British Nuclear Fuels (BNFL) is in talks with Urenco, the world’s largest enricher of uranium, to sell its one-third stake in the company for up to £2 billion.

The Government is in the process of selling off parts of BNFL, including the stake in Urenco — a joint venture between Britain, the Netherlands and Germany that is considered one of the crown jewels.

High uranium prices have increased the demand for enrichment services from nuclear power utilities. Enrichment effectively means less raw material is needed to produce the same amount of power.

Uranium prices surged a further 7 per cent to $91 an ounce this week as Cameco, the world’s largest supplier, confirmed that its Cigar Lake mine in Saskatchewan, Canada, would be delayed two years because of flooding.

This increase in demand for enrichment helped Urenco to lift net profits for 2006 by 26 per cent to €209 million (£142 million). Its order book nearly doubled to €15 billion.

Analysts believe that if BNFL were to sell the stake, possibly to a utility company or to a uranium miner, it could fetch about £2 billion.

However, sources close to the talks said that they were in very early stages and were complicated by the ownership structure of Urenco. The company was founded after the Dutch, British and Germans signed the 1970 Treaty of Almelo. It was established to guarantee supplies of enriched uranium for each of these countries and its ownership is split equally between the three. Any change in ownership must be agreed by all three countries.

Urenco has enrichment facilities in all three countries and it plans to invest about €1.5 billion over the next four years expanding the capacity of each. It will also spend a further €1.5 billion building a new enrichment facility in New Mexico to supply the North American market.

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