Hitachi freezes UK nuclear project

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Hitachi’s Toshiaki Higashihara at a press conference in Tokyo. Work on a nuclear plant in Wales was suspended after Hitachi said it had been unable to agree financing with the UK government. (AP Photo)
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The president of Japanese company Hitachi, Toshiaki Higashihara, leaves at the end of a press conference at the company’s headquarters in Tokyo. Hitachi said it would freeze construction of its stalled nuclear power station in Wales due to problems financing the project. (AFP)
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An artists impression of the Wylfa nuclear plant in Anglesey, which was to be built by Hitachi. Hitachi said today it would freeze construction of its stalled nuclear power station in Wales. (AFP)
Updated 17 January 2019
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Hitachi freezes UK nuclear project

  • The suspension comes as Hitachi’s Horizon Nuclear Power failed to find private investors for its plans to build a plant in Anglesey
  • Hitachi had called on the British government to boost financial support for the project to appease investor anxiety

TOKYO/LONDON: Japan’s Hitachi Ltd. decided on Thursday to freeze a 3 trillion yen ($28 billion) nuclear power project in Wales as Britain scrabbles for a way to exit the EU, dealing a blow to UK plans for the replacement of aging plants.
The suspension comes as Hitachi’s Horizon Nuclear Power failed to find private investors for its plans to build a plant in Anglesey, which was expected to provide about 6 percent of Britain’s electricity.
“We’ve made the decision to freeze the project from the economic standpoint as a private company,” Hitachi said in a statement, adding that it had booked a write-down of 300 billion yen.
Hitachi had called on the British government to boost financial support for the project to appease investor anxiety, but turmoil over the country’s impending EU exit limited the government’s capacity to compile plans, people close to the matter have previously said.
Hitachi had banked on a group of Japanese investors and the British government each taking a one-third stake in the equity portion of the project, the people said. The project would have been financed one-third by equity and rest by debt.
“It is now clear that further time is needed to develop a financial structure for the Horizon project and the conditions for building and operating the nuclear power stations,” Hitachi said.
With the clock ticking down to March 29, the date set in law for Brexit, the UK is now in the deepest political crisis in half a century as it grapples with how, or even whether, to exit the European project it joined in 1973.
Prime Minister Theresa May’s two-year attempt to forge an amicable divorce was crushed by Parliament this week in the biggest defeat for a British leader in modern history, deepening uncertainty for potential investors.
The withdrawal of the Japanese conglomerate could leave the nuclear newbuild industry open to Russian and Chinese state-owned companies as Western private firms struggle to compete.
China’s General Nuclear Services, an industrial partnership between China General Nuclear Power Corp. (CGN) and French utility EDF, plans to make a number of investments in Britain’s nuclear power sector, most notably the Hinkley Point C project in southwest England.
CGN also intends to deploy the first Chinese-designed reactor for use in Britain at a plant in Bradwell, Essex.
The UK government said that despite negotiations with Hitachi, they failed to reach an agreement. The focus for the government was about driving  down costs and maximizing value for consumers and the taxpayer.

 

The UK government remains committed to the nuclear sector and is reviewing alternative funding models for future projects and will give an update this summer, it added.
Britain wants new nuclear plants to help replace its aging fleet of nuclear and coal plants coming offline in the 2020s, but high up-front costs have deterred construction.
Another Japanese firm, Toshiba Corp, scrapped its British NuGen project last year after its US reactor unit Westinghouse went bankrupt and it failed to find a buyer.
Hitachi stopped short of scrapping the Anglesey project in northern Wales. The company will continue discussions with the British government on nuclear power, it said.
The nuclear write-down wipes off the Horizon unit’s asset value, which stood at 296 billion yen at the end of September.
Horizon Nuclear Power said it would take steps to reduce its presence but was keeping the option open to resume development in the future.
“Wylfa Newydd on Anglesey remains the best site for nuclear development in the UK and we remain committed to keeping channels of communication open with the government and our other key stakeholders regarding future options at both our sites,” said Duncan Hawthorne, chief executive of Horizon.
However, analysts and investors viewed the suspension as an effective withdrawal and saw the decision as a positive step that has removed uncertainties for the Japanese conglomerate.
Hitachi bought Horizon in 2012 for £696 million ($1.12 billion), from E.ON and RWE as the German utilities decided to sell their joint venture following Germany’s nuclear exit after the Fukushima accident.
Hitachi’s latest decision also further dims Japan’s export prospects.
Mitsubishi Heavy Industries Ltd. has effectively abandoned its Sinop nuclear project in Turkey, a person involved in the project previously told Reuters, as cost estimates had nearly doubled to around 5 trillion yen.

FASTFACTS

$28bn — Value of proposed nuclear power project in Wales


New Zealand to conduct own assessment of Huawei equipment risk

Updated 28 min 41 sec ago
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New Zealand to conduct own assessment of Huawei equipment risk

  • Huawei faces intense scrutiny in the West over its relationship with the Chinese government
  • Several Western countries had restricted Huawei’s access to their markets

WELLINGTON: New Zealand will independently assess the risk of using China’s Huawei Technologies in 5G networks, Prime Minister Jacinda Ardern said on Monday after a report suggested that British precautions could be used by other nations.
Huawei, the world’s biggest producer of telecoms equipment, faces intense scrutiny in the West over its relationship with the Chinese government and US-led allegations that its equipment could be used by Beijing for spying.
No evidence has been produced publicly and the firm has repeatedly denied the allegations, which have led several Western countries to restrict Huawei’s access to their markets.
The Financial Times reported on Sunday that the British government had decided it can mitigate the risks arising from the use of Huawei equipment in 5G networks. It said Britain’s conclusion would “carry great weight” with European leaders and other nations could use similar precautions.
New Zealand’s intelligence agency in November rejected an initial request from telecommunications services provider Spark to use 5G equipment provided by Huawei.
At the time, the Government Communications Security Bureau (GCSB) gave Spark options to mitigate national security concerns over the use of Huawei equipment, Ardern said on Monday.
“The ball is now in their court,” she told a weekly news conference.
Ardern said New Zealand, which is a member of the Five Eyes intelligence sharing network that includes the United Kingdom and the United States, would conduct its own assessment.
“I would expect the GCSB to apply with our legislation and our own security assessments. It is fair to say Five Eyes, of course, share information but we make our own independent decisions,” she said.
Huawei New Zealand did not immediately respond to a request for comment. Spark said it was in discussions with GCSB officials.
“We are working through what possible mitigations we might be able to provide to address the concerns raised by the GCSB and have not yet made any decision on whether or when we should submit a revised proposal to GCSB,” Spark spokesman Andrew Pirie said in an emailed statement.
The Huawei decision, along with the government’s tougher stance on China’s growing influence in the Pacific, has some politicians and foreign policy analysts worried about potential strained ties with a key trading partner.
Ardern’s planned first visit to Beijing has faced scheduling issues, and China last week postponed a major tourism campaign in New Zealand days before its launch.
Ardern said her government’s relationship with China was strong despite some complex issues.
“Visits are not a measure of the health of a relationship they are only one small part of it,” she said, adding that trade and tourism ties remained strong.