Sarkozy in talks to end Areva impasse

Friday, December 3, 2010

Qatar’s prime minister met French president Nicolas Sarkozy this week in an attempt to resolve the stalemate over a capital increase for Areva, the French state-owned nuclear group.

Sheikh Hamad bin Jassim bin Jabr al-Thani was in Paris for a stopover to discuss the terms of Qatar’s proposed investment in Areva.

Qatar is seeking guarantees over the value of the French group, for example by having an option to take shares in its sensitive uranium mining division, even as tensions intensify on the French side over the terms and conditions of the group’s capital increase.

The capital increase aims to raise between €1.5bn ($2bn) and €3bn for Areva, by selling up to 15 per cent of the group to three new investors – the sovereign wealth funds of Qatar and Kuwait as well as Areva’s Asian partner, Japan’s Mitsubishi Heavy Industries.

People close to the situation said the government would have to decide whether to press ahead with the capital increase in the coming days if it was to meet its target of raising funds by the end of the year.

However, it has been reluctant to grant shares in the highly strategic uranium mining subsidiary to outside investors.

Mr Sarkozy had hoped to boost France’s influence in the Middle East and Asia by inviting these three investors to buy into one of the country’s most strategic companies.

But he has become caught up in the crossfire of a bitter war between Areva and EDF, the state-owned utility which has ambitions to control the nuclear fuel and reactor supplier.

Earlier this year the president indicated that he wanted EDF to increase its 2.4 per cent stake in Areva in a bid to reorganise France’s nuclear industry, long riven by disputes and rivalry.

But EDF is insisting on having a board seat, which Areva is resisting as it could create a conflict with its other utility clients.

EDF has accused Areva of failing to respond to questions over its finances and its exposure to a heavily unprofitable reactor project in Finland.

The utility, headed by Henri Proglio, has also voiced opposition to MHI taking a stake.

One person close to the subject said that EDF was in favour of Areva establishing an industrial alliance with the Chinese rather than with MHI, which is developing the 1100MW Atmea reactor with the French group.

If the stand-off over the capital increase is not resolved, the Japanese group could seek another partner, much as Germany’s Siemens did when it decided to end the 10-year reactor partnership in favour of a deal with Russia’s Rosatom.

“If the chance of a capital partnership fell to completely zero, we might have to consider our options,” a person close to Mitsubishi said.

The uncertainty, and the reactor problems in Finland, appear to have encouraged Qatar and Kuwait to put a far lower value on Areva than the €15bn Paris had hoped for a year ago.

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