Russia and Japan form nuclear alliance

Paris is in shock: nuclear giants Atomenergoprom and Toshiba have decided to form an alliance in civilian nuclear power operations, including power plant construction and fuel production.

The two companies signed a framework agreement last week, under which the Russian company will enrich uranium produced in Kazakhstan, while Toshiba will produce nuclear fuel and undertake the designing and engineering of nuclear power plants.

The firms may establish a strategic partnership in the future, Toshiba said. By securing a stable supply of nuclear fuel through the alliance with Atomenergoprom, Toshiba hopes to sharpen its competitive edge.

Experts predict that the alliance will become the world's leader in the nuclear sector.

Previously, the market was divided between four players: the French-German alliance of Areva and Siemens, two American-Japanese groups, Toshiba-Westinghouse and GE-Hitachi, and Russia's Atomenergoprom.

The Russian-Japanese alliance will cut the number of players to three. Moreover, Toshiba now owns a 70% stake in Westinghouse.

The French newspaper Les Echos described the alliance as "the main event in the nuclear production cycle." As a nuclear power and leading player on the global market of nuclear power engineering, France is worried that the Russian-Japanese tie-up could become a major rival of the French Areva.

The newspaper reports that the French government intends to merge Areva and Alstom into a nuclear power plant building super-company.

The Russian-Japanese merger was prompted by Russia's desire to swim with the tide, although Toshiba was neither its initial nor only choice. Russia made offers of strategic partnership to several candidates, but Toshiba offered the best terms.

Sergei Novikov, a spokesman for Rosatom, the Federal Agency for Nuclear Power, said: "The Japanese have the engineering know-how to build nuclear power plants within three years. They are the recognized leaders in this respect; it takes us five years to build a nuclear power plant. So, we will learn from them if the alliance is formed. We may also cooperate in mutual supplies of large-size equipment. [The alliance] will also allow Russia to emerge on the global market for nuclear fuel."

Atomenergorpom has the technologies of an open nuclear fuel cycle and can build civilian nuclear facilities under turnkey conditions. It also has cutting-edge water-water reactor (VVR) technologies.

Although it has signed only a framework agreement with Toshiba, experts believe that the document is the first step to forming a full-scale transnational alliance. It will be set up as an absolute parity, without the partners exchanging stakes or assets, but agreeing to jointly plan their business. The alliance will work toward a global goal of developing and applying safe, clean and efficient nuclear generation systems.

"The framework agreement is a sign made to the market; subsequent moves will be based on the assumption that business is a highly practical matter, with adequate decisions depending on each particular project," said Novikov.

"If we decide to build a nuclear power plant in Russia's Far East, as stipulated in the general plan for placing nuclear power plants, it would be logical to invite the Japanese," he said.

Experts also say that Russia may join forces with Toshiba to manufacture equipment for nuclear power plants.

Taken together, this promises dynamic, effective and mutually beneficial cooperation.

Sergei Kiriyenko, head of the Rosatom corporation, said: "An alliance of two giant companies would have a positive effect on the nuclear renaissance, making it more predictable and technically feasible."

He said that all consumers of commodities and services of the nuclear fuel cycle would enjoy the fruits of Russian-Japanese partnership.

Harufumi Mochizuki, head of Japan's Agency for Natural Resources and Energy, is of the same opinion. RIA Novosti.