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RISK FACTORS
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4.4 Industrial and environmental risks
As is done for nuclear safety, the measures taken are based on the concept
of defense in depth and rest on three interrelated pillars forming a strong and
interconnected whole, which are:
p
physical protection to avert, detect, prevent or delay any unauthorized access
to the nuclear materials or any act of sabotage that might endanger the public;
p
physical monitoring, in which movements of nuclear materials require
authorization and are monitored;
p
a materials accounting system distinct from physical monitoring, which provides
independent control based on the daily accounting of quantities of materials
held in each area of the site and of all movements of nuclear materials from
one area to another.
The competent authorities, including for France inspectors reporting to the Senior
Defense and Security Official of the Ministry of Environment, Energy and Oceans,
regularly verify compliance with and proper application of these measures.
4.4.1.7.
NON-PROLIFERATION
Proliferation is the diversion of nuclear materials by a State for non-peaceful
purposes.
Non-proliferation is a shared objective of all of the signatory countries of international
agreements in this area, in particular the Treaty on the Non-Proliferation of Nuclear
Weapons of July 1, 1968. Non-proliferation requirements relate to the physical
protection of nuclear materials per the Convention on the Physical Protection of
Nuclear Material; to safeguards controls per the Euratom treaty, which established
a nuclear materials accounting system; and to inspection by the IAEA and Euratom.
To meet national regulatory requirements for nuclear materials safeguards and
facility protection, AREVA takes every measure necessary in this field to know, at all
times, the amount, type, use and location of thematerials held by the group’s entities.
4.4.1.8.
RISKS RELATED TO END-OF-LIFECYCLE
OPERATIONS
As operators of regulated nuclear facilities (
installation nucléaire de base,
INB)
and industrial facilities covered by legislation on environmentally regulated sites
(
installation classée pour la protection de l environnement,
ICPE), the group’s legal
entities have an obligation to ensure the safety and dismantling of those facilities
during their final shutdown, in whole or in part; to remediate the sites; and tomanage
the products resulting from these operations. Similarly, operators of uraniummines
have an obligation to perform closure work, safety-related work and rehabilitation
of the mines after their operations have ceased.
The group plans for the dismantling of its new facilities from the beginning of the
design phase. Operating experience from facility maintenance, from dismantling
operations carried out for its own account or for that of other nuclear operators,
and from pilot projects conducted upstream contribute to the safety of dismantling
operations. Computer programs were developed to facilitate the adoption of new
traceability standards, thus reducing the research necessary for characterization at
the end of operations (radiological, physico-chemical, etc.) as well as the impacts
of dismantling work.
In France, the lawprovides amechanism for ensuring that the operators of INBs have
sufficient assets to fund long-termexpenses associatedwith the dismantling of these
facilities and/or the management of used fuel and radioactive waste. In the United
States, the Decommissioning Funding Plan (DFP) is updated every three years.
Future expenses associated with the end-of-lifecycle operations of nuclear facilities
and with the remediation of regulated industrial facilities have been identified, and
specific provisions have been constituted by the legal entities which operate those
facilities. Rules related to provisions for end-of-lifecycle operations are described in
Section 20.2.
Notes to the consolidated financial statements
, note 13.
End-of-lifecycle
operations.
The present value of end-of-lifecycle provisions was 7.172 billion euros
at December 31, 2016; earmarked assets had a market value of 6.357 billion euros
at that same date, giving a coverage ratio of 89%.
Provisions for end-of-lifecycle expenditure are based on the group’s estimates of
future costs, which are by nature based on assumptions (see Section 20.2.
Notes to
the consolidated financial statements
, note 13.
End-of-lifecycle operations
). However,
it cannot be stated with certainty that the provisions currently set up will be in
line with the actual costs ultimately borne by the group, which could be higher
than initially estimated, due in particular to changing legislation and regulations
applicable to nuclear operations and environmental protection, to their interpretation
by the courts, and to developments in scientific and technical knowledge. These
costs also depend on regulatory decisions, in particular concerning dismantling
methods, and on the choice and cost of solutions for the final disposal of certain
types of radioactive waste (see Section 20.2.
Notes to the consolidated financial
statements
, Note 25.
End-of-lifecycle operations
). It is therefore possible that these
future obligations and potential expenses or potential additional future liability of a
nuclear or environmental nature that the group may later have to bear could have
a significant negative impact on its financial position.
The main disruptive risks which could have a significant impact on the cost of
end-of-lifecycle liabilities are:
p
differences between the initial estimated condition of legacy facilities and
waste and their actual condition, as observed during preliminary operational
investigations of the facilities;
p
changes in regulations or policies, particularly with respect to the target final
condition of the facilities and soils after dismantling or the requalification as waste
of radioactive materials currently still considered to be reusable;
p
the appreciable increase in radioactive waste packaging and disposal costs,
particularly for waste destined for geologic disposal (cost of the future Cigéo
geologic repository) and for waste for which no final disposal method has yet
been identified.
The group holds a portfolio of financial assets (equities, bonds, investment funds
and third-party receivables) to fund its future end-of-lifecycle obligations. Because
the coverage ratio for end-of-lifecycle liabilities was less than 100% at December 31,
2016, the group has adopted the assumption of an addition to the earmarked fund
of approximately 800 million euros in 2017 in order to return to a 100% coverage
ratio in 2017, in particular by means of the announced capital increase. Reaching
the 100% coverage ratio will also depend on market conditions, which cannot be
anticipated (discount rate and yield of earmarked funds recognized at the end
of 2017).
However, despite the group’s prudent management strategy for earmarked assets,
outside economic factors may have an unfavorable impact on the ratio of coverage
of end-of-lifecycle liabilities by earmarked assets, and thus the group’s financial
position. They include:
p
the unfavorable behavior of financial markets, introducing the risk of a lower yield
from the assets than in the assumptions; in particular, the value of the portfolio of
securities could decline and/or provide lower yields than is ultimately necessary
to cover expenses related to end-of-lifecycle obligations, due to the risk of volatility
inherent in capital markets;
2016 AREVA
REFERENCE DOCUMENT
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