The Nuclear Decommissioning Authority

18 September 2006

Introduction

The Sellafield MOX Plant (SMP) processes overseas plutonium derived from reprocessing operations of spent fuel in THORP and produces new Mixed Oxide (MOX) fuel suitable for use in Light Water Reactors (LWRs).

Information on the progress of SMP (February 2006) has been published via the NDA website previously, and this report reviews progress over the past year in ramping up production as well as considering the future production capability, economic case and potential strategic role of SMP. SMP was discussed at the NDA board in June 2006 where a recommendation was made in regard to its future operation.

To support the NDA review, Arthur D Little were also commissioned to carry out an independent review of the progress of SMP over the past year and a redacted copy of their report is attached.

Key Findings and Observations

Safety Performance

The safety performance of SMP during the year has been exemplary with only one reportable incident. SMP has now operated for an accumulated 1.8 million man hours without a lost time accident.

Production

Production during the last year fell well short of the Master Production Schedule (MPS). This shortfall was primarily due to poor plant availability and a slow restart following an engineering outage. However, pellet production nearly doubled over the previous year and rod production increased by 25%. It is noted the plant is still in a fragile condition and whilst instantaneous performance gives some optimism that throughputs are improving, the availability issues are still dominating overall production. More detailed modelling work this year has shown the previous plan to be too optimistic and a revised MPS has now been put in place based on a more thorough assessment of the modelling assumptions and the limited performance data available.

Integrated Improvement Plan

During the past year an integrated improvement plan has been put in place and is being followed, although it is still in the early stages of delivery. The integrated programme has workstreams covering areas such as plant improvements, safety, organisation, people and resources and manufacturing improvement. A number of high level milestones have been developed from the integrated plan and these have been monitored by NDA. Good progress has been made against the business improvement milestones although the plant improvement plan is still in development and has yet to be fully underpinned.

Third Party Support

BNGSL have liaised with a number of industry expert third parties to progressively gain their technical and operational support in ramping up SMP. This work continues to generate a number of planned improvements, which are being assessed for business benefit, and if appropriate will be implemented progressively as part of the overall plant improvement plan.

Customer Confidence
SMP has demonstrated that it is capable of safely producing a high quality product with the first production assemblies from SMP now having operated successfully in reactor for over 12 months. Further commitment from customers for SMP capacity has also been obtained.

Net Present Value (NPV)

The NPV calculations have been revised to reflect the new Master Production Schedule. The continued operation NPV has a broad range of potential outcomes with the closure case more tightly defined. On balance, the economic analysis suggests continued operation and ramp up to achieve the MPS remains more favourable than immediate closure of the plant.

Potential strategic role of SMP

The Government has recently published the findings of its Energy review and NDA is undertaking reviews of both Plutonium and Spent Fuel management. The latter reviews are expected to be concluded by the middle of 2007. As such it has yet to be determined what future role, if any, SMP could play in the future disposition of UK Plutonium. It is also noted that a significant proportion of the UK Plutonium expertise is embedded either in the SMP workforce or in its suppliers.

Conclusions

The plant has proven its capability to safely make good quality product and customers are still keen to see the plant operate. Against last years Master Production Schedule, actual production fell well short of the requirements.

Significant progress has been made through the year in developing and implementing the plant improvement plan. However, at this early stage of implementation, the changes made to date have yet to result in major increases in plant production. The future delivery of the implementation plan and operation of SMP will be subject to close scrutiny from NDA.

It is the considered opinion of the NDA that although the plant remains fragile the early implementation of the improvement plan gives some cause for optimism that ramp up to throughputs required to deliver customer requirements can be achieved. It is, however, noted that at this time there is only limited operational data on which to generate robust long term future predictions of performance.

Analysis of the difference between the NPV calculated for closure and that calculated for the reference MPS suggests that continued operation to achieve the MPS is more favourable than immediate closure the plant.

The output of the Government Energy review and NDA Plutonium and Spent fuel strategy review, both of which are expected to be complete by mid 2007, will inform what strategic role, if any, SMP may play in the future disposition of plutonium.

Given the above the NDA Board recommended that SMP continue to operate under close scrutiny from the NDA.