banging on, as well as the small but real safety risk.

The answer is clear.   Go ahead with the privatisation right now.   Let the market decide whether it’s worth operating the MOX plant.   Now that the decommissioning costs have been removed, Tony Blair can auction BNFL off, and see who wants to buy.   If, even with all the sunk cost taken care of, no one wants it, then the government should put it into mothballs.  If the managers really believe it can be profitable, let them raise funds for a management buy out.   Perhaps British Energy would like to run it.   Real buyers can insure against the risk of a successful legal challenge, and price the risk of Japanese and other utilities reneging on their contracts into their offer. 

I think it might go.   Given their worries about global warming, even Greenpeace and their cronies will support the recycling of such a clean fuel one day soon!    I’d have a punt on BNFL on those terms.  

Jim Thornton Leeds 9 Dec 2001

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Last modified: September 10, 2006