Areva's integrated activities

12 April 2007

France's nuclear champion Areva has been involved in a busy week, investing in uranium on two continents, progressing in reactor design and bidding for wind turbine technology.

Areva's core business of nuclear power reactor sales developed with the recent announcement in the USA that a utility, Ameren, would develop plans for a new Areva-designed nuclear power plant. Looking further into the future, Areva and Mitsubishi Heavy Industries have announced that their partnership project of a conceptual design for a new reactor is advancing according to schedule and should be completed by "early summer." The main features of the conceptual design specify an advanced, Generation-III pressurized water three loop reactor with a power of around 1100 MWe.

The uranium rush

On the uranium front, the company's Canadian subsidiary, which is the senior partner in the Shea Creek exploration project with UEX Corporation, has pushed for the sinking of a 1 km-deep exploration shaft. This would cost around C$100 million ($88 million), but would clarify the economic potential of the property, where some extremely high grade uranium occurs and which is near Areva's now closed Cluff Lake mine.

Meanwhile in Australia, Areva has made a strategic alliance with Summit Resources, which controls the Mount Isa Uranium Project centred on the promising Valhalla deposit. Areva has agreed to buy shares to the value of A$121.1 million ($100 million), and has an option to increase its share to 18% at a higher price. Summit chair Alan Eggers said: "As a result of this strategic alliance, we will have the backing of the world's leading uranium industry player... We will have the financial resources needed to bank the project. We will have access to additional technical support."  if Areva takes up its full 18% share it will market two thirds of the production.

Summit is currently engaged in both a legal and a takeover battle with rival Australian uranium company Paladin Resources. In September 2006 Paladin took over Valhalla Uranium Ltd, Summit's 50% joint venture partner in the Mount Isa project. Summit contends that it had the preemptive right to this other 50%. As legal action got underway, Paladin launched a hostile takeover bid for Summit, which was rejected. The day after Areva's move, Paladin raised their offer for Summit by 22% to a value of A$1.18 billion. Furthermore, a Paladin statement said it welcomed Areva's participation which would "go some way to bridging the capability gaps and nuclear industry inexperience" within Summit.

Repower

Control of Repower, a German wind technology specialist, is now the object of a bidding war between Areva and Suzlon Windenergie, a joint venture between India's Suzlon Energy and Portuguese steel company Martifer. The latest development is the submission by Suzlon of a bid worth Eur150 per share, beating Areva's most recent offer of Eur140.

Observers say that Suzlon could become the fourth largest wind turbine manufacturer through the purchase of Repower, but at the expense of a large amount of debt. Areva meanwhile, has positioned itself as a low-carbon power company, wishing to include wind alongside its traditional nuclear alternatives.

An earlier round of bidding saw Suzlon's Eur126 per share offer beat Areva's original bid of Eur105 per share, made in mid January.

Further information

Areva
Summit Resources
Repower
Paladin Resources
UEX Corporation

WNN: Ameren and Unistar team up for COL
WNN: Areva raises bid for Repower
WNN: Areva and Mitsubishi to collaborate

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