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BUSINESS OVERVIEW
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6.4 Operations
Suppliers
The risk of supply interruptions for the chemical reagents needed for its production
operations is minimized by contracting with suppliers based in Europe and in the
rest of the world.
Market and competitive position
Conversion market
Annual world conversion requirements were estimated at approximately
62,000 metric tons of natural UF
6
in 2016 (
source: WNA 2016
), including
18,000 metric tons in Western and Central Europe (Euratom area). China’s
conversion requirements are rising quickly, largely contributing to the growth in
global demand for these services. According to the World Nuclear Association
(WNA), Chinese demand for UF
6
will be about 11,400 metric tons in 2020 (
source:
WNA 2015 report, reference scenario
).
The conversion market has seen a recent drop due to excess capacity which
should last for several more years in view of the persistence of secondary materials
and utility inventories, in particular those of the Japanese utilities affected by the
outage of a significant share of their nuclear fleet. Nevertheless, the gap between
spot indicators and long-term indicators reflects the perception of the conversion
market’s long-term fragility related to the need to replace aging production plants.
CONVERSION PRICES (LONG-TERM AND SPOT)
USD / kgU of UF
6
0
2
6
4
8
10
12
14
16
18
Jan. 05
Jan. 06
Jan. 07
Jan. 08
Jan. 09
Jan. 10
Jan. 11
Jan. 12
Jan. 14
Jan. 16
Dec. 16
Jan. 15
Jan. 13
CV EU LT
CV NA Spot
CV EU Spot
CV NA LT
Source: UxC.
Competitive position in conversion
With nominal production capacity of 14,000metric tons of UF
6
in 2016, NewAREVA
Holding is a major global player in conversion services. Its main competitors are
TVEL in Russia, Converdyn in the United States and Cameco in Canada. The State-
owned China National Nuclear Corporation (CNNC) still has limited capacity, but
strong growth potential for the future.
The current production capacities of AREVA’s competitors are thus estimated as
follows according to UxC:
p
11,500 metric tons for TVEL;
p
15,000 metric tons for Converdyn;
p
12,500 metric tons for Cameco; and
p
5,000 metric tons for CNNC.
It should be noted, however, that most of the plants do not operate at their nominal
capacity. The plants in the Western countries have operated at an average of
60% of their nominal capacity over the past ten years, mainly due to outages for
maintenance and safety upgrades. AREVA’s production was close to 90% of its
nominal capacity during that same period.
Enrichment market
Annual world enrichment requirements were estimated at 48.9million SWU in 2016,
including 14.2million SWU inWestern Europe (
source: WNA 2016
). Market volume
will grow slowly, pushed by Chinese and South Korean demand.
The market is traditionally regulated by geopolitical considerations, but they have
less and less impact. In Europe, the Euratom Supply Agency monitors supplies of
uranium and enrichment services. Deriving from the Euratom Treaty, its missions
cover the security of supply of nuclear fuel materials in particular. In the United
States, since the US Congress amended the Suspension Agreement in 2008, the
Russian supplier Rosatom was allowed to supply up to 20% of the US utilities’
requirements starting in 2014 and signed several contracts with these customers.
Rosatom’s competitors are unable to access the uranium enrichment market in
Russia at this time.
COMPETITIVE POSITION IN ENRICHMENT
Operator
Estimated installed capacity
Process
Georges Besse II (France)
7.5 million SWU/year Centrifugation
Rosatom (Russia)
26.0 million SWU/year Centrifugation
Urenco (UK, Germany,
Netherlands, USA)
18.9 million SWU/year Centrifugation
CNNC (China)
5.6 million SWU/year Centrifugation
Other (Japan, Brazil)
0.6 million SWU/year Centrifugation
TOTAL (2016)
58.6 MILLION SWU/YEAR
Source: AREVA estimates based on available data.
AREVA, Urenco, TVEL, CNNC andCentrus are the leading players in the enrichment
market.
The Georges Besse II plant reached its nominal capacity of 7.5 million SWU per
year in 2016.
TVEL and Urenco recently announced that they have initiated advanced
assessments on the reduction of their capacity in order to adapt to the volumes of
the US and European markets.
In the former countries of the USSR, for historical reasons, demand is chiefly met
by Rosatom, whose enrichment plants are split among four combines: Angarsk,
Zelenogorsk, Seversk and Novouralsk. All of these plants use centrifugation
technology.
72
2016 AREVA
REFERENCE DOCUMENT