Big in Japan? Hope at home for Toshiba's nuclear arm after U.S. debacle

Fri Mar 31, 2017 7:50am EDT
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By Aaron Sheldrick

TOKYO (Reuters) - The bankruptcy of Westinghouse Electric Co may be a blow to Toshiba Corp's (6502.T: Quote) international nuclear ambitions, but the Japanese conglomerate still has a profitable business at home.

Toshiba, whose businesses range from memory chips to rail, is at the heart of Japan's atomic industry. While this has been moribund since the 2011 Fukushima disaster, Japan still has dozens of reactors that need to be maintained and supplied with parts and fuel once operating.

Toshiba is also involved in the Fukushima clean-up. The cost of decommissioning the wrecked Fukushima Daiichi facility alone is estimated by the Japanese government at 8 trillion yen ($71 billion). Some experts have predicted the process could take as long as a century.

All but three of Japan's 54 commercial nuclear reactors are currently shut down. Twelve are set for decommissioning, including the six at the Fukushima stations.

Even idle, they need constant maintenance and supervision.

For Toshiba, the main contractor or a major component supplier to 20 of those reactors, that's a stable business, and one of its most profitable in terms of return on sales. Fuel and servicing make up the lion's share of the group's nuclear revenue.

"They can come out of this (Westinghouse bankruptcy) with a very healthy nuclear business in Japan," said George Borovas, global head of nuclear at law firm Shearman & Sterling, noting this would include servicing, maintenance and decommissioning.

"Business lines such as nuclear fuel supply and services have a significantly different risk profile to nuclear new build projects," he added.   Continued...

The logo of Toshiba is seen as shareholders arrive at Toshiba's extraordinary shareholders meeting in Chiba, Japan  March 30, 2017.   REUTERS/Toru Hanai