Sellafield Mox Plant
68. The Sellafield Mox Plant (SMP) was planned
during the 1980s. Planning permission was granted in 1994, and
the plant was completed in 1998, at a cost of over £300 million.
It has a planned annual capacity of 120 tonnes a year. Its opening
has been delayed by the need to obtain a variation in its authorisation
from the Environment Agency for discharges, although any change
in discharges attributable to the plant are, in the estimation
of the EA, likely to be negligible. Following BNFL's original
application in November 1996, supplemented in January 1997 by
further information sought, the EA held public consultations,
and commissioned an examination by PA Consulting Group of the
economic justification for the plant. PA Consulting Group produced
its Report in December 1997. Following a further round of consultations,
in November 1998 the EA forwarded to Ministers its proposed decisions
in favour of full commissioning. DETR and MAFF Ministers took
a further nine months to consider this. In June 1999 they decided
to permit uranium commissioning of the plant, a relatively low-cost
and readily reversible process; published a fuller version of
the PA Consulting Group Report than that previously published;
published an updated assessment by BNFL of the market for Mox
fuel, endorsed by DTI; and opened a yet further round of public
consultation. This further round of consultation closed in July
1999.
69. The delay in full commissioning has been costing
BNFL £1.5 million per month. Uranium commissioning, begun
on the day permission was given, is not yet complete. It had been
estimated to require around nine months. If the plant is opened,
it will take around five years to reach full output. The recent
loss of customer confidence in BNFL will inevitably have affected
BNFL's Mox sales in the short-term. The policy of the German Government
towards future nuclear generation, and therefore German demand
for Mox, is relevant. There are uncertainties over the state of
public opinion in Japan on Mox fuel use, and the degree of urgency
in implementing plans for a Japanese Mox plant on a similar scale
to the Sellafield plant. It has been reported that the plans briefed
to us in March 1998 for licensing further Japanese reactors to
use Mox have been modified. BNFL told us of the announcement on
15 March 2000 of the approval by the Japanese Government of a
further reactor to load Mox fuel.[111]
There is no overwhelming reason why the current problems should
affect the likely demand for Mox fuel from BNFL's potential customers
in Germany, Switzerland and Japan in the medium-term. Those operators
who have made the necessary investment in equipment and training,
and have obtained the requisite regulatory permission, to enable
power stations to use Mox fuel are likely to want to buy such
fuel. If they do not buy it from BNFL they will do so from BNFL's
French competitors. Those with plutonium in the UK must receive
it back in one form or another.
70. Ministers' hesitation in granting permission
for full commissioning of the SMP is understandable, especially
in the light of the data falsification incident. The public would
in the end pay if the facility were to be opened for full production
and then prove a white elephant. The PA report estimated it would
cost £85 million to commission and £50 million to decommission.
Mox production and sale represents a small but significant slice
of BNFL's anticipated future turnover and profit. Ideally, it
could be left to a more commercially attuned Board to decide if
it were prudent to press ahead with opening the Sellafield Mox
Plant and to assess whether the low level of assured customers
is such as to make the risk of opening worthwhile. The PA Report
identified risks as well as opportunities. There are for example
uncertainties on the opening up to competition of the market for
Mox fuel in France; over possible demand in Korea; and so on.
It is, however, unrealistic to expect investors in BNFL to buy
into the company in uncertainty as to whether full-scale Mox production
can proceed and with a large capital investment potentially to
be written off.[112]
The 1997 PA Consulting Group Report emphasised the importance
of early operation of the SMP to maximise its potential profitability.
It warned that "any significant delay to the commissioning
start date" could affect customer confidence and "place
BNFL at a competitive disadvantage".[113]
A decision to allow full commissioning does not presuppose continuation
of reprocessing beyond levels already contracted. We understand
that overseas utilities have a sufficiency of plutonium already
separated or contracted for. 18 months ago the PA Report found
that full commissioning was justified on economic grounds. While
the Report has proved useful and instructive, it is a curious
quirk that it is left to Environment and Agriculture Ministers
to decide on what is admitted to be a matter of commercial judgement
rather than environmental significance. The delay in deciding
on whether to permit full commissioning of the Mox plant has gone
on long enough. A decision should be made before BNFL submits
its Corporate Plan to Ministers later this year.
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