Areva, Mitsubishi Heavy Form Nuclear Fuel Venture

By Megumi Yamanaka

Dec. 22 (Bloomberg) -- Areva SA, the world’s largest supplier of nuclear reactors, will team up with companies including Mitsubishi Heavy Industries Ltd. to supply nuclear fuel to Japanese customers.

Mitsubishi Heavy will own 35 percent in the venture, Paris- based Areva and Mitsubishi Materials Corp. will each hold a 30 percent share and trading house Mitsubishi Corp. will own the rest, the companies said in a joint statement in Tokyo.

Areva and Mitsubishi Heavy hope the partnership will help them increase their share of the nuclear fuel market as they compete with Toshiba Corp. and an alliance between General Electric Co. and Hitachi Ltd. Competition in the global atomic industry is intensifying as the three dominant groups vie to win orders from China, India and other developing countries.

“The new company aims at strengthening its nuclear fuel business in response to the increasing importance of nuclear power generation globally,” the partners said in the statement. It “will be a full-fledged nuclear fuel supplier, integrating development, design, manufacturing and sales of nuclear fuel.”

The venture, which may start in the first half of 2009, will have about 550 employees and aims for sales of 50 billion yen ($556 million) by 2020, according to the statement.

The new company will be formed by restructuring Mitsubishi Nuclear Fuel Co., which is owned by metals smelter Mitsubishi Materials and Mitsubishi Heavy. Areva will spin off a business that sells nuclear fuel in Japan and transfer it to the new company, while Mitsubishi Heavy and Mitsubishi Materials will transfer all their atomic fuel related operations.

In addition to its domestic sales, the new company will enter the overseas market for the sale of fuel assemblies for pressurized water reactors designed by Mitsubishi Heavy.

Separately, Mitsubishi Heavy and Areva said they intend to build a nuclear fuel fabrication facility in the U.S.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.