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Hitachi to suspend UK nuke project

January 11, 2019


Hitachi preparing to suspend Anglesey nuclear power project in U.K.




Hitachi Ltd. is in the final stages of preparations to suspend a project to build a nuclear power plant in the U.K., it was learned Friday.


The major heavy machinery-maker will confirm the move at a board meeting that could be held as early as next week, sources with knowledge of the matter said.


Hitachi is settling on the suspension as it is unclear whether the company will be able to receive additional assistance from the U.K. government, the sources said. It has had difficulty finding investors for a subsidiary that will operate the plant amid concerns over profitability.

The firm is expected to book up to about ¥300 billion in related losses in the business year through March, the sources said.


The focus of the project is the construction of a nuclear power plant on the island of Anglesey in north Wales, which had been scheduled to go into operation in the early 2020s.


Due to the growing likelihood that the project’s costs will far exceed the initial estimate, reaching ¥3 trillion, the company had proposed to London a review of the project including the level of financial assistance that would be available to the firm.


At a new conference on Thursday after a meeting with her Japanese counterpart, Shinzo Abe, U.K. Prime Minister Theresa May said that whether or not the project would go ahead was a commercial decision for Hitachi, leaving the future course of the project unclear.


The firm plans to suspend the project and reduce the related workforce, the sources said.


The company said in a statement that there has been no decision on the project, although it is closely examining a possible suspension and the potential financial impact from the perspective of economic rationality.



Hitachi to suspend all work on UK nuclear plant



Funding deadlock looks set to sink Japan's last overseas nuclear project


TOKYO -- Hitachi plans to put a U.K. nuclear power project on hold as negotiations with the British government over funding hit an impasse, all but closing the book on Tokyo's vision for nuclear infrastructure exports.


The Japanese industrial conglomerate's board is expected to officially decide next week to suspend all work on the plant, including design and preparations for construction. Hitachi will freeze the roughly 300 billion yen ($2.77 billion) in assets held by its British nuclear business and write down their value, likely booking a loss of 200 billion yen to 300 billion yen for the fiscal year ending in March.


The move would bring to a halt Japan's last active overseas nuclear project after the news last month that a Japanese-led consortium including Mitsubishi Heavy Industries was scrapping a project in Turkey. With the aversion to nuclear power that took hold after the March 2011 Fukushima Daiichi disaster showing little sign of abating, prospects look grim for a sector that the Japanese government had positioned as a pillar of its infrastructure export drive.


Hitachi had taken on the planned construction of two reactors on the Welsh island of Anglesey after acquiring U.K.-based Horizon Nuclear Power in 2012.


After Hitachi Chairman Hiroaki Nakanishi discussed the project with British Prime Minister Theresa May last spring, London agreed to arrange more than 2 trillion yen in financing for the project, about two-thirds of the total cost. Japanese and British public-private consortia and Hitachi would each cover a third of the remaining 900 billion yen.


But Hitachi had trouble finding corporate investors in Japan, with major utilities such as Tokyo Electric Power Co. Holdings and Chubu Electric Power proving reluctant to participate. The conglomerate asked London late last year for additional financing, but negotiations have made no headway, and mounting opposition to May's government within parliament over Brexit has raised questions about the future of U.K. nuclear policy.





Hitachi set conditions on continuing its participation in the nuclear project in order to reduce its exposure to risk. It seeks to unload enough of its stake in wholly owned Horizon to take the company off its consolidated books, and it wants a guaranteed electricity price to ensure a steady stream of income once the plant goes online. But the odds of these requirements being met now look dim, which factored into the decision to halt the project.

The suspension will spare Hitachi from shelling out 3 billion yen to 4 billion yen a month on the plant.


The company is leaving the door open to a return. The project is "not being abandoned," a source close to Hitachi told Nikkei, suggesting the company would keep an eye on the situation and resume the project if possible.


While negotiations with London are apparently set to continue, reworking the project to the extent Hitachi requires will be no easy task. As things stand now, it appears likely that the company will ultimately be forced to bow out.






January 11, 2019




Hitachi to freeze UK nuclear power project, post $2 billion special loss – Nikkei



TOKYO (Reuters) - Hitachi Ltd (6501.T) has decided to freeze its 3 trillion yen nuclear project in Britain and to post a special loss of about $2 billion (1.6 billion pounds) for the year ending in March, the Nikkei business daily reported on Friday.

Hitachi is set to vote on the planned suspension at its board meeting next week, the Nikkei said without citing sources.

Hitachi’s Horizon Nuclear Power unit has struggled to find investors for its plans to build a new power plant in northern Wales.

Hitachi said the asset value of the plant in Wales was 296 billion yen as of the end of September. The special loss from freezing the project is expected to be 200 billion to 300 billion yen, according to the Nikkei.

A Hitachi spokesman said nothing has been decided on the suspension.

Hitachi was hoping a group of Japanese investors and the British government would each take a one-third stake in the equity portion of the project. A company source has said the project would be financed one-third by equity, two-thirds by debt.

The Nikkei report comes after another Japanese industrial conglomerate, Toshiba Corp (6502.T), scrapped its British NuGen project after its U.S. reactor unit Westinghouse went bankrupt and it failed to sell NuGen to South Korea’s Korea Electric Power Corp.

Shares of Hitachi rose by as much as 6 percent on the Tokyo stock exchange after the report.

Reporting by Makiko Yamazaki; editing by Richard Pullin and Christian Schmollinger












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