January 9, 2018 / 3:25 PM / a year ago

France's Areva signs China nuclear facility pact, still awaits contract

BEIJING (Reuters) - France’s Areva signed a protocol agreement on Tuesday to build a nuclear fuel reprocessing facility in China worth 10 billion euros (8.82 billion pounds), but has yet to secure a firm contract for a deal seen as vital to reviving the French nuclear industry.

The logo of Areva is seen at Areva's Tower, the headquarters of the French nuclear reactor maker Areva in the financial and business district of La Defense, west of Paris, France November 21, 2017. REUTERS/Gonzalo Fuentes

The French nuclear industry has struggled to secure new business since the 2011 Fukushima nuclear accident stunted orders worldwide. It has also suffered from growing competition from renewable energy and cheap natural gas.

Areva, which was bailed out by the state in 2017 after years of losses wiped out its equity, has signed several partnership and other initial agreements with China for the reprocessing plant, but has failed to turn those deals into a firm contract.

On a state visit by French President Emmanuel Macron, China National Nuclear Corp (CNNC) repeated its commitment to building the reprocessing plant. But officials said the price for transferring technology remained a sticking point.

“We have the assurance of a contract (for the reprocessing plant) with a deadline and a signature in the spring, and this will save the industry. It is worth 10 billion euros,” French Finance Minister Bruno Le Maire told reporters in Beijing.

“The talks with the Chinese are extraordinarily difficult because their strategy is not to imitate the technology but to improve it,” he said, adding that France had “made an effort” on the price to try to unblock the talks.

Areva CEO Philippe Knoche said reaching a firm deal was getting closer. “I am looking to finalising the talks and start-up of the project in 2018,” he said in a statement.

The initial target had been to commission the plant by 2030, meaning work would have to start by around 2020 latest.

Talks on technical aspects of the project were completed in June 2015. Since then, several agreements have been signed, typically during high-level government visits, but no firm contract.

Reprocessing uranium involves extracting plutonium from spent nuclear fuel to reuse in a new cycle, but the process is costly and dangerous. Most countries, such as the United States, Britain and Japan, have given up on it or are phasing it out.

The Chinese plant would be modelled on Areva’s facilities at La Hague in western France but with a lower capacity. The Chinese plant would be able to reprocess 800 tonnes of spent nuclear fuel a year, compared La Hague’s 2,700 tonnes.

China also wants to build a Mixed Oxide (MOX) fuel plant modelled on Areva’s plant in Melox, southern France. La Hague takes plutonium out of uranium burned in French nuclear plants, which Melox blends with uranium to produce new MOX fuel rods.

Additional reporting by Benjamin Mallet in Paris; Writing by Geert De Clercq; Editing by Richard Lough and Edmund Blair

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