India's BHEL Signs 10-Year Technology Transfer Agreement with U.K.'s Sheffield Forgemasters

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Researched by Industrial Info Resources (Sugar Land, Texas)--Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi), India's largest equipment manufacturer and engineering company in the power sector, recently signed a 10-year technology transfer agreement with one of the world's largest forgings manufacturers, Sheffield Forgemasters International Limited (Sheffield, England). The deal, valued at $43 million, will see BHEL buying forging technology and expertise from Sheffield while offering its knowhow in the engineering sector.

Sheffield Forgemasters will supervise the construction of new forging and steelmaking units to manufacture forgings for use in thermal, hydro and nuclear power plants in India. BHEL will pay a royalty to Sheffield Forgemasters on the sales of these components throughout the period of the agreement. Sheffield Forgemasters will also provide training services to BHEL on various aspects of the casting and forging process. BHEL currently manufactures steel castings and forgings for subcritical power plants at its Central Foundry Forge plant in Hardwar.

India's focus on increasing its power generation capacity to 92,000 megawatts (MW) by 2012 as part of the ongoing Eleventh Five-Year Plant (2007-12), has led to a rapid growth of the domestic power-equipment market. Sheffield Forgemasters currently does not have a presence in India's power sector, so the technology transfer agreement will allow the firm to foray into this sector with tremendous potential for new deals in the future.

India is keen on augmenting its nuclear power generation after the Nuclear Suppliers' Group lifted the ban on trade of nuclear power reactors, equipment and technology to the country last year. India plans to build new reactors capable of producing 40,000 MW of power by 2020. It is estimated that at least 700-800 nuclear forgings will be required to achieve this target in the next 20-25 years.

Nuclear power is gaining increasing popularity worldwide as a cleaner source of power. In order to meet the European Union's carbon-emissions targets and fulfill the demand for electricity, many countries in Europe have planned to set up new nuclear power plants during the coming decade. However, an acute shortage of nuclear forgings is anticipated as the current global capacity to manufacture nuclear forgings is not sufficient to meet even 50% of the projected demand. India thus stands to gain by setting up a domestic manufacturing facility for forgings.

Sheffield Forgemasters also plans to build a 15,000-ton open-die forging press for manufacturing large components required in nuclear power stations. The company is seeking financing for the forging facility that is estimated to cost $165 million. The facility, comprising a giant forge, a steel melt shop and other equipment, will be designed to accept 500-ton steel ingots and will also be the world's largest press once built. The forging press will produce pressure vessels for nuclear reactors such as the AP1000 developed by Westinghouse Electric Company LLC (Monroeville, Pennsylvania) and the 1,650-megawatt European pressurized reactor (EPR) developed by Areva SA (EPA:CEI) (Paris, France). Areva's EPR is currently the world's largest pressurized water reactor.

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