India’s Prime Minister Narendra Modi goes shopping

His short list includes nuclear reactors from France and uranium from Canada

One of the things the head of state gets to do when on an international, multi-nation trip is draw up a list of things to buy and bring home. In terms of a trip to France, this isn’t about bringing back vintage wines. For India’s POM Modi, it is about finally settling on the terms of a long pending contract for six nuclear reactors in Jaitapur, and the uranium to fuel them, which top the list.

For Areva, which has sought to break ground on the massive power project since 2008, the ink on a contract to proceed cannot come a moment too soon. Facing massive debt, and a skeptical French government seeking a compelling reason to cough up several billion euros in new capital, the Jaitapur project is just what the company needs.

The deal comes with a price for Areva, and that is to outsource some of the major, long lead time components to Indian companies and deliver the reactors at a lower cost. Rates for electricity from the plants is also an issue.

But what is a nuclear reactor, or six of them, without the uranium to fuel them? For that PM Modi will go to Canada where he will talk with the government about getting supplies from Cameco, the country’s largest producer, via a 10 year contract for yellowcake. Canada does not operate any enrichment facilities. India will produce the nuclear fuel for its commercial reactors enriching the uranium to 3-5% U235.

Finally, Modi will buy 36 advanced “ready to fly” fighter jets from France, but will have to wait for them while the two countries haggle over the price and how much assembly will take place in France or India.

Two reactors now, four more later

Areva’s deal with India is actually with the Nuclear Power Corporation of India Ltd (NPCIL) which owns and operates all nuclear reactors in that country. As part of the arrangement, Areva will build two reactors at a location on India’s western coastline 320 km (200 miles) due south of Mumbai. Once these units are complete, the plan is to build four more of the 1650 MW giants.  When completed years from now, the 10 Gwe power station it could be the biggest power station in the country if not the world.

Almost all countries that import nuclear reactors have what are euphemistically called “localization” policies. What they mean, in effect, is that the firm selling the reactor will buy as much as possible from firms in the host country.  Typically, this has not included components like reactor pressure vessels, steam generators, turbines, and other long lead time item. But India is not just any country. It has heavy industry capable of fabrication of some of these items. For instance, Larsen & Tubro, known generally at L&T, manufactured the turbines for the two Russian built 1000 MW VVERs recently commissioned at Kudakulam in Tamil Nadu on India’s southern tip.

For this reason, PM Nodi’s bargaining chip for moving the Jaitapur job ahead is that Areva will buy heavy forging from Indian firms.  L&T will be the first Indian firm to produce them though competition is planned by Bharat for heavy forge components for a planned American deal with GE-Hitachi for 1530 MW ESBWR reactors at Srikakulam, Andhra Pradesh.  Like Jaitapur, its is a coastal site 900 miles due west of Mumbai on India’s eastern shore.

For its part L&T told the Times of India the pact to supply heavy forgings will also put ink on the company’s order books for valves, pipes, electrical components, and engineering services.  However, it appears France’s Alstom will supply the turbines for the power stations.

Another reason for the localization agreement, and investment in heavy industry with Indian firms, is that Japan has refused to sign off on a trade agreement with India for nuclear reactor technology due to long standing differences over India’s refusal to sign the Nuclear Nonproliferation Treaty.

Japan Steel Works is one of the world’s few places where the heavy forgings needed for reactor pressure vessels can be built. Cut off from access to that firm, and its products, India hopes to develop a domestic capability for its planned 21 Gw of new nuclear power. The Areva EPRs, and sourcing the large forgings to L&T, are the first steps in that direction.

Canada’s offer to fuel the reactors

Some of the world’s richest uranium deposits, with yields of 15 lbs/ton of the stuff, come from Saskatchewan.  There the mining giant Cameco operates the Cigar Lake hard rock uranium mine.  When PM Modi comes to Ottawa next week, the uranium from that mine is at the top of his shopping list.

This is a major change for Canada which was royally teed off decades ago when India used an imported CANDU reactor to drive its nuclear weapons program. In response, Canada cut India off from buying its uranium which is where matters stood since the 1970s.  It wasn’t until 2013 that Canada relented and signed a cooperation agreement with India authorizing new uranium exports. Modi’s trip there is the first by an Indian PM in 40 years.

Cameco executives told the Toronto Globe & Mail they don’t expect to meet directly with Modi while he is in Canada. However, any government-to-government agreement will likely translate into a commercial contract.  Currently, Cameco is exporting uranium to China under a contract signed five years ago.  Total export plans are for 52 million pounds over ten years.

Flaws found in Areva EPR pressure vessels

Areva’s EPR under construction at Falmanville, France, has added a new source of worries for the beleaguered firm. In addition to being behind schedule, and over budget, tests of the reactor pressure vessel have turned up areas in the steel which might be less resilient to stress than others.  The problem is reported to be the amount of carbon in the steel. The wrong mix of it makes the steel weaker.

The French government’s nuclear regulatory agency, ASN, has notified other countries where EPRs are under construction about the preliminary test results. The units include one EPR in Finland and two in China.  Areva is on tap to supply its EPR design to the Hinkley Point project in the UK.

French energy Minister Segolene Royal told the Reuters wire service that more tests are expected to determine conclusively whether the carbon issue is serious or if the reactor pressure vessels can be accepted as is. She said a report is due to ASN in about six months.

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