---
Sent From Bloomberg Mobile MSG
+------------------------------------------------------------------------------+
China Nuclear Boom Sees Reactor Builders Risk Know-how for Cash
2010-12-02 16:00:01.1 GMT
By Bloomberg News
Dec. 3 (Bloomberg) -- The ballroom of the Grand Hyatt on
Beijing's East Chang An Avenue was packed. The occasion: the
first-ever China International Nuclear Symposium, a gathering of
China's top nuclear players and the world's nuclear power
companies, including Westinghouse, Areva SA, and Hitachi-GE.
What brought the Chinese to the Hyatt on Nov. 24 and 25 was
a hunger for the latest technology, Bloomberg Businessweek
reports in its Dec. 6 issue. What brought the foreigners was
money: According to Michael Kruse, consultant on nuclear systems
for Arthur D. Little, the Chinese are ready to spend $511
billion to build up to 245 reactors.
"The market is being driven by the construction of new
reactors, and it is no secret that most of those are right here
in China," says Fletcher T. Newton, an executive vice-president
of Uranium One, a mining company.
The global nuclear industry is willing to take big risks to
get a piece of China's nuclear budget. The danger is that in
landing those fat contracts -- and sharing technology with
Chinese partners -- the industry will help build a formidable
rival. Even though they lack the most advanced technology, the
Chinese are rapidly becoming self-sufficient in reactor design
and construction, according to the World Nuclear Association.
The industry has the backing of the deep-pocketed Chinese
state, an ambitious plan to train an army of nuclear engineers,
and the leverage that comes from being the biggest market
around.
"They are going to use a bunch of different [suppliers]
with the goal of being a developer themselves," says Jeffrey
Holzschuh, a Morgan Stanley vice-chairman.
Technical Documents
Westinghouse, for example, says it has handed over more
than 75,000 technical documents to its Chinese customers as part
of its agreement to license reactor technology.
"We look at this as a long-term opportunity and
partnership," says Jack Allen, Westinghouse Asia's president.
"But there are no guarantees."
Just 13 nuclear plants operate in China today, and until
recently the Chinese were building only one or two reactors a
decade. Now they are building 25 facilities, accounting for
close to half the reactors under construction worldwide.
"This shows the rapid momentum of China's nuclear power
development," says Zhang Shanming, president of China Guangdong
Nuclear Power Group, the country's No. 2 builder and operator of
reactors.
China's energy planners say they aim to have 40 reactors by
2020 and, by 2030, enough additional reactors to generate more
power than all 104 reactors in the U.S., the leader in nuclear
energy. Westinghouse, Areva, and other foreign companies will
profit by licensing their reactor technology, consulting on
safety and other issues, supplying components, and helping with
construction.
'Deadly Serious'
"Money is not an issue, which is different from the rest
of the world. The Chinese have the capacity to deliver and they
are deadly serious about achieving it," says Steve Kidd,
director of strategy and research at the London-based World
Nuclear Association, the industry trade group.
President Hu Jintao wants non-fossil fuels to produce 15
percent of China's energy by 2020. Although the Chinese have
spent plenty on wind turbines and solar panels, only a buildup
of nuclear power can make that target reachable.
"Developing clean, low-carbon energy is an international
priority," says Zhao Chengkun, vice-president of the China
Nuclear Energy Association. "Nuclear is recognized as the only
energy source that can be used on a mass scale to achieve
this."
Getting Contracts
Foreign companies are already getting contracts. On Nov.
23, Cameco Corp., the miner, agreed to supply 29 million pounds
of uranium to Guangdong Nuclear through 2025. Thomas Mundy,
president and chief executive officer of Exelon Nuclear
Partners, whose parent company runs 17 nuclear reactors in the
U.S., says he hopes to reach an agreement by mid-2011 to help
the Chinese manage their reactors.
Westinghouse designs are being used for four reactors now
under construction. Areva has sold two latest-generation
reactors now under construction, as well as nuclear fuel. Areva
Chief Executive Officer Anne Lauvergeon told the French Senate
on Nov. 24 that she expected another deal on two more.
According to Lauvergeon and Allen, China is building
reactors faster and at a lower cost than the rest of the world.
State ownership of the industry guarantees capital and
relatively quick approvals of new plants. Low-cost labor and
experience in major infrastructure projects, whether power
plants or subway systems, also help.
As a result, building a Western-designed reactor in China
costs about $4 billion, 40 percent less than one in Normandy,
and can be completed in 46 months, versus 71 months in France,
according to Areva.
Locking in Supply
One challenge for the Chinese is locking in a supply of
components, including reactor vessels (which protect the nuclear
fission core), steam generators, and nozzles produced in large-
size forges. Just a few companies make these parts, says
Westinghouse's Allen.
"You end up in a queue for these long-lead specialized
materials," he says. "That is a constraint on how fast you can
build."
How long will it take for the Chinese to become tough
competitors? Guangdong Nuclear says it would like to be selling
its reactors abroad by 2013 (to date, China has supplied
commercial reactor technology only to Pakistan). The Chinese
ability to complete large civil engineering projects is already
"very worrying" for Europe's companies, Lauvergeon told the
French Senate on Nov. 24. Yet Areva, like every other Western
company, still wants those China deals.
For Related News and Information:
For global energy market menu: NRG <GO>
Word energy statistics: ENST <GO>
Top power news stories: PTOP <GO>
--Dexter Roberts and Stanley Reed with assistance from Francois
De Beaupuy and Tara Patel in Paris and Rachel Layne in Boston.
Editors: Chris Power, Will Kennedy.
To contract Bloomberg News staff on this story:
Dexter Roberts in Beijing at +86-10-6649-7559 or
droberts34@bloomberg.net;
Stanley Reed in London at +44-20-3216-4956 or
sreed13@bloomberg.net.
