Threats to supply of uranium are the biggest chalenge to the government's nuclear expansion plans, says Aon

Global fuel wars could foil Business Secretary John Hutton’s plans to expand Britain’s nuclear power industry, according to Aon.

Aon said the UK government would need to rely on good relationships with key suppliers of uranium, essential to the long term goals of expanding the nuclear industry.

Uranium or ‘yellow cake’ is mainly exported from Australia to the UK, where it is enriched to become nuclear fuel.

According to Aon, political risks are one of the key challenges for the UK government’s plans.

‘The government must consider the threat of expropriation and supply chain disruption,’ said the broker.

Out of the African exporters of uranium, Aon’s 2008 Political and Economic Risk Map identifies Niger as the highest risk with the potential for political interference and legal and regulatory issues.

“Coupled with battles over water shortages, fuel supply will be the biggest challenge of our generation.

Hamish Roberts, managing director of Aon's natural resources team

The threat of terrorism was also highlighted by the broker as a key risk.

Hamish Roberts, managing director of Aon’s natural resources team, said Hutton’s plans for nuclear expansion were achievable but only if the government thinks beyond just the risks of safety.

He added: ‘Coupled with battles over water shortages, fuel supply will be the biggest challenge of our generation.’

Robers also called on the government to address the existing problems of nuclear waste disposal.

‘Since the first UK nuclear plant in 1953, it is estimated that the industry has only produced the equivalent of three double-decker buses’ worth of highly radioactive waste. This waste once vitrified in small quantities is buried or stored. There is no perfect solution to long term storage so engineers must work towards a revised strategy as to when the next phase of plants are introduced,’ he said.

“This is an opportunity for the insurance industry to bring about innovation and flexibility to respond to the new nuclear goals and recognise the potential scale of losses for the public, industry and government,” concluded Roberts.