FRANCE: China Deal Gives Lift to Revival of Fission

Publisher Name: 
New York Times

Areva, the French nuclear power giant, signed the
largest deal in the industry's history Monday, with China's
leading nuclear power company.




The agreement will bring both technology and much-needed energy to
China, which has the world's fastest-growing appetite for energy.
But the deal could prove an even greater boon to Anne Lauvergeon,
Areva's chief executive, whose strategies - and optimism - have
been questioned by critics.




The reasons for skepticism are clear. In recent years, nuclear-powered
countries - like the United States, Germany and Japan - have
refrained from building more plants, and countries like Italy and
Poland, who had none, have refused to plunge into the nuclear age. But
as today's deal illustrates, the business of nuclear energy has come
alive again, and it is people like Ms. Lauvergeon, her steely temper
softened by a lively manner and a captivating laugh, that are bringing
it back to life.




"A nuclear renaissance is now gearing up everywhere in the world,"
said John B. Ritch III , a former American diplomat and director
general of the World Nuclear Association, an industry group. "It is
occurring parallel to an enormous expansion in energy
consumption."




The daughter of a professor and the niece of an archaeologist, Ms.
Lauvergeon felt drawn to antiquity as a girl - until her uncle took
her on her first dig one summer.




"I discovered it was a lot of dirt, dirty hands, and crawling around
on all fours," Ms. Lauvergeon, 48, said, explaining how her interest
shifted from the past to the future.




Ms. Lauvergeon's long path from dirty hands to clean energy took
some unexpected turns, including ones through the halls of power at
the Élysées Palace, where she served as a top adviser to
François Mitterrand, and into the bastions of the very male business
world, leaving her, in the end, one of the most powerful women in
corporate Europe.




Ms. Lauvergeon grew up in Orleans, the heartland of France, where her
father was a professor of geography. Her interest in the past
gradually made way for college studies in chemistry and physics,
leading to a degree from the École des Mines in Paris, an elite
engineering school.




After graduation she worked for several French companies, including
the former Usinor steel company, now part of the Arcelor-Mittal steel
group. In the first half of the 1990's, she was Mr. Mitterrand's
lead aide on international trade issues. In 1995, she became a partner
in Paris at Lazard Frères, spending several months in the investment
bank's New York office.




Today, Ms. Lauvergeon spends much of her time on the road, selling
Areva's nuclear products and services. When she is in Paris, she
makes time to drop off her two children, ages 8 and 4, at their
private school.




"I started late," she confesses. Her husband, Olivier, is also in
business.




Even as the nuclear industry opens new projects around the globe, the
industry has been consolidating. After Toshiba's $5.4 billion
takeover of Westinghouse, General Electric and Hitachi joined forces
in a $2 billion deal. Russia has carved Atomstroyexport, the Russian
nuclear power company, out of the old Soviet atomic energy
ministry.




In France, Ms. Lauvergeon assembled Areva in 2001 from the bickering
factions of France's state-owned nuclear establishment, the fuel
company Cogema and the reactor builder Framatome, creating arguably
the world's only one-stop nuclear shop, selling uranium, reactors,
fuel reprocessing and waste storage.




It was around this time that she first visited a nuclear reactor.
"It was clean, very modern, and I was impressed by the idea that a
tiny amount of uranium produced a huge amount of energy," she said.
And this, she added, despite her being at the time, "very ecolo,"
French slang for environmentalist.



"At the time, many said we had no future," she recalled. "I
said, 'We have a future, and we should invest.' In this new
situation, we're very attractive."




Of course, much of the increasing appeal of nuclear power has to do
with the rising cost of oil and the need to reduce the level of
greenhouse emissions. Companies like Westinghouse, General Electric
and Areva, which design and build nuclear power plants, are taking
advantage, landing contracts in Asia and even turning their sights on
Western countries, like the United States.




"It's not expensive, and the costs are totally predictable," Ms.
Lauvergeon said recently in her office in a meticulously restored Art
Deco building in the center of Paris. "The cost of uranium is only 5
percent of your costs." Moreover, she said, nuclear energy is not
dependent on foreign sources of fuel and produces no greenhouse
gases.




Not everyone shares her enthusiasm. "Currently there is no safe way
to deal with radioactive waste," said Nathan Argent, who follows the
industry for Greenpeace, one of many antinuclear groups. They argue,
moreover, that the spread of nuclear technology leads to the
proliferation of atomic weapons.




Ms. Lauvergeon insists Areva is not in the business of proliferation.
''Without ambiguity, we don't accept to do business with
countries that don't accept, without doubt, international controls,"
she said.




Some governments heed their antinuclear constituencies. Germany, once
a leader in nuclear energy, is committed to exiting nuclear energy by
2020; Sweden is similarly committed to phase out its nuclear plants by
2010.




But Ms. Lauvergeon highlights Areva's experience in converting spent
fuel into mixed oxide, or MOX, pellets that can be burned in nuclear
reactors. She can speak with conviction because France, unlike most of
the world, never backed away from atomic power. Roughly 80 percent of
the country's electricity is generated by nuclear plants.




The new government of President Nicolas Sarkozy is giving Ms.
Lauvergeon a helping hand. Addressing the United Nations, and on trips
to Mediterranean countries, notably Libya and Morocco, Mr. Sarkozy has
promoted French nuclear technology.




And he was present at the signing of the Areva-CGNPG agreement,
according to Xinhua.




Areva will supply the China Guangdong Nuclear Power Group with two
cutting-edge nuclear reactors in the city of Taishan in the southern
province of Quangdong. Areva will also help run and maintain the
plants, whose design will include a European pressurized water
reactor, or EPR.




Under the 8 billion euro ($11.86 billion) deal, Areva will also
cooperate with the Chinese on future civilian nuclear energy,
including the reprocessing of spent fuel.




In the first nine months of 2007 Areva generated revenue of $11.6
billion, up 6.8 percent from the year before, building power plants,
but also mining and processing uranium, and disposing of spent fuel.
Its order book in the first half-year was up 30 percent, at $45
billion, before the Chinese deal.




Areva is currently building two new EPR plants in France and in
Finland.




But Ms. Lauvergeon faces strong competition from companies like
Westinghouse, General Electric and Atomstroyexport. She says she is
not fazed, noting that Areva is taking the battle to Westinghouse's
home turf: it reached a joint venture with Constellation Energy, a
Baltimore utility, to sell its power plants in the United States, and
it is cooperating with Électricité de France, the French utility,
to penetrate the American market.




Now Areva needs cash to grow, and the French government is considering
all options, including selling shares in Areva. Less than 5 percent of
Areva trades on the Paris exchange, in nonvoting investment
certificates; a possible merger with the French turbinemaker Alstom
would create an even more muscular competitor. This likelihood has
driven Areva's shares up more than 50 percent over the last year.
Ms. Lauvergeon says she favors joining with "one or two industrial
partners."




But the centerpiece of Ms. Lauvergeon's sales pitch is of course the
EPR, which she has sold to China. Areva is building the first of its
kind in a dark pine forest in Finland. But the Finnish project is
years behind schedule and news reports have set cost overruns as high
as $1 billion.

Ms. Lauvergeon, who says Areva does not publish the provisions it
makes for such losses, acknowledges that the company is unlikely to
make money on the project. But she even puts an optimistic spin on the
loss.




"It's an investment, an incredible show window," she
says.

Apparently, the
Chinese agreed.
AMP Section Name:Energy