HC Deb 19 December 1969 vol 793 cc1732-40
The Minister of Technology (Mr. Anthony Wedgwood Benn)

May I add to the list of those whom you thanked, Mr. Speaker, your good self for presiding over our proceedings with such wisdom, kindness and the consideration which you showed in your statement.

Mr. Speaker, with your permission and that of the House, I should like to make a statement on the Tripartite Agreement for the production of enriched uranium using the gas centrifuge process.

I apologise to the House for having to make this statement today on the eve of the Christmas Recess, but its timing has had to be co-ordinated with our partners. Final clearance was obtained yesterday when I was unable to make a statement, and I am therefore making it to the House at the earliest possible moment. I thought the House would prefer to have this information before the Adjournment rather than have an announcement made during the Recess.

Her Majesty's Government and the Federal German and Netherlands Governments have approved the terms of an Agreement to collaborate on the gas centrifuge process for enriching uranium, and intend to sign the Agreement after completion of the procedures laid down in Article 103 of the Euratom Treaty. It will then be laid before Parliament in the usual way.

All three countries have been developing the process for a number of years. We are confident that it offers the most economically attractive means of providing the capability which Western Europe needs to meet the rapidly growing demand for enriched uranium for nuclear power stations and believe that our collaboration to this end will not only strengthen technological co-operation but will also contribute to economic integration in Europe. We have already stated our readiness to collaborate with other countries interested in the process, both within Europe and elsewhere, and have had informal talks with two of them. But our first objective has been to get industrial collaboration going on a tripartite basis.

Two joint industrial enterprises will be established—an Enrichment Organisation with its headquarters in this country, to own and operate enrichment plants, and a Prime Contractor, with headquarters in Germany, to design and build them. Both will, as soon as possible, assume responsibility for research and development.

Initially the collaboration will provide separative work capacity of 350 metric tonnes per annum, divided between enrichment plants at Capenhurst and at Almelo in the Netherlands. The joint enterprises will decide in due course about expanding capacity beyond this figure.

An inter-Governmental Joint Committee will supervise the joint industrial enterprises in such matters as safeguards, security and agreements with other countries or international bodies. The collaboration will be entirely consistent with the three Governments' responsibilities for the non-proliferation of nuclear weapons, to which we all attach great importance. Indeed we see the international exploitation of the process as a major contribution to this cause, and to the peaceful uses of atomic energy. The safeguards applied will include the procedures already established by Euratom as well as any additional obligations which may arise from agreements with the I.A.E.A. The Governments will continue to protect the security of the technology involved.

These are the main features of the collaboration. They are described in more detail in a statement agreed between the three Governments, which is being issued in the three capitals today and which I propose to circulate in the OFFICIAL REPORT.

Mr. David Price

We welcome the statement. It is rather a complex one to digest on the eve of the Christmas Recess, but I am sure that the House will understand the reason why the right hon. Gentleman has made it today. The House will wish to study the statement —and the subsequent Agreement when it is published—in some detail. Therefore, today I restrict myself to asking two short questions. First, in relation to the enrichment organisation, would I be right in assuming that the British participant in the organisation will be the proposed Nuclear Fuel Company? If that is so, when may we expect the Bill that was envisaged in the Queen's Speech for bringing in the new Nuclear Fuel Company?

Secondly, will the right hon. Gentleman say a little more about industrial collaboration? Will the A.E.A. now be free to remove the security ban which has hitherto existed and which has made it very difficult for British firms to ge the knowledge in order to participate and which does not appear to have applied to either the Dutch or German [...]ms?

Mr. Bean

On the question of further information, the main Agreement, with its Annexes, will be published subsequently, and as the companies are set up the articles of association will become known, and therefore further information will become available.

It is the intention—as I have indicated in the House before—that the new Nuclear Fuel Company would be the British participant, and when the Bill is published—which it will be in the New Year—the House will have the opportunity of considering it, with all its implications, and there will be opportunities for association with industrial companies.

As for security, with a technology as sensitive as this, I must not give any impression that there will be a relaxation of any kind in the security procedures governing this project, but it is the intention of the people now responsible in the A.E.A. that there should be links with and contracts for British firms, although this is a matter which would need to be looked at in greater detail later.

Mr. Dalyell

I understand the issue of security, but on the question of costs, can my right hon. Friend confirm or deny the capital expenditure of £625 million, and the suggestion that the balance of payments saving will be about £152 million? Can be also say something about the time scale, and something of his plans for research and development with the prime contractor?

