May 2001
Foreign firms threaten crisis for Sellafield
Independent on Sunday, 13 May 2001
By Severin Carrell and Geoffrey Lean[Posted 15/05//2001]
Sellafield's main international customers have threatened to withdraw their business, throwing the Cumbrian nuclear complex into an unprecedented crisis, according to confidential documents obtained by The Independent on Sunday.
The documents show that nuclear power companies in Germany, Japan, Switzerland, Holland and Italy have warned British Nuclear Fuels (BNFL) — the nationalised industry that owns the complex — that they are considering abandoning contracts worth £6bn to have their used nuclear fuel reprocessed there. They also reveal that the customers are on the verge of "a complete loss of confidence" in the firm.
The threats jeopardise the Government's plans to part-privatise the firm after the general election. BNFL could be forced to close down its controversial Thorp reprocessing plant, at the cost of 2,000 jobs. BNFL's main home customer, British Energy, has already decided to open talks on ending reprocessing its fuel at the plant, describing the practice as "economic nonsense".
Disclosure of the threats comes at the worst possible time for BNFL, which is hoping to get permission to expand its operations at Sellafield shortly after the election, by opening a new £300m plant to turn plutonium into new nuclear fuel.
The Prime Minister and Stephen Byers, Secretary of State for Trade and Industry, are keen to give the plant the go-ahead, despite growing doubts over its profitability. Reprocessing separates used fuel from reactors into plutonium, uranium and waste. It was originally conceived when it was thought that nuclear power would expand so rapidly that uranium would become scarce and reactors would need the recycled uranium and plutonium that it produces. In the late 1970s, Sellafield customers effectively signed open-ended contracts with BNFL, allowing it to charge them whatever it cost to treat their fuel, plus a margin for profit.
Nuclear power is now much less economic, thanks to increased energy market competition. But the overseas customers have become increasingly angry as BNFL has increased its prices, leading to angry demands to renegotiate the contracts. The leaked documents show that the negotiations have erupted into a furious row. The customers accuse BNFL of breaching the contracts by failing reprocess on time or at agreed prices.
They reveal that at one heated meeting in September last year, the customers warned BNFL's chief executive, Norman Askew, that the "situation is now becoming critical". In a stinging statement they said that they were "losing confidence in BNFL's technical ability" and added: "If BNFL's underperformance continues [there] could be a complete loss of confidence in all aspects of BNFL's services."
The companies said they were considering taking court action, totally renegotiating the contracts or stopping sending their fuel to Sellafield.
The documents also report a crisis meeting at Heathrow on 23 March, brokered by the accountants PriceWaterhouse-Cooper, when the customers accused BNFL of being "unresponsive and unwilling to help". They warned that they would take legal action if BNFL refused to carry out a full technical audit of its operations.
Last night, one senior overseas negotiator confirmed the crisis raised "rather significant" doubts over the future of their Thorp contracts.
Another crisis meeting will take place in London on Tuesday. Last night, a BNFL spokesman refused to comment on the crisis but confirmed that both sides were in long-running negotiations. He said that "robust contracts" were in place, underpinned by government commitments, and that 85 per cent of the fuel to be reprocessed was already at Sellafield. He insisted that BNFL was "optimistic" the dispute would be resolved.
However, environment campaigners at Greenpeace insisted that the leaks prove BNFL is facing a major crisis. "Their future economic prospects are bleak, and they know it, their customers know it and the British government needs to understand it," a spokesman said.
Greenpeace today said the documents (available at http://www.BritishNuclearFuels.com, set up by Greenpeace) totally contradict BNFL's public statements that it has rebuilt customer confidence, and that it will obtain sufficient contracts to allow the UK government to approve the opening of the Sellafield mixed oxide (MOX) plutonium fuel plant, SMP.
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