France's nuclear love affair too strong to let Areva fail

Wed Mar 11, 2015 8:38am EDT
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By Michel Rose and Geert De Clercq

PARIS (Reuters) - The future of France's nuclear industry has never looked bleaker, with a government pledging to wean the country off atomic power, cut-throat rivalry in world export markets and the debt of flagship nuclear group Areva in junk territory.

But even with a painful overhaul and lean years ahead for the nuclear sector, the fuel which after World War Two powered France's rise to the Group of Seven nations remains the bedrock of its energy independence and is so strategically vital that Paris will not let Areva (AREVA.PA: Quote) fail.

That is the premise underpinning a new industrial strategy due to be announced by Areva and domestic utility EDF (EDF.PA: Quote) in coming months, while President Francois Hollande is softening his resolve to reduce the share of nuclear in France's electricity mix.

"Neither the government nor EDF can afford to let Areva die," said former Areva executive Bertrand Barre, who noted that U.S. nuclear giant Westinghouse suffered a 30-year order drought but survived - albeit as part of Japan's Toshiba. (6502.T: Quote)

Areva's record 4.83 billion euro 2014 loss underlined the troubles of a group which since its 2001 creation never managed to become a world leader in nuclear newbuild.

Over the last few years a series of shockwaves have jolted the case for nuclear: the 2011 Fukushima disaster; Germany's exit from nuclear; rising renewable energy output; and the U.S. shale gas revolution.

Already weakened by billions of euros lost on a fixed-price, turnkey reactor project in Finland and an African uranium mine, Areva had limited reserves to ride out the storm.

Hollande has charged Areva's new management team, led by Philippe Varin, to work with EDF to come up with a new industrial and financial strategy by end July.   Continued...

General view of the Areva nuclear power plant site in Tricastin, southern France, November 25, 2011.  REUTERS/Michel Euler