Areva SA (AREVA) Chief Executive Officer Luc Oursel is seeking fresh talks to sell nuclear reactors to China, halted in the wake of last year’s nuclear accident in Japan and amid questions about the new French government’s energy stance.
The Chinese “aren’t worried but they are legitimately asking questions about the continuity of the French nuclear commitment,” Oursel said yesterday in an interview in Aix-en- Provence, France.
French President Francois Hollande, who took office in May, pledged to cut the nuclear-power portion of France’s electricity production to 50 percent by 2025 from about 75 percent now, and to invest in renewable energies. Hollande wants to allow the completion of a nuclear reactor currently built with the technology of Paris-based Areva in Flamanville, and to shut the country’s oldest nuclear plant by the end of his five-year term.
Once the Chinese unveil a new energy plan, “I expect the negotiations to restart and to be closed very quickly because it’s a replication of former negotiations” for Areva reactors being built in Taishan, China, he said. “In India, they are very skilled negotiators, so you never know when it ends.”
Areva, the world’s largest builder of nuclear reactors, has been seeking business in countries such as China and India, where economic growth has spurred demand for diversified energy sources. Demand is also building up in Europe, Oursel said.
No Nuclear Winter
China and India are committed to their nuclear power programs, and Saudi Arabia, the world’s largest oil producer, “is launching a nuclear program in 2013 to accompany the growth in its industry, create jobs,” and cut the use of oil as a fuel for its power plants, he said.
“There is no nuclear winter,” the Areva CEO said. The installed base in nuclear power will probably grow by about 50 percent by 2030 as countries in Europe and Asia seek to cut reliance on fossil fuels and cap rising power prices, he said.
The meltdown of a nuclear facility in Japan last year after an earthquake, construction delays at an atomic facility in Finland, and a 2007 investment in African uranium mines that soured led to a record loss for Areva in 2011. Oursel has pledged to slash costs, pare investments, and sell non-core assets to restore profits at the company.
“We will present very soon the first-half results for 2012, and I’m sure that people will appreciate that our strategic plan is properly deployed and implemented,” he said.
He blamed most of the 47 percent drop in Areva’s shares this year on the fact that an investor “decided to withdraw very quickly,” while Areva’s free float is very limited.
Only about 4 percent of Areva shares trade, while the French government and state-controlled entities own 89 percent and the Kuwait Investment Authority holds 4.8 percent. The stock currently trades at about 10 euros.
“The level of the shares is absolutely not justified by the performance of the company and the implementation of the strategic action plan,” the Areva chief said.
In the immediate term, the industry’s main issue is finding long-term infrastructure funding, the executive said, which “isn’t easy” given that “the banking system is a bit breathless about such commitments,” Oursel said yesterday at a conference organized by Le Cercle des Economistes. Also, “excessive deregulation of the electricity market is currently deterring all investment,” he said.
The industry “will need labor resources, technologies and research and development,” Oursel said. “All stop-and-start policies, or steep acceleration or slowdown in the field of energy inevitably leads to failures. Continuity is what’s needed.”
In that, Oursel is drawing some comfort from Hollande’s recent pronouncements.
“With the very clear position expressed by Francois Hollande on the fact that nuclear will remain the biggest component of the energy mix, and that construction will continue in Flamanville, the answers are in place to maintain the confidence that France is really today the reference in term of nuclear industry organization,” he said.
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