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

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


Africa development bank says risks to continent’s growth ‘increasing by the day’

Updated 42 min 43 sec ago

Africa development bank says risks to continent’s growth ‘increasing by the day’

  • The trade dispute between US and China has roiled global markets and unnerved investors
  • African nations need to boost trade with each other to cushion the impact of external shocks

DAR ES SALAAM: The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4 percent in 2019 and 4.1 percent in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down. Free mobility of labor, free mobility of capital and free mobility of people.”