Customers
72. Until the integration of Magnox into BNFL,
the supply of fuel to Magnox stations, and reprocessing the spent
fuel, were significant and profitable parts of BNFL's business.
The 1998-99 Annual Report notes that profits to BNFL on Magnox
business had amounted to around £70 million in the 10 in
the first ten months of 1997-98, suggesting £85 million in
a full year. Others have suggested double that figure. Around
a half of BNFL's UK fuel sales are to Magnox.[118]
Reprocessing of Magnox fuel — to which it is now apparently
generally accepted that there is no safe alternative — is
undertaken in the B205 plant at Sellafield.[119]
In the early 1990s there was a problem over the need to replace
the dissolver in this plant, raising questions as to whether it
was a worthwhile investment. In the event, a new dissolver and
plutonium evaporator were commissioned in 1996, with a 20 year
design lifetime. This is intended to ensure that there will be
a safe route for dealing with annual arisings of spent Magnox
fuel as well as the final cores of Magnox reactors after closure.[120]
BNFL is continuing research into an alternative fuel for Magnox
reactors —"Magrox" — capable of being reprocessed
in THORP.[121]
If successful, that could extend reactor life, and lead to savings
on running the B 205 plant. There is, however, no profit in BNFL
dealing with its own spent fuel.
73. The KPMG study noted the problem presented by
Magnox, which will within a matter of years be simply a liability
to be managed by BNFL on behalf of the Government rather than
a profitable asset. Separation of Magnox from the ambit of the
PPP has been ruled out. BNFL can benefit in the longer term from
successful decommissioning of their Magnox stations, as a means
of demonstrating their excellence in the global market for such
services. There will be difficult choices as the Magnox stations
reduce, in balancing the continuing costs of maintaining reprocessing
facilities at Sellafield against the economic benefit of the remaining
stations. We recommend that Ministers ensure that BNFL provide
in its Corporate Plan a clear vision on the way ahead for Magnox
up to the introduction of a PPP and beyond, based on thorough
analysis of the economics of the whole Magnox cycle, and that
targets be set for BNFL's Magnox generation business.
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