Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Japan Inc exit from nuclear exports would leave field to Russia, China

Stock MarketsDec 21, 2018 06:57AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Nuclear reactors A and B are seen at Hinkley Point nuclear power station near Cannington in southwest England

By Makiko Yamazaki and Geert De Clercq

TOKYO/PARIS (Reuters) - The possible withdrawal of Japanese conglomerates from nuclear export projects in Britain and Turkey would leave the nuclear newbuild industry open to Russian and Chinese state-owned companies as Western private firms struggle to compete.

Japanese media reported this month that Mitsubishi Heavy Industries (MHI) (T:7011) was set to scrap the Sinop nuclear project in Turkey as cost estimates had nearly doubled to around 5 trillion yen ($44 billion).

Last week, Hitachi (T:6501) was reported to be considering whether to scrap its 3 trillion yen Horizon nuclear project in Britain as cost estimates had risen, while Toshiba (T:6502) liquidated its UK project this year.

A source involved in the Turkish project told Reuters MHI had effectively abandoned it.

He said the deal, signed in 2013 between Turkish leader Tayyip Erdogan and Japan's Shinzo Abe, had been too ambitious. The project, earmarked for a country with no nuclear tradition, would have been the first to use the untested Atmea reactor developed by MHI and France's Areva (PA:EDF), the source noted.

    MHI Chief Executive Shunichi Miyanaga said this month it was up to the Turkish and Japanese governments to decide on the project, adding that Turkey was examining a feasibility study MHI had submitted.

Hitachi's Horizon project to build reactors at two UK sites - the first at Wylfa Newydd, Wales - is now also uncertain. Hitachi has said it will make a final decision next year.

Horizon said it had been in talks with the UK government since June, when business minister Greg Clark said Britain may invest directly in the project.

"We've been in negotiations with the government regarding financing of Wylfa Newydd," a spokesperson said.

The government declined to elaborate.

Hitachi is seeking new investors for Horizon so the company can cut its stake to below 50 percent, but the project cannot be profitable under current conditions, a Hitachi executive said.

Hitachi hopes Britain will make up its mind by April.

"The political situation makes it impossible for the government to take action now ... but there are limits to how long Hitachi can wait," the executive said, referring to Britain's protracted negotiations on leaving the European Union.

Nuclear cooperation will be on the agenda of Prime Minister Abe's visit to Britain next month.

Hitachi hopes a group of Japanese investors and Britain each will take a third of the equity portion of the project. A company source said the project would be financed one third by equity, two thirds by debt.

Japanese media have reported Hitachi would need to book a 270 billion yen ($2.4 billion) loss if it abandoned Horizon. An industry source said Hitachi had already spent $2 billion on it.

A second Hitachi executive said the company cannot walk away from Horizon as it has other business interests in Britain.

"The company may freeze the project unless conditions are met, but can never walk away," the source said.

Toshiba last month scrapped its British NuGen project after its U.S. reactor unit Westinghouse went bankrupt and it failed to sell NuGen to South Korea's KEPCO (KS:015760).

RUSSIA, CHINA FACE-OFF

With Japan's export prospects severely curtailed, the global nuclear market is virtually in the hands of Russia's Rosatom and two Chinese reactor builders.

Two other privately owned Western nuclear firms - Westinghouse and France's Framatome (PA:EDF) - were restructured following losses and have no new foreign orders at the moment.

"Without Horizon, Japan is left without a nuclear project abroad ... this is becoming a Russia/China-dominated industry," said a consultant who advises one of Japan's nuclear groups.

China has a foot in the door in Britain, where state-owned CGN co-finances EDF's (PA:EDF) Hinkley Point project and has a deal to build its own reactor, which would be the first Chinese reactor constructed outside Asia.

Russia and China are already facing off in Latin America, where a Chinese deal to build a reactor in Argentina seems to be unravelling and Russia is muscling in. https://

An industry source familiar with the situation said China-Argentina talks had stalled. "Something fell apart. It is not an accident that the Russians are there now," he said.

A Beijing-based nuclear industry consultant said it was significant that Chinese President Xi Jinping did not mention nuclear in a recent speech about China-Argentina cooperation.

"The Chinese project, if it is not canceled, it is at least postponed," the consultant said.

($1 = 111.6100 yen)

Japan Inc exit from nuclear exports would leave field to Russia, China
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email