Sunday, December 16, 2007

China is going on a nuclear energy spree

By Stephanie Grimmett
China plans to build 30 new nuclear power plants to supply its insatiable need for electricity in the next 12 years.

Just like everything it does, the country of a billion workers is moving into nuclear power in a big way. That means China will have to outlay 450 billion yuan. Based on the assumption that it will continue its adherence to the dollar in the next decade, that’s about $61 billion to make China one of the leading nuclear energy countries in the world.

And unlike Western countries, China’s ambitious plans have a pretty good chance of being met (ah, the efficiency of a totalitarian regime). It’s amazing what you can get done when opposition is punishable by death and banks can be ordered to lend you money.

China is using its old beg-and-steal strategy for the nuclear power market, too. The country is buying the technology to develop those power plants from two Western companies: France’s Areva (CEI: Paris) and Pennsylvania-based Westinghouse Electric Corporation.

Both companies have 50 years of experience with nuclear power. And they’re about to sell their latest designs to China for billions each: $5.3 billion (Westinghouse) and 8 billion euro (US$12 billion, Areva) to be more accurate.

The China State Nuclear Power Technology Company bought four of Westinghouse’s new AP1000 reactors, along with an agreement to help construct them on the ground in China. And Areva sold two European pressurized water reactors and a long-term contract to supply uranium to China Guangdong Nuclear Power Group Company.

The technology transfer could make things easier for Westinghouse and Areva. It means both companies will be able to obtain parts for the construction of those power plants locally, instead of having them shipped from their own manufacturing facilities.

And Chinese producers could mean cheaper parts for future construction by the two companies. But I have two problems with the idea of outsourcing my nuclear power plant production.

First, China is very good at learning how to build a mousetrap that may not be better than its Western competitors, but it’s most definitely cheaper. And selling technology to companies in the country could mean a death sentence for Westinghouse and Areva’s own power plant business.

Both companies are multinational conglomerates, and they won’t live or die based solely on their nuclear plant sales. But the construction of nuclear power plants isn’t exactly a booming market, except in China, these days (Americans and Europeans are hesitant to try nuclear power after witnessing the Three Mile Island meltdown and Chernobyl disaster.)

Second, we all know how China handles its other outsourcing markets. And I’m guessing many of you have had to chuck at least one product in the last year because of China’s recent “cost-saving” measures… that just happen to cause brain damage or kill the family pet.

Do we really want them building our nuclear power plants?

The Chinese have already started showing off their strict safety standards when it comes to handling their radioactive toys. And both Westinghouse and Areva have sworn those standards are being followed with solemn pomp and circumstance. But nobody has broached the topic of where exactly all of that nuclear waste is going to go.

Mattel may soon be selling “Nuclear Meltdown Barbie.” She comes complete with glowing, peeling green skin and a Geiger counter.

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