Stop Hinkley Press Release
2nd April 2009
Hinkley C partner 'facing bankruptcy'
The French nuclear design and engineering company, whose reactor is set to be built at Hinkley Point, Areva is facing severe financial trouble.
The European Pressurised Reactor design favoured by EdF for building at Hinkley Point is owned by Areva who are reported to be facing bankruptcy.
Experts examining Areva's cash situation just days before its accounts are published show that it is "staring down the barrel of business failure" with a 3 billion Euro bail-out request from the French Government. Overrun costs of its reactor build in Finland have left the project facing a 5.4 billion Euro bill including an invoice to Areva of 2.4 billion Euros in penalties for lateness amounting to over three years. Embarrassingly for Areva, German engineering partners Siemans recently walked away from the project.
South Africa has cancelled a 12 reactor programme with Areva who were also forced to pull out of a Uranium mining venture in Canada . Potential nuclear contracts in Africa, the Middle-East and Eastern Europe have evaporated. Barack Obama has not agreed to a hoped-for $50 billion financial commitment to drive a nuclear renaissance in USA which might have helped Areva who had invested heavily in the country's nuclear future. Areva's shares have slumped by 60 percent since June last year.
EdF, who bought British Energy sites last year for £12 billion and who wish to build two reactors at Hinkley Point with two more at Sizewell, are also facing financial problems at home with a heavy debt burden and a 70 percent drop in share values. EdF depends on co-operation with Areva to build the European Pressurised Reactor (EPR) at Hinkley but the credit crunch seems to be casting a shadow over at least Areva's future.
Jim Duffy , spokesman for Stop Hinkley said: "Other countries are pulling back from Areva contracts. They don't want to pick up the pieces of a failed nuclear industry. Gordon Brown should also pull the plug on the impending financial disaster that could happen here. Having been burnt by the banking industry taxpayers won't want to bail out a nuclear industry who may run out of cash when reactors are half built."
Jim Duffy, Stop Hinkley Coordinator, 2nd April 2008
AREVA ON VERGE OF BANKRUPTCY:
NO USE OF PUBLIC MONEY TO BAIL OUT NUCLEAR INDUSTRY
In the face of colossal losses on their EPR construction site in Finland, facing a two billion Euro invoice from the departure of Siemens from the project, some unwise investments in America, 60% fall in share prices over the last few months, Areva is staring down the barrel of business failure. The French nuclear industry is a disaster area, and public money should not be used to prop it up, but to develop renewable energies.
Nuclear company Areva is due to publish its 2008 end of year accounts any day. We already know though that this so-called "beacon" of French industry is on the verge of collapse and waiting once again for a hand-out from the French public to keep their failing nuclear industry alive. Areva is looking for a 3 billion Euro bail out just to balance its 2009 budget, and has already cancelled, on November 25, 2008, a planned uranium-mining project in Canada .
And another big setback for Areva, who were expecting such big things from this market: on December 5th South Africa cancelled its order for 12 nuclear power stations it had hoped to build. While all this has been going on, the EPR site in Finland , started in February 2005, is rapidly turning into another catastrophe: already 38 months behind schedule, with the Finnish government invoicing Areva for 2.4 billion Euros in penalties for lateness. So, having been invoiced at 3 billion Euros, the real cost of the project is more like 5.4 billion Euros. Barring any other surcharges.
Add to that the departure of Siemens from the project, announced this January, which has hit the company with another bill for 2 billion Euros to buy out their former ally, plus acquire the work they've already carried out and are withholding against payment. The Elysée would be by now thinking about letting Middle-Eastern capital into Areva, but this remains very hazardous. On the Paris Stock Exchange, Areva's price has slipped from 820 Euros per share last June to 325 Euros by now - a loss of more than 60%!
Additionally, the various reactor construction projects announced over the last few months and representing at least some market optimism for Areva, turn out to be completely "virtual": on his various foreign trips (Libya, Algeria, Morocco, Abu Dhabi, Saudi Arabia, Jordan, South Africa, Estonia, etc.), President Sarkozy has signed a series of simple "cooperation agreements", and whilst these make frequent mention of an eventual desire to build EPR reactors, in fact absolutely nothing is definitely signed or sealed.
That led to the Elysée government "bluffing" everyone on February 4 and 24, with their announcements of 2 EPR reactors for India and 4 more for Italy : it's easy enough to say, much more difficult to do - specially at this time of world economic crisis - to find the kind of money necessary to fund the actual construction.
The other possible market Areva had been eying up but which isn't looking so good now: the USA . New President Obama's first announcement committed zero dollars to the nuclear sector. where it had hoped for up to 50 billion. Most reactor projects have been put on hold, and the few that are actually showing signs of life are run by Areva's big business rival, the American-Japanese consortium of Westinghouse/Toshiba, General Electric/Hitachi.
None of which has stopped Areva investing heavily in America to buy into the supposed nuclear "renaissance" that is looking less and less realistic: in May 2008 Areva announced it was buying into the site at Bonneville, Idaho, to produce nuclear fuel. And in October 2008, Areva announced a 360 million dollar investment in the State of Virginia to produce heavy tolls and machinery for the American nuclear sector.
Areva is also holder of promises of orders from EDF, which bought up British Energy at a top price, just before the economic crunch! But EDF is also heavily in debt and has lost almost 70% of its stock market value by mid- March. Seemingly incapable or recognizing a problem when she sees one, Madame Lauvergeon is sailing on full steam ahead with only one possible outcome, total financial disaster.
But, with Areva being supported by the state, it's the people of France who'll be picking up the bill when the time comes. There's still time to stop the whole mad affair, to stop President Sarkozy from using public money to keep Areva afloat. He should follow the excellent example of President Obama in America , investing in energy economy and renewables.