Japan's Kansai Electric Power and Sojitz Secure 2.5% Stake in Areva's George Besse II Uranium-Enrichment Plant

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Japanese electric utility company Kansai Electric Power Company Incorporated (TYO:9503) (Osaka, Japan) and trading corporation Sojitz Corporation (TYO:2768) (Tokyo, Japan) have entered into an agreement with Areva SA (EPA:CEI) (Paris, France) to acquire a 2.5% stake in Societe d'Enrichissement du Tricastin (SET) (Paris), which is owned by Areva. SET is the holding company and operator of the George Besse II uranium-enrichment plant.

In June 2008, GDF Suez SA (EPA:GSZ) (Paris) acquired a 5% stake in SET. By June 30, 2009, SET's stakeholders will be Areva with a stake of 92.5%, GDF Suez with 5%, and Kansai and Sojitz with a combined stake of 2.5% in a ratio of 80:20, respectively. This will be the first time that Japanese companies would participate in an overseas uranium-enrichment project.

The George Besse II plant is being set up at the Tricastin nuclear site, which is a collection of sites in four different communes -- Pierrelatte and Saint-Paul-Trois-Chateaux in Drome, and Lapalud and Bollène in Vaucluse.

The plant is based on state-of-the-art centrifugal technology. The technology has been used successfully in Europe for more than 30 years. The plant will include a northern unit and a southern unit, both of which will be brought online smoothly by virtue of the plant's modular design. The centrifuge assembly facility at the project site is currently managed by Enrichment Technology Company Limited (Marlow, England), which is a joint venture between Areva and nuclear fuel company Urenco Limited (Marlow).

Construction of the plant began in 2006, and the plant is scheduled to begin production within the first half of this year. George Besse II is expected to reach full production capacity of 7.5 million separate work units (SWU) per year by 2016. This quantity would represent 75% of the global demand for enriched uranium. In the future, the plant's production capacity could be increased up to 11 million SWU per year.

George Besse II is being set up with an investment of about $4 billion and is one of France's largest industrial projects currently under way. The plant will replace the existing George Besse gaseous diffusion enrichment plant in Tricastin. The existing plant is energy-intensive and requires 50% more electricity than George Besse II will require. The use of centrifuge-enrichment technology will increase the safety level of the facilities as well.

Areva has already begun training employees on the operating conditions and procedures of George Besse II. The training is being carried out under real life conditions at Urenco's Capenhurst site. Areva currently commands 25% of the world's uranium enrichment market, and with the development of George Besse II, the company hopes to strengthen its position.

Sojitz has had a business relationship with Areva NP (La Defense, France) since the 1970s. Sojitz has been the exclusive sales agent of Areva in Japan in the nuclear-fuel-cycle business. In 2008, Sojitz, in cooperation with Areva, launched a uranium-development project in Uzbekistan.

In 2008, Areva signed two contracts with Kansai to supply the latter with 48 mixed-oxide fuel assemblies to be used in units 3 and 4 of Kansai's Takahama nuclear power plant in the Fukui prefecture of Japan. The contracts were signed in April and November 2008. According to the contracts, the fuel was to be fabricated at Areva's MELOX production site using plutonium that had been recovered after reprocessing the used fuel. The used fuel was to be reprocessed at Areva's La Hague plant. MOX fuel is made of plutonium and uranium oxides, and is used to recycle the plutonium that is recovered from used nuclear fuel. The contract follows Japan's nuclear program to recycle used fuel.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.