China to Build More Nuclear Plants, Japan Steel Says

[A quick note that the AP-1000 reactors under construction in China will NOT have their vessels fabricated at JSW. News reports are that these vessels will be made by Doosan and then by the Chinese following technology transfer.]

http://www.bloomberg.com/apps/news?pid=20601101&sid=a7znRB.NvVmo

By Masumi Suga and Shunichi Ozasa

Sept. 7 (Bloomberg) -- Japan Steel Works Ltd., a maker of atomic reactor parts for Areva SA and Toshiba Corp., more than doubled its forecast for China’s nuclear plant construction because of stimulus spending and environmental pressures.

The country may build about 22 reactors in the five years ending 2010 and 132 units thereafter, compared with a company estimate last year for a total 60 reactors, President Ikuo Sato said in an interview. Japan Steel Works has the only plant that makes the central part of a large-size nuclear reactor’s containment vessel in a single piece, reducing radiation risk.

China, the world’s largest energy consumer after the U.S., is increasing spending on atomic energy as part of a 4 trillion yuan ($586 billion) economic stimulus and as it curbs greenhouse gas emissions. Japan Steel Works is counting on the rising reactor demand as the global recession curbs sales to customers such as carmakers and electronics companies.

“The potential for investment in nuclear power is huge,” said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai. “Only a small number of companies in China have the right to develop nuclear power projects, but the country is open to foreign companies to help build reactors and to provide equipment.”

Japan Steel Works, which has lost 4.6 percent of its value this year, climbed 8.2 percent to 1,174 yen on the Tokyo Stock Exchange. The Nikkei 225 Stock Average rose 1.3 percent.

China became the world’s largest emitter of greenhouse gasses from burning oil and coal in 2006, followed by the U.S., Russia, India and Japan, according to U.S. Department of Energy data compiled by Bloomberg News.

Business Talks

“China, which had increased construction of coal-fired power plants, is now trying to focus on nuclear power because of the environmental issue,” Sato, 60, who took office in June, said in the Aug. 31 interview in Tokyo. “China is accelerating nuclear spending, and additional business talks are coming up.”

The country has 9,100 megawatts of nuclear capacity and has approved the construction of additional reactors able to generate 25,400 megawatts, Sun Qin, then-deputy head of the National Energy Administration, said last month. China will issue a plan by the end of the year to push development of clean energy sources such as nuclear, wind, solar and hydro power.

The average time it took to build China’s first 10 nuclear reactors was 6.3 years, according to a report commissioned by the German environment ministry.

Gross domestic product in China expanded 7.9 percent in the second quarter as the economy rebounded from the weakest growth in almost a decade, boosted by stimulus spending.

“Similar to road and railway construction, nuclear energy is also part of China’s plans for a recovery after the economy slowed,” Sato said.

Global Increase

Globally, a total of 52 nuclear reactors were under construction as of Jan. 1, according to the Japan Atomic Industrial Forum Inc. Last year was the first time in the history of commercial nuclear power that no new reactors came into operation, according to International Atomic Energy Agency figures. Some 33 new plants came online in 1984 and that number has declined almost every year since.

Japan Steel Works is spending 80 billion yen ($864 million) at its Muroran plant in the country’s northern island of Hokkaido by March 2012 to increase capacity to make parts for 12 nuclear reactors a year, compared with 5.5 units now, the president said.

The investment will increase annual sales from Japan Steel Works’ cast and forged steel for electric and nuclear power to 70 billion yen from the year starting April 2012, up from 45.5 billion yen expected for the current year, Sato said.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net.

Last Updated: September 7, 2009 08:39 EDT