Areva Secures U.K. Reactor Order Worth More Than $2.7 Billion

Areva SA’s Chief Operating Officer said a contract to supply two nuclear reactors and control systems for a new station at Hinkley Point in southwest England is worth more than 2 billion euros ($2.7 billion) and ends a six-year lull in orders for its flagship reactor.

The deal may be supplemented by an order to provide nuclear fuel for the station when the contract is finalized next year, Philippe Knoche said today in an interview on the sidelines of a conference in Paris. Areva shares surged as much as 9.6 percent, the most since April 4.

Electricite de France SA, together with partners Areva and two Chinese nuclear companies, agreed today to construct the plant. The project will cost about 16 billion pounds ($26 billion) and take 10 years to build, Paris-based EDF said in a statement. The project is conditional on the European Union agreeing the terms of state aid.

Areva’s EPR reactor has been overlooked in recent years in tenders in the United Arab Emirates, Finland and the Czech Republic. Construction work on EPR’s by Areva and EDF in Finland and France respectively, have suffered from delays and cost overruns.

EDF will own 45 percent to 50 percent of the Hinkley Point project, while Areva will take a 10 percent stake. China General Nuclear Power Corp. and China National Nuclear Corp. will hold 30 percent to 40 percent of the project.

Taking a stake in the U.K. project “is exceptional,” and “isn’t Areva’s business model,” Knoche said. The aim is that the investment “won’t interfere” with the company’s 2016 financial targets, he said.

EPR Target

After the nuclear accident at Fukushima in Japan two years ago, Areva Chief Executive Officer Luc Oursel set a target to sell 10 EPR reactors by the end of 2016.

The target is “aggressive,” Knoche said. He didn’t rule out concluding talks to sell two EPRs in China next year. There is “no fixed timeframe” for negotiations to sell two similar reactors in India, where an election next year may delay discussions, he said.

The company is preparing for tenders in Saudi Arabia, South Africa and Poland. Areva and Japan’s Mitsubishi Heavy Industries Ltd. are also in exclusive talks to sell four smaller Atmea reactors in Turkey, Knoche said.

The Hinkley Point C plant, about 150 miles west of London on the southern edge of the Bristol Channel, will have a total capacity of 3.3 gigawatts, enough to supply 5 million homes for 60 years.

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