26 March 2024

How Capenhurst has taken on the Kremlin

By Lincoln Hill

Urenco, the partially UK state-owned uranium enricher, is the most important company in our collective effort to drive Russia out of Western nuclear fuel markets, and it is gaining ground. Urenco is building up orders, making key investments, and reliably earning money for the UK taxpayer.

Why is this important? For decades, Russia has pursued a strategy of building up energy leverage over our allies based on four pillars: coal, oil, gas and nuclear. The Kremlin has done this deliberately to dull our response to their criminal acts, culminating in the full-scale invasion of Ukraine two years ago. In nuclear, Russia earns billions of dollars per year as the leading supplier of nuclear fuel services. The highest value of these is enriched uranium, where Russia provides about 35% of global output, and has 45% of global capacity, selling to countries all over Europe, the United States, South Korea and Japan. In short, all our major allies buy Russian, and the Russians have slack to take on more.

The largest Western enricher is Urenco, a third owned by the British Government, a third by the Dutch Government, and a third by RWE and E.ON together. Our success in diminishing Russia’s energy leverage rests to a great extent on Urenco’s ability to take our allies’ orders away from Russia and to scale up its own uranium enrichment capacity.

Urenco has achieved great results so far. The order book has risen from €10.6bn at the start of 2023 to €14.7bn in 2024. This is a critical success: if Urenco had not captured that extra €4bn in value, Russia, whose own capacity is highly underutilised, would be in pole position to take it instead. Urenco has signed deals to supply all the enriched uranium need for Ukraine’s nuclear power plants, who provide more than half the electricity to the country’s homes, schools, hospitals and war effort. It has also reached agreement with Bulgaria and Canada, shifting them away from reliance on Russia.

If you look at Urenco’s annual results, you will see that profits are down a bit, which may seem surprising. But that is because money is being ploughed back into an ambitious programme to preserve or expand enrichment capacity at all four of Urenco’s sites, including Capenhurst in Cheshire. Capital investment is up 54% in one year, with more planned. These long-term investments will provide us the security and sovereign capability to stay away from Russia for good.

In the midst of this huge strategic effort, Urenco is still delivering for UK plc and for the UK taxpayer. This year again, Urenco paid a direct dividend of €100m to the UK Government for its ownership stake, making it an even €1bn over the last 10 years. There are few enterprises who can say as much. On top of that, Urenco in the UK is the leading exporter in the nuclear sector, with 80% of Capenhurst’s output going abroad and earning £300m for the UK. This success drives investment, build skills and sustains good jobs right here in the UK.

The UK should stand foursquare behind Urenco. Every sinew of our soft power and diplomatic muscle should be strained to encourage our major allies’ utilities to switch their contracts from Russia to the West. We should provide the framework of policy certainty to underpin Urenco’s major new investments in capacity and to reassure our allies that their supplies and their nuclear generation will be secure if they buy from us. The Civil Nuclear Roadmap’s determination to end use of all Russian fuel services by 2030 was a welcome step, and now we have to see it through.

The UK has a special role to play in taking out the nuclear pillar of Russia’s energy leverage: it means less money for Putin, more energy security for our allies, and more business for the UK. That is a winning combination.

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Lincoln Hill is Director of Policy and External Affairs at the Nuclear Industry Association.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.