Mr. Benn

My hon. Friend has quoted capital expenditure figures, which I believe appeared in the newspapers. These relate to a much larger scale operation than we visualised in the first instance. In the first instance the demand for enriched uranium arose in this country, where the market requires it most rapidly and we are thinking initially of a 200 tonne separative operation in Capenhurst, with an associated plant at Almelo, based on the existing technologies of the two proposed partners. The increase in capital investment depends upon the growth in the demand. As for the cost, there is no doubt that—that is why we are entering this industry—it will be cheaper to enrich uranium by the centrifuge method rather than by the gas diffusion method which has hitherto been used.

The balance of payments advantage will flow from the fact that the work will be undertaken here, and we believe that this will be competitive with the American price and therefore this will be a gain in our balance of payments, although I cannot give exact figures.

As for research and development, we are aiming to see this transferred to the industrial enterprises as rapidly as possible, and there will naturally be the fullest co-operation between the partners. We are one of the members of each organisation and therefore we shall be closely associated with the shape of it. But this work has gone on for many years in the three countries and until we are in a position to exchange information more fully than hitherto we shall not know in which direction research and development should most sensibly move.

Mr. Bessell

In welcoming the right hon. Gentleman's statement, I should like to be associated with the remarks he made in paying tribute to yourself, Mr. Speaker. Is the right hon. Gentleman aware that my hon. and right hon. Friends welcome his statement? Can be assist us by indicating the likely time scale for the construction of the centrifuge plant, and also say what opportunity there will be for private interests to participate.

Mr. Benn

I am grateful to the hon. Member for welcoming my statement. Very roughly, the time table is as follows: Article 103 of the Euratom Treaty—and our two partners are mem- bers of Euratom—contains provision for this to go for consideration, and I would expect that the agreement would be signed in the latter part of February, and from then on the establishment of the companies would proceed. The articles of association to which I have referred would be made public in the normal way for those two companies in the course of 1970.

As for the technical time table, the work on the centrifuge has already gone on in the two countries and, in a sense, therefore, this work has already begun. But we have in mind that by the mid-1970s the plant will be operating, and the demand for enriched uranium is likely to rise rapidly throughout the 1970s and even more in the 1980s. It is our intention to meet as much of this demand as we can, both in Europe and elsewhere. In each case private arrangements will be made in this country, and, as the House knows, it is our intention that private firms should be in a position to participate in the Nuclear Fuel Company, but the details must await the publication of the Bill, which I hope will take place shortly.

Mr. Jay

Does not this very substantial agreement show how easy it is to achieve technical co-operation without forming customs unions?

Mr. Benn

Without entering into other arguments that may be in my right hon. Friend's mind, I would pay tribute to those who have worked on this, and to the officials of all three countries and the industry concerned, in proving how useful and fruitful European collaboration can be.

Mr. Marten

Is not this just another example—after the Concorde, the multi-role combat aircraft, and the Jaguar—of a technological job going ahead without our going into the Common Market? What effect would it have had on the whole procedure if we were in the Common Market?

Mr. Bean

Despite the tributes I have paid to your wisdom, Mr. Speaker, I have a feeling that you would not like me to engage in a more general discussion in answering that question.

Mr. Speaker

Order. It is because of my alleged wisdom that I would not allow the right hon. Gentleman to engage in more general discussion.

Mr. Benn

For whatever reason, Mr. Speaker, I doubt whether you would welcome a general argument. We regard collaboration on an industrial level as of prime importance, and this arrangement is the very best arrangement. The hon. Member mentioned one or two examples, but the differences lies in the fact that we are setting up an industrial organisation with the necessary minimum of Government supervision, for this is a sensitive technology. It represents a very important development, but it bears not at all, one way or the other, on the argument whether or not this should be reinforced by closer association between this country and art extended Community. In this the view of the Government is well known.

Following is the statement:

The Governments of the Federal Republic of Germany, of the Kingdom of the Netherlands, and of the United Kingdom of Great Britain and Northern Ireland, have approved the terms of an Agreement for collaboration in the development and exploitation of the gas centrifuge process for enriching uranium. The Netherlands and German Governments will shortly communicate the draft of the Agreement to the European Commission in accordance with Article 103 of the Euratom Treaty. (Text of this Article is attached.) After completion of the procedures laid down in that Article, it is the intention of the three Governments to sign the Agreement.

2. Research and development work on the gas centrifuge process has been carried out independently in the three countries for a number of years, and each has reached the point where industrial exploitation can be undertaken. The three Governments are of the view that the rapid growth in the demand for enriched uranium for nuclear power stations makes it essential to establish in Western Enurope a substantial and growing capacity for uranium enrichment. They consider that, in European conditions, the gas centrifuge process will be economically the most attractive method of enrichment. They believe that collaboration in this advanced field of technology will strengthen European technological co-operation generally and that its joint industrial exploitation will contribute to European economic integration.

