Areva Says in Talks With EDF on Fuel Supply Guarantees

French power utility EDF is in talks with Areva about a deal to source at least 40 percent of its uranium fuel from the state-owned nuclear group, chief executive Luc Oursel said on Tuesday.
 

In a hearing about nuclear costs at the French parliament, Oursel said that at the beginning of the 2000-2010 decade, Areva provided 80 to 90 percent of EDF's fuel needs, but that EDF had since diversified its fuel purchases in a bid to lower prices and secure its supplies.
 

France's top public auditor said in a report published by French media last week that Areva's fuel business was suffering as a result and that Areva had been unable to win new contracts with foreign clients.
 

Oursel said that while Areva's share in EDF's supplies has fallen, it should not fall to the point that the efficiency of the entire French nuclear industry is put into question.

"That is why we are studying with (EDF CEO) Henri Proglio a policy that would allow Areva to provide a significant percentage of EDF's needs," Oursel said.
 

He added that this share, depending on the area of activity, could range between 40 to 70 percent of EDF's needs and that this would allow Areva to boost the yield on its Comurhex uranium conversion plants and its George Besse II uranium enrichment plant.

"When EDF diversifies and buys enrichment services or fuel services abroad, there is an impact on France's trade balance as well as on jobs," Oursel said.

He added that the idea was not to create a captive market, but to set up long-term deals under which EDF provides guarantees on volume and Areva on price. He hopes to have agreements in place by the end of the year, he said.

Oursel also defended Areva's integrated business model - offering a full range of nuclear activities from uranium mining, enrichment and nuclear fuel to building and servicing reactors and recycling spent fuel - after the auditor questioned the synergies between these activities.

Unlike most other major reactor builders such as Mitsubishi Heavy, Toshiba Corp's Westinghouse, GE Hitachi (HTHIY) , and Korea's Kepco, Areva is involved in mining, fuel and recycling as well.

Oursel said that Areva remains focused on cutting its debt and costs as it posted a third consecutive year of losses for 2013.

"Our recovery is under way, but it has not been achieved yet. At 5 billion euros, our debt level is still too high," he said.

He said that in the capital-intensive renewable energy sector in particular the firm is looking for partners to share development costs. It set up a joint venture for offshore wind with Spain's Gamesa earlier this year.

"To keep renewables competitive as subsidies fall, a lot of research and development is needed. We need to share that effort with other partners," he said.

He also said that Areva would study any opportunities relating to a sale of Alstom's offshore wind activities.

Niger Renewal
Asked about the drawn-out negotiations with Niger about a renewal of its uranium mining licences there, he said Areva was in the process of finalising agreements with the government that will allow it to continue its activity there.
 

Regarding Areva's legal conflict with its Finnish client Teollisuuden Voima (TVO) about the construction cost overruns and delays linked to the Olkiluoto 3 nuclear plant, he said Areva had entered a 2.7 billion euro ($3.7 billion) claim against TVO as compensation for its "negative interferences" in the project.

He said he expected the arbitrage court court would give its first, but not final, rulings early next year.
 

Finnish utility (TVO) on Tuesday said it planned to postpone its next nuclear reactor, Olkiluoto 4, by five years.

Areva has said before it would be interested in taking part in the tender for that plant too.

($1 = 0.7289 Euros)

(Reporting by Geert De Clercq; Editing by Andrew Callus)