China in talks with UK’s DECC for $35B in reactor projects

The UK Department of Energy & Climate Change, seeing declining prospects for Areva to be able to build 4 1600 MW EPR nuclear reactors, 2 at at Hinkley point and 2 more at Sizewell, has opened talks with the China National Nuclear Corporation (CNNC).  At stake is a deal potentially worth $35 billion.

China has recently begun exporting its Hualong One, a 1000 MW PWR design with the first order for it placed by Argentina.  In addition to CNNC, the Shanghai Nuclear Engineering Research and Design Institute (SNERDI) is reported to be part of the talks.

It would be a long road for China to actually book a sale of the Hualong One in the UK as it would have to pass the time consuming and expensive Generic Design Review process.

A more likely scenario is that Chinese firms are seeking equity positions in the two projects potentially affected by Areva’s need to recapitalize its reactor division. This week EDF appeared to pull back from being an open checkbook for Areva saying it could be weeks or months before a term sheet is prepared for an infusion of about 2 billion euros. Areva is said to need as much as three times that amount to proceed with the UK projects.

US and South Korea update 1-2-3 nuclear cooperation agreement

After years of sometime tense negotiations, the US and South Korea has formally signed off on a renewal of the 1-2-3 Agreement for another 20 years. Highlights of the agreement cover reliable fuel supplies and management of spent nuclear fuel.

A key provision of the new terms is that South Korea can proceed with enrichment of uranium for commercial reactors. However, reprocessing of spent fuel, while still prohibited in South Korea, can now be contracted out to other countries.  France has long reprocessed spent fuel from Japan and is a potential supplier of these services for South Korea.

South Korea has 24 domestic nuclear reactors supplying one third of its electricity. The country has successfully exported four of its new 1400 MW PWR design nuclear reactors to the United Arab Emirates.

Kazakhstan to host international fuel bank

An international nuclear fuel bank will open in Kazakhstan in two years with the intent to provide reliable fuel supplies in case commercial supplies are interrupted. The key objective of the fuel bank is to offer incentives to countries with commercial nuclear reactors to not also seek their own domestic uranium enrichment capabilities.

The initial facility configuration will be home to 90 tonnes of enriched uranium (up to 5% U235). The IAEA will administer the fuel bank which is funded in part by $50 million from billionaire Warren Buffett.  The European Union will kick in twice that amount. The Nuclear Threat Initiative, a non-governmental group focused on nonproliferation of nuclear weapons, has played a key role in organizing the fuel bank.

Members of the fuel bank so far are the US, the UAE, Kazakhstan, and several countries that have no nuclear reactors.

Kazakhstan is the leading supplier of uranium to world markets. In 2013 it supplied 12% of world market demand or 680,000 tonnes.  Australia is the top producer supplying 1.7 million tonnes in 2013 (Source: World Nuclear Association)

Negotiations with Iran over its uranium enrichment program have included the option of shipping the country’s inventory of UF6 and solid powder form enriched uranium to a third country to hold it for future use.  The Kazakhstan fuel bank has been offered as an option for that storage scenario.

Separately, China announced that it would allow transit via rail of commercial grade enriched nuclear fuel from its seaports to the fuel bank in Kazakhstan.

Japan eases terms for doing business with India

Until recently, Japanese firms wanting to do business with India for the export of nuclear reactors were faced with the policy of the Japanese government that no deal could go through unless India gave up the demand to reprocess spent fuel from the reactors.  India has not signed the Nuclear Nonproliferation Treaty.  Japan’s government demanded that India not divert plutonium from the spent fuel to make nuclear weapons.

In a major shift in policy, the Japanese government is reported to have accepted letting India reprocess spent nuclear fuel from reactors supplied by Japanese firms. The shift in Japanese policy follows an agreement between the US and India for material accountability for all extracted plutonium.

Japan has export agreements with six other countries for export of its nuclear reactors, and none of them allow reprocessing of spent fuel. The countries include Turkey and Vietnam.   Turkey is building four 1100 MW Atmea nuclear reactors to be supplied by Mitsubishi in a joint venture with Areva.  The project is reported to cost an estimated $16 billion. Japan has an agreement with Vietnam to build four nuclear reactors there.  A timetable has not been set to break ground.

Within India GE-Hitachi is working on a project to build two 1500 MW ESBWR reactors at a coastal site in Andhra Pradesh.

France advances options for civil nuclear deal with Saudi Arabia

While the Kingdom of Saudi Arabia has taken a “go slow” approach to developing up to 16 nuclear reactors, it has opened talks with France and Russia to potentially build them.

French foreign minister Laurent Fabius told Reuters June 24 Areva is preparing feasibility studies to provide two 1600 MW EPR reactors. In addition to the reactors, Fabius said KSA also is in talks to sign a nuclear spent fuel management contract and technical support to develop a nuclear regulatory and safety capability for the massive reactor development program.

KSA is seeking to build the 16 reactors at three coastal sites to reduce the amount of of oil and gas it burns to generate electricity thus allocating these supplies for export earnings.

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