Kansai to negotiate Mox fuel contract
FT.com, September 4, 2003
By David Pilling and David Barroux in Tokyo and Andrew Taylor in London
Kansai Electric Power, Japan's second-largest utility, will shortly begin negotiating a contract for delivery of plutonium-uranium mixed-oxide (Mox) fuel from Europe.
The move demonstrates Japanese utilities are committed to using the controversial Mox fuel following their joint Y500bn investment in a reprocessing plant in Rokkashomura, northern Japan.
The use of Mox fuel has been opposed by local politicians and resident groups in many parts of Japan after a scandal in which British Nuclear Fuels was found to have falsified quality control data for a demonstration shipment of the fuel. Kansai returned the shipment to the UK last year.
The company which supplies Japan's second-biggest industrial region centred around Osaka, said it would be "difficult" to consider BNFL as a vendor given the scandal.
That leaves Cogema, now part of France's state-owned Areva group, as the most likely supplier. Belgonucleaire, the Belgian atomic energy group, also produces small quantities of Mox fuel, but probably not enough to meet Kansai Electric's needs.
"We will begin talks in the near future," said Yoshihisa Akiyama, chairman of Kansai Electric, in an interview. "Once a deal is signed it will take at least 24 months to start operations."
BNFL, whose future is being considered by the UK government as part of a general review of the nuclear industry, has yet to win a commercial mox contract in Japan.
The has always recognised that it would be difficult for it to win early orders when contract negotiations resumed but is relieved that Mox supply is now under consideration again. It says its Mox facility has already won sufficient continental European orders to break even.
Negotiations in Japan are expected to begin this year and to be signed in 2004. The earliest that a Mox plant could be up and running is likely to be 2006.
Any deal would come as a big boon to Cogema, representing at least several months' Mox production at its facility in Marcoule, southern France.
Kansai Electric said that, following the BNFL incident, its biggest concern was quality control. In order to obtain a government licence to use Mox fuel, the company would need to persuade regulators that safety controls were rigorous. "The situation is still very delicate," Mr Akiyama said.
Kansai Electric has gained political support for its Mox programme following the election in April of Issei Nishikawa as governor of Fukui prefecture, where the company's nuclear facilities are concentrated. The nuclear issue became a focal point of that election.
Tokyo Electric Power has had to put its Mox plans on the back burner because of opposition from the local electorate. The company lost public confidence after cracks were discovered in nuclear reactors, obliging it to shut operations while repair work was carried out.
Emphasis on nuclear generation in general, and Mox fuel in particular, is part of Japan's efforts to reduce its dependence on outside energy supplies, particularly Middle Eastern oil.
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