Toshiba to Acquire 52% Stake in Japan's Nuclear Fuel Industries

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Toshiba Corporation (TYO:6502) (Tokyo, Japan), through its subsidiary Westinghouse Electric Company LLC (Monroeville, Pennsylvania), will purchase a 52% stake in the Japanese company Nuclear Fuel Industries (NFI) (Tokyo). NFI is a joint venture between Furukawa Electric Company Limited (TYO:5801) (Tokyo) and Sumitomo Electric Industries Limited (TYO:5802) (Osaka, Japan).

Under the terms of the deal, Toshiba will purchase 52% of NFI from Furukawa and Sumitomo, leaving these companies with a share of 24% each in NFI. As Japan's largest manufacturer of nuclear fuel, NFI produces fuel for both the varieties of light water reactors--boiling water reactors (BWR) and pressurized water reactors (PWR). The company also produces fuel for fast breeder and high temperature water reactors. Each year, NFI produces about 284 tons of uranium as PWR fuel from its Kumatori works in Osaka and 250 tons of uranium as BWR fuel and 400 kilograms of uranium as fast breeder reactor fuel from its Tokai works in Ibaraki.

NFI is also involved in the design of fuel-related systems, reactor maintenance operations, and reactor core management and control systems. The firm also produces nuclear fuel test devices such as fuel leakage test devices and a new mixed oxide fuel-test device. NFI offers plant inspection services and short-term storage facility technologies. Mixed oxide fuel is a mixture containing 3% plutonium oxide and 97% uranium oxide, which is commonly used as a fuel in nuclear power stations in Belgium, France, Germany and Switzerland. The plutonium oxide can be produced from weapons grade plutonium.

Japan currently imports the majority of its uranium requirements from Canada and Australia. However, in 2007, Toshiba acquired a share of 22.5% in a consortium formed by Marubeni Corporation (TYO:8002) (Tokyo) to develop uranium mines in Kazakhstan, making it the first nuclear power station manufacturer to invest in uranium mining. Under the deal, Toshiba has the rights to mine up to 600 tons of uranium per year. Although only 2.5% of Japan's uranium requirement is currently imported from Kazakhstan, experts expect this to rise to as much as 30% by 2015. Kazakhstan has estimated reserves of 1.5 billion tons of uranium.

Toshiba faces market competition from Areva SA (EPA:CEI) (Paris, France) and GE-Hitachi Nuclear Energy Incorporated (Wilmington, North Carolina), a joint venture of Hitachi Limited (NYSE:HIT) (Tokyo) and General Electric Company (NYSE:GE) (Fairfield, Connecticut). Together, Hitachi and GE own 75.5% of Global Nuclear Fuel Japan Company Limited (Yokosuka, Japan), with Toshiba owning the balance stake of 24.5%. Toshiba fears that it may be pushed out of the joint fuel venture by the merging of Hitachi and GE interests in 2007.

In April 2008, Hitachi and GE opened a joint office in San Jose, California, specifically to sell BWRs. The move came a month after Toshiba announced the formation of the Toshiba America Nuclear Energy Corporation in the U.S. aimed at marketing advanced boiling water reactors. In 2007, Areva signed an agreement with Mitsubishi Heavy Industries Limited (TYO:7011) (Tokyo). With these developments, the global nuclear market will see the three groups - Toshiba, Areva-Mitsubishi, and GE-Hitachi - competing against each other for lucrative nuclear power projects.

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.