3. The three countries, as they have made clear from the outset of their negotiations, stand ready to collaborate with European or other countries interested in the enrichment of uranium by the centrifuge process. Given the urgency of making a start with the development and exploitation of the gas centrifuge process in Europe, and given the fact that the three countries are individually well advanced along this road, they have thought it right to concentrate most of their attention so far on getting industrial collaboration going on a tripartite basis. Their readiness to consider collaboration with other countries has however been demonstrated by the holding of informal discussions with the Governments of Italy and Belgium, the two countries which have so far formally expressed interest.

4. The three Governments will promote the establishment and operation of joint industrial enterprises to build centrifuge enrichment plants, to operate such plants and otherwise to exploit the process on a commercial basis. Their research and development effort will be integrated and responsibility for it will be assumed by the joint industrial enterprises as soon as possible.

5. The following understandings concerning the industrial and financial arrangements have been reached.

6. Two principal enterprises are envisaged under the collaboration known as the Enrichment Organisation and the Prime Contractor. In each case the shares of the joint industrial enterprise will be held, as to one-third each, by a commercial enterprise or group of enterprises nominated by each of the three Governments; and the Board of Directors of each of the enterprises will consist of an equal number of representatives from each of the three enterprises or groups of enterprises concerned. These national enterprises will be meeting shortly to prepare for the early establishment of the Prime Contractor and Enrichment Organisation.

7. The Enrichment Organisation will establish subsidiary companies to own and operate the initial plants at Almelo and Capenhurst, and further plants to be established in the future, to meet demand arising in the three countries or elsewhere. The Enrichment Organisation will normally provide at least 51 per cent. of the equity capital of each subsidiary. Its headquarters will be in the United Kingdom.

8. The Prime Contractor will design and construct plants for the enrichment of uranium by the centrifuge process for the Enrichment Organisation or its subsidiaries, and will design and manufacture centrifuges for this purpose. It will also be able, subject to approval by the three Governments under the Collaboration Agreement, to market enrichment plants or centrifuges, and to license the related technology in fourth countries. Its headquarters will be in the Federal Republic of Germany.

9. The initial programme of collaboration will comprise the construction, commissioning and operation of uranium enrichment plants of a total separative work capacity of 350 tonnes per annum, together with the facilities necessary to provide centrifuge machines for this purpose.

10. Enrichment plants for this initial programme will be set up at Capenhurst in the United Kingdom and at Almelo in the Netherlands. It is expected that a separative work capacity of 50 tonnes per annum will be reached at each plant during 1972.

11. Expansion of the plants beyond the 50 tonnes level and up to a combined total of 350 tonnes will proceed in accordance with the growth in the level of demand for enrichment within the three countries, together with any further demand which may be accepted from elsewhere.

12. Decisions as regards expansion of capacity beyond the initial programme of 350 tonnes will be taken in due course by the joint industrial enterprises.

13. In order to provide effective supervision of the joint industrial enterprises, the three Governments will set up a Joint Committee. Its main tasks will be to consider and decide upon questions regarding safeguards in respect of non-proliferation, security and classification and agreements with other States or with international organisations. Its decisions will be taken unanimously. Pending the establishment of the Joint Committee a Centrifuge Preparatory Committee of officials is already in operation.

14. The three Governments fully recognise their responsibilities with regard to the nonproliferation of nuclear weapons, to which they attach the greatest importance; and their collaboration will be entirely consistent with their policies and with their international obligations in this field. Appropriate international safeguards will be applied; these will include the procedures of the safeguards system established by the European Atomic Energy Community and the procedures resulting from any additional obligations pursuant to an agreement or agreements concluded with the International Atomic Energy Agency. The three Governments will take all appropriate steps to continue to protect the security of the sensitive technology involved. They take the view that the establishment of international enterprises to develop and exploit the gas centrifuge process will be a substantial contribution not only to the development of the peaceful uses of atomic energy but also to the cause of nonproliferation. The three Governments will ensure that information, equipment and material which may be at their disposal for the purpose of or as a result of the collaboration will not be used by or to assist any non-nuclear-state to manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices.

Article 103 of the Euratom Treaty states: Member States shall communicate to the Commission their draft agreements or conventions with a third country, international organisation or national of a third country, in so far as such agreements or conventions concern matters coming within the purview of this Treaty. If a draft agreement or convention contains clauses impeding the implementation of this Treaty, the Commission shall, within one month of receipt of such communication, make known its observations to the State concerned. Such State may not conclude the intended agreement or convention until it has overcome the Commission's objection or complied with any ruling which the Court of Justice, adjudicating urgently upon a Request from such State, shall give concerning the compatibility of the proposed clauses with the provisions of this Treaty. Such Requests may be submitted to the Court of Justice at any time after the State has received the Commission's observations.