Home > Press releases > 1999
24 Jul 1999
Hell [1] will freeze over before British Nuclear Fuels makes a profit
on its controversial plutonium (MOX) fuel plant, a report commissioned
by Friends of the Earth reveals today[2]. The news comes on the day
that further Government consultation on the economic case for the plant
closes, and as BNFL are attempting the first test shipment by sea of
MOX fuel to Japan. The likely scale of losses on the MOX plant, as revealed
by FOE's report,would make the sale of BNFL shares recently announced
by the Government unattractive to any intelligent investor.
The report was written by Mike Sadnicki and Fred Barker (both members
of the Government's Radioactive Waste Management Advisory Committee)
and Gordon MacKerron (Head of the Energy Programme at the Science Policy
Research Unit,University of Sussex)[3]. FOE commissioned the report
to analyse the additional economic information on BNFL's business case
for the MOX plant, published on the instructions of Deputy Prime Minister
John Prescott on 11th June. This is no less than the third public consultation
on the MOX plant.
In June, Ministers said that they were minded to give the plant the
go ahead, believing that the plant could make a profit of at least £100
million and pay for all its decommissioning and clean-up costs. FOE's
new report shows that this is nonsense.
FOE's consultants replicated the methodology and economic model of
BNFL's MOX business, as established by the PA Consulting Group, commissioned
by the Environment Agency to assess the economic case for the plant.
PA Group advised Government that BNFL would only need to secure contracts
representing 30%-40% of its reference case (the amount of work that
BNFL hopes to attract) to break even and pay all the plant's costs.
So far contracts for only 6.7% of its reference case have been signed.
FOE's consultants analysed the price BNFL would have to charge for
MOX fuel in order to secure additional contracts to either break even
or make a profit. They found that.
. BNFL would have to charge very high prices of around £2000/kg MOX in order to break even at 30-40% of its reference case. However, as such prices are
significantly higher than the prices charged to German utilities by
the French reprocessor, COGEMA, it is unlikely that BNFL's overseas
customers would sign contracts on this basis.
. If BNFL sold MOX at a significantly lower price
of around £750/kg MOX (similar to the level COGEMA charges the
French nuclear company EdF) it could not even break even at 150% of
its reference case.
. If BNFL were able to charge an average price
of around £1250/kg MOX it would need to sign contracts for around
60% of the reference case to break even and 90%of the reference case
to achieve a profit of over £100 million.
The consultants also carried out a risk analysis of the probability
that BNFL would get additional contracts, break even or make a profit.
Again they followed PA's methodology and found that:
. BNFL has only a 36% chance of breaking even
with its MOX plant
. BNFL has only a 15% chance of making a profit
of £100 million or more
. BNFL has only a 5% chance of making a profit
of £230 million or more.
The difference between these results and those of PA and BNFL is so
great that Ministers have no rational basis for sanctioning the full
operation of the MOX plant.
Commenting, Dr Patrick Green, Friends of the Earth Senior Nuclear Campaigner,
said:
“BNFL's economic case for the MOX plant is, frankly, a pile
of irradiated codswallop. Our report shows that Ministers would need
to be barking mad to give it the go ahead. Such a decision would be
patently irrational, and therefore ripe for judicial review. If they
make it they will be hearing from our lawyers. If BNFL really wants
to be privatised it had better forget about MOX quick.”
NOTES TO EDITORS:
[2] Analysis of the Economic Case for the Sellafield
MOX Plant, by Fred Barker, Mike Sadnicki and Gordon MacKerron, Friends
of the Earth, July 1999.
[3] The authors of the report are writing in
a personal capacity.
Contact details:
Friends of the Earth
26-28 Underwood St.
LONDON
N1 7JQ
Tel: 020 7490 1555
Fax: 020 7490 0881
Web: www.foe.co.uk/feedback.html
Media team
