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Mitsubishi Heavy makes huge and risky investment in AREVA nuclear

scrutiny-on-costsAREVA crumblingMitsubishi Heavy faces tough decisions in nuclear power business  Orders dry up at home and abroad after Fukushima disaster, Nikkei Asian Review, 8 Dec 16,  TOKYO –– Mitsubishi Heavy Industries and Japan Nuclear Fuel are putting the final touches on a plan to acquire a roughly 10% stake in the troubled French nuclear energy company Areva. But for Mitsubishi Heavy it is an agonizing decision.

The investment would involve spending 40-50 billion yen ($350-438 million), which is an extraordinary amount considering the uncertain future of the nuclear power business. Mitsubishi Heavy has made little headway with exports, highlighted by Vietnam’s recent decision to abandon plans for a pair of nuclear plants. The Japanese company finds itself in a tight spot, pulling with no progress on a rope it cannot release.
In Japan, the Sendai plant operated by Kyushu Electric Power is one of the few domestic nuclear power plants now running. Restarting other plants and making them safer and more quake-resistant are the tasks at hand. But Mitsubishi Heavy has received few hard orders and it is rough going for the manufacturing aspect of its nuclear power business, admitted company President Shunichi Miyanaga.

Facing dim prospects for new domestic orders, both Mitsubishi Heavy and Japan Nuclear Fuel must find other ways to secure enough business to keep their equipment and workforces active.

Back in 2006, Mitsubishi Heavy partnered with Areva to develop a so-called Generation III+ pressurized-water reactor with state-of-the-art technologies. The team has been using the design to compete with the larger, older-generation pressurized-water systems promoted by two other groups: the team of Hitachi and General Electric, and the team of Toshiba and Westinghouse…….

The French government, which owns nearly 90% of Areva, is looking to cut its losses. Unprofitable businesses are being excised from Areva and a new company is being set up that will seek over 30% of its capital from Japan, China, and elsewhere. …

There are lingering worries inside Mitsubishi Heavy about this huge investment in Areva. To alleviate those concerns, Mitsubishi Heavy has voiced confidence that there will be another nuclear renaissance in 20 to 30 years……

December 9, 2016 - Posted by | business and costs, France, Japan, politics international

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