The planned sale of Urenco
poses a quandary for the three European governments who own it. They want a good price for the world's second-largest nuclear fuel vendor, yet are suspicious of every buyer's motives.
Germany, Britain and the Netherlands, which set up Urenco more than 40 years ago, have a duty to ensure secret technology that could be used to make an atomic bomb does not fall into the wrong hands.
U.S.-Japanese reactor builder Westinghouse, French nuclear group Areva and a consortium led by a former industry insider have been reported to be eager to buy a stake in Urenco, estimated to be worth up to 10 billion euros ($13.53 billion).
Other bidders for the company, which enriches uranium into nuclear fuel sold to power stations in Europe, the U.S. and Asia, could include uranium miners, infrastructure funds or even China.
Talks are likely to be complicated by disagreement among the governments about how much of the company to sell and who to sell it to. Germany wants to dispose of its one third share, Britain is considering an exit, while the Dutch prefer the status quo.
The nationality of potential buyers is also a tricky issue.
The Dutch want Urenco to remain European-owned, but London and Berlin seem open to bids from further afield. Any of the three governments can veto a deal.
Bankers involved in the talks do not expect a deal before the end of this year.
"There are a lot of thorny issues we are working through with our partner governments. We need to sell at the right value, while safeguarding the technology,'' a government official from one of the Urenco consortium countries told Reuters.
Urenco was complicated from the start. Not many companies are set up and governed by an intergovernmental treaty, but Urenco is ruled by three.
The 1970 Treaty of Almelo, which created the company, requires each country to protect Urenco's enrichment technology. That protection did not work so well initially.
In 1975, Abdul Qadeer Khan, a Pakistani scientist who worked for a Dutch nuclear research lab and had access to the Dutch Urenco plant in Almelo, was accused of espionage and fled to his native country, where he set up an enrichment facility and later became known as the father of Pakistan's nuclear bomb.
Three decades later, in 2004, Khan confessed he had sold nuclear secrets to Iran, Libya and North Korea.
Time to sell
Following Japan's Fukushima disaster in 2011, Germany decided to move out of nuclear power. Last month, Berlin said that German utilities E.ON and RWE, which own its 33 percent Urenco stake, want to sell.
Britain has nine nuclear plants and plans more by 2025. But the government does not see utilities services as part of its role and wants to privatise as much as possible.
Britain is talking to Urenco's other shareholders but says that no formal position has been taken yet.
Dutch authorities are more cautious and say they want to keep the company in safe hands.
One banker said a possible scenario could be for Germany to sell 33 percent and Britain 16 percent, so that only a 49 percent minority stake is put on the block.
Urenco is the second-largest of four major nuclear fuel producers, behind Russian firm Tenex, and ahead of U.S. company USEC Inc and Areva, according to the World Nuclear Association.
Even though buying a stake in Urenco would not grant access to Urenco's top-secret centrifuge technology, the governments worry that a new owner could attempt to breach the firewall they have erected to protect it.
A decade ago the governments agreed to put centrifuge research and production into a separate unit, the Enrichment Technology Company (ETC). This separated the business of selling nuclear fuel from the business of making the centrifuges that enrich it.
"Technology development is now in the hands of ETC. It is holding assets which in both the Netherlands and in Germany are considered the deepest industrial secrets those countries have,'' Carnegie Endowment non-proliferation expert Mark Hibbs said.
The firewall allowed French state-owned nuclear group Areva in 2006 to buy a 50 percent stake in ETC from Urenco, giving it the right to buy ETC's centrifuges for its enrichment factories without gaining access to the technology.
The terms of cooperation with France were laid out in the 2005 Treaty of Cardiff. The U.S. also joined the Urenco group when it signed the 1992 Treaty of Washington as a prerequisite for the construction of a Urenco plant on U.S. soil.
Whether a sale requires another treaty depends on the buyer, but if the purchaser was non-European, a new treaty seems inevitable.
For Areva, a Urenco stake would be a defensive move. The firm is the West's only reactor builder which is also able to sell nuclear fuel, and might want to buy a Urenco stake to prevent competitors from acquiring a nuclear fuel business.
Westinghouse, owned by Japan's Toshiba, does not have that ability and a Urenco stake could strengthen its hand.
"Countries like France, Japan and the U.S. already have nuclear know-how, signed the non-proliferation treaty and pose no proliferation risk,'' an Almelo Treaty country official said.
A Urenco bid by one of the Western uranium miners, notably from Australia or Canada, would also make business sense.
"It would be attractive to a company that has uranium assets and wants to add value downstream ,'' Carnegie's Hibbs said.
Firms like Cameco, the largest listed uranium producer, would have to consider a bid if the opportunity arose.
The wild card among potential buyers is a consortium led by former ETC chief Patrick Upson. The group is ready to bid for 66 percent of Urenco but refuses to name its partners, which probably include industrial and financial firms.
An even bigger wild card would be an approach by China, which has the world's biggest nuclear new-build program and little enrichment capacity of its own.
An industry source said he'd heard nothing about a possible Chinese bid. "But it certainly would make waves,'' he said.