Argentina-China talks on new nuclear plants

08 May 2015

A $13 billion deal agreed by China to build two reactors for Argentina hinges entirely on the Chinese side putting up the financing, with a final arrangement on the cash deal to be inked in 2017, according to sources in the Chinese nuclear industry.

"CNNC [China National Nuclear Corporation] signed the deal but it and several Chinese government agencies involved are demanding that the loan from China be contingent on Chinese companies being given priority in all aspects, including design, construction and fuel cycle," said a Chinese consultant for equipment sales between western and Chinese nuclear firms.

Speaking on condition of anonymity, the source added: "Argentina needs the Chinese funds to build the reactors but it's not convinced on the equipment, because the Fuqing project [based on China's first domestically designed commercial reactor, the Hualong One] is running behind schedule and thus the delay [in final signing off on the deal] till 2017."

Sources in Buenos Aires told World Nuclear News that the deal would be part of a wider plan to boost nuclear power capacity by 3000 MWe over the next decade to meet rising demand for electricity.

Argentina's state nuclear power operator, Nucleoelectrica Argentina SA (NASA) wants work on an 800 MWe pressurized heavy water reactor to begin in 2016. The second project is in the preliminary stages, with construction planned to begin in 2017 on a 1100 MWe pressurised water reactor. But China is insisting that domestic components are central to the deal and this might push progress back to 2017.

Industry observers are bullish about export sales. A list of companies participating in the Argentina deal will include Harbin Electric and Shanghai Electric, as well as Zhefu Holding Group and China First Heavy Industries Group, according to Founder Securities, a Chinese brokerage which published a research note on the sector this month.

Meanwhile, Egypt is the next priority for China's exporters of nuclear power equipment. Two of China's main suppliers of oil - Saudi Arabia and Sudan - were also on the list of priorities for Chinese reactor sales in a State Council (cabinet) Energy Development Strategic Action Plan 2014-2020 distributed at the annual general meeting of the China Nuclear Energy Association (CNEA), an industry lobby group, in late April. The document notes that China has nuclear cooperation with 16 countries, but sees particular potential in the Middle East, South Africa and Turkey. European countries on the list include the Czech Republic and Poland.

March saw the first new approvals in two years for reactor projects in China itself. Competition between Chinese nuclear firms is prompting a race between companies to tie down overseas deals.

There has been speculation in the Chinese media that the country's four big nuclear reactor-operating companies may be merged into a single firm. "We need a single well known Chinese nuclear brand which can compete with international brands like Areva and Westinghouse," stressed Wan Gang, president of the China Institute of Atomic Energy, in a recent statement.

Buenos Aires-based energy consultants say that NASA will design, build and operate both plants, the fourth and fifth in the country, while CNNC will provide some components, services, technology and long-term financing.

The first project, Atucha 3, is expected to cost $5.8 billion and to take eight years to build at the Atucha Nuclear Power Plant Complex in Buenos Aires province, where the 335 MWe Atucha I and 745 MWe Atucha 2 currently operate. Atucha 3 will be a part Canadian-developed Candu reactor running on natural uranium fuel, like the 648 MWe Embalse Candu reactor in Córdoba province.

The second would be a Chinese-designed Hualong One PWR, the first of its kind in Latin America. The $7 billion plant, to be installed at an undetermined location, probably on the Paraguay River, would run on CNNC-supplied enriched uranium fuel and local light water.

Argentina is seen as having chosen CNNC out of five bidders for this expansion for several reasons. The first is that it needs more power capacity. Francisco Mezzadri, an energy consultant in Buenos Aires, told World Nuclear News that 1000 MWe of additional capacity must be installed each year, while 4000 MWe in aging plants must be replaced by 2030-35.

Given the country's limits in adding hydropower potential and the uncertainty about domestic gas supplies for thermal power plants, the Argentine government is betting on nuclear capacity to meet rising demand, Mezzadri said.

The other reasons for enlisting China are that it will finance the projects and source between 50% and 70% of components and 100% of the civil works for the reactors in Argentina, limiting foreign inputs to components and engineering services not available there.

China also offered "to transfer technology for construction of the PWR", said Ricardo De Dicco, director of scientific and technological research at OETEC, a Buenos Aires think-tank.

This supports Argentina's ambitions to build on its 65 years of experience in the nuclear industry to become a technology platform for building nuclear reactors in Africa and Latin America, mirroring China's own ambitions.

Argentina signed an agreement with Russia last month on construction of a 1200 MWe VVER unit in the South American country. Rosatom director general Sergey Kirienko - who signed the memorandum of understanding with Julio de Vido, Argentina's minister of federal planning, public investment and services – said work on an agreement for construction of the reactor was already under way and that he hoped the final deal would be signed by the end of the year.

In addition, JSC Rusatom Overseas and NASA signed a preliminary project development agreement on construction of the reactor in Argentina. The document "defines the scope of cooperation, the rights and obligations of the parties, financial and other terms of interaction during the development of a nuclear power plant construction project based on Russian technologies in Argentina," Rosatom said. It includes provision for Russian state financing at preferential rates and some technology transfer. The two countries will also work together to sell VVER technology in South America and Africa, Rosatom said.

By Charles Newbery, in Buenos Aires
and Gao Fu Mao, in Beijing
for World Nuclear News