Mitsubishi joins EDF in bid to save reactor builder Areva

Under the memorandum of understanding, Mitsubishi Heavy Industries could take a minority stake alongside EDF in Areva NP

First Published28 Jun 2016
A photo shows the logo of the French nuclear giant Areva during the World Nuclear Exhibition in Le Bourget, near Paris, on June 28, 2016. Photo: Eric Piermont/AFP<br />
A photo shows the logo of the French nuclear giant Areva during the World Nuclear Exhibition in Le Bourget, near Paris, on June 28, 2016. Photo: Eric Piermont/AFP

Paris: France may have found a long-awaited Asian partner to help rescue its nuclear industry as its energy giant EDF signed a partnership deal with Japan’s Mitsubishi Heavy Industries (MHI).

Under the memorandum of understanding, MHI said it could take a minority stake alongside EDF in Areva NP, the reactor unit which is to be split off from other parts of France’s troubled state-owned Areva nuclear behemoth.

MHI boss Shunichi Miyanaga and EDF chief Jean-Bernard Levy said in a statement that the planned deal would strengthen ties between the two countries’ nuclear industries and allow them to pursue new nuclear projects across the globe.

The joint statement also calls for EDF to take part in Atmea, a MHI-Areva joint venture that offers a reactor with design elements from both Areva and MHI.

EDF will provide engineering, operations, and safety know-how—but no capital—to the project of constructing four Atmea reactors at Sinop in northern Turkey.

The Sinop project is estimated to be worth more than €15 billion ($16.6 billion).

“We look forward to cooperating with EDF in the civil nuclear fields comprising the development of the first ATMEA project, ATMEA 1, which will become one of the most advanced nuclear power plants in the world,” said Miyanaga.

Splitting the reactor business off Areva and selling it to EDF, the world’s largest operator of nuclear power plants, is a main element of the French government’s plan to rescue the majority state-owned company.

Areva is also involved in the mining of uranium and its processing into nuclear fuel.

Areva has faced severe difficulties since 2011, when the Fukushima disaster in Japan called nuclear power generation into question across the world.

Confidence in the technology’s future was further shaken when Germany announced that it would shutter all of its nuclear power plants over the decade following the calamity, reversing a decision to keep the reactors running.

Areva’s woes were compounded by construction problems affecting its first EPR reactor in Finland—now expected to open nine years late in 2018—putting company finances deep into the red.

EDF, also majority owned by the French state, agreed in June 2015 to purchase between 51 and 75% of Areva NP at a valuation of around €2.7 billion ($2.99 billion), with the deal expected to be finalised in 2017.

The rump of Areva would retain a stake of between 15 and 25% in the affiliate.

But company chiefs and the French government have been hunting since October for an Asian minority partner to join the takeover with up to a third of shares, with MHI the longstanding favourite.

The French state holds an 87% stake in Areva and 84% of EDF shares.

France sees nuclear energy as a key national industry and the government has been closely involved in talks to restructure the sector.

The French state has poured billions into Areva in the interim to keep the lights on and thousands of French workers on the payroll.

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