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BUSINESS OVERVIEW
06
6.4 Operations
The molybdenum extracted after the irradiation of certain of these targets is
used for medical applications.
Relations with customers and suppliers
CUSTOMERS
Sales contracts are generally signed for multiple years and for one or more reactors
of the same utility. These contracts may include services such as shipping and
handling; technical support for fuel loading and unloading operations; fuel
inspection during scheduled outages; and even the underwater repair of defective
fuel rods or assemblies at the utility’s reactor site. Given their importance for the
customer’s operations, the contracts generally include warranties. These warranties
are provided for:
p
fuel integrity under all normal operating conditions and up to the announced
burnup (see
Glossary
);
p
satisfactory fuel performance in the reactor at nominal power;
p
compatibility with fuel already in the reactor, recognizing that the reactor core is
refueled in sections; and
p
fuel transportability and the ability to store the fuel safely after irradiation.
SUPPLIERS
After prices stabilized at the break-even point from 2014 to 2016, the markets for
zircon sand and zirconium (staple commodity for the extraction of zirconiummetal
at the Jarrie plant in France) appear to be moving slightly upward again in 2017 at
the instigation of the suppliers. Most of the zirconium supplies (approximately 75%)
were secured at the end of 2016 by the renewal of multi-year contracts.
For 2016, the price of nickel (a component of inconel alloys) trended strongly
upwards (+20% year on year), a sign of the recovery needed by the mining
companies to remain profitable. Despite this positive activity, which is expected to
last in 2017, prices nonetheless remain far from the levels achieved before 2014. The
price of carbon black remained depressed in 2016, due to the stagnation of the oil
market, to which it is pegged. Still, prices are up following changes in oil production
policy and agreements and OPEC’s return to its management of market rules.
The Fuel business’s supplies of other key components or materials, such as
magnesium, niobium or the components needed to manufacture fuel assemblies
and rod cluster control assemblies, are secured through yearly and multi-year
contracts for spacer grid cutting, SIC rods (silver-indium-cadmium) and stainless
steel tubing.
Electricity prices were brought under control in 2015 through a five-year group
agreement; