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MarketScreener Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  CNNC International Limited    2302   KYG2352X1262


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Brazil narrows field to China, Russia, France for Angra 3 nuclear partner

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10/24/2019 | 06:52pm EST
President of Eletronuclear Leonam Guimaraes poses for a photo near of Angra Nuclear Power Plant complex during a media tour in Angra dos Reis

(This October 23 story corrects paragraph 8; Westinghouse owned by Brookfield Business Partners, not Toshiba Corp as erroneously reported)

By Anthony Boadle

Eletronuclear will decide by the end of the year whether to create a subsidiary joint venture or if the foreign partner will become a minority shareholder in the state company, which would entitle it to a stake in its existing Angra 1 and 2 nuclear power plants, Guimaraes said.

Speaking in an interview on Tuesday, he said the partner would require deep pockets, as completion of Angra 3 will require 15 billion reais ($3.7 billion) on top of the 9 billion reais already invested.

"We are looking for an international partnership to invest in the completion of Angra 3 and that partner would own part of the plant until the end of its life," he said.

Under Brazilian law, the partner must have less than 50% of the voting capital.

In June, Eletronuclear sounded out market interest in a partnership for Angra 3 with invitations to 10 foreign firms, Guimaraes said. Seven replied but the most interested are CNNC, EDF and Rosatom, he said.

CNNC executives visited Angra 3 in June and reaffirmed their interest in completing it and building future plants in Brazil.

U.S. company Westinghouse, which is owned by Brookfield Business Partners LP, and France's Framatome, majority owned by EDF, were also interested. However, they are suppliers of nuclear technology and Eletronuclear is looking for a partner to help build the rest of Angra 3, Guimaraes said.

South Korea's Kepco Engineering and Construction and China's State Power Investment Corporation also showed interest in Angra 3, located on the coast south of Rio de Janeiro, but seemed less committed to exploring a partnership, he said.

The plant was first planned in the 1980s but dropped due to lack of finance. Building restarted in 2010, but Eletronuclear was hit by a corruption scandal in 2015 and stopped paying contractors such as French company Areva, which was installing the Siemens-designed reactor technology now owned by Framatome.

Angra 3 is 70% finished and 80% of the nuclear reactor equipment has been bought, Guimaraes said. Eletronuclear spends 25 million reais a year on upkeep and insurance for the construction site and nuclear technology, he said.

That does not include interest payments on 10 billion reais in loans from national development bank BNDES to build Angra 3.

Eletronuclear is a subsidiary of state-run electric utility Eletrobras, which the government plans to privatize, although the nuclear power unit will be spun off and remain under state control.

President Jair Bolsonaro, who took office in January, has pledged to complete Angra 3 and study new plants in a push to expand the contribution of nuclear power to Brazil's electricity output, from 3% currently.

Guimaraes said two potential sites for future plants have been identified, one in the northeastern state of Pernambuco and another in southeastern Minas Gerais state.

Brazil has had to buy uranium concentrate for Angra 1 and 2 on the global market, mainly from Canada, Russia and Kazakhstan, due to a halt in output over licensing at the only domestic mine in operation, in Bahia state, Guimares said.

A new open pit mine in Bahia near the first mine should be licensed by year-end, he said.

(Reporting by Anthony Boadle; Additional reporting by Luciano Costa; Editing by Brad Haynes and Tom Brown)

Stocks mentioned in the article
ChangeLast1st jan.
BROOKFIELD BUSINESS PARTNERS L.P. -1.38% 42.525 Delayed Quote.4.46%
CENTRAIS ELETRICAS BRASILEIRAS S.A. -0.31% 42.38 End-of-day quote.10.80%
CNNC INTERNATIONAL LIMITED 0.00% 2.91 End-of-day quote.-1.36%
ELECTRICITÉ DE FRANCE 0.09% 11.485 Real-time Quote.15.58%
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