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19 October 2006 -- French nuclear reactor provider Areva and Japanese machinery manufacturer Mitsubishi Heavy Industries, Ltd. (MHI) have agreed to collaborate in the area of nuclear energy in order to expand their presence in growing markets.
As a first step, the two companies have already agreed to develop a 3rd-generation 1,000 MWe nuclear power plant expected to attract great market demand. The agreement covers other fields of possible cooperation such as procurement, services, fuel cycle and new types of reactors. The two groups have already worked together in constructing the Rokkasho Reprocessing Plant in Japan, using Areva's technologies developed for the La Hague Reprocessing Plant in France.
The announcement came a few days after Toshiba finished its $4.2 billion acquisition of Westinghouse. Toshiba said it expects growth in its nuclear business to quadruple as more countries pursue nuclear power technology. Mitsubishi was outbid by Toshiba for the Westinghouse acquisition.
General Electric Co. and its partner Hitachi Ltd. are also looking to gain more of the world's share of nuclear power clients.
"Mitsubishi Heavy had no choice but to partner with another company, otherwise it would become a very minor player in the (nuclear power) business," said JP Morgan machinery analyst Masayuki Mochizuki to Reuters news agency.
Analysts expect this cooperation to be beneficial to both companies, but it may not have an effect on the companies' earnings for at least 10 years.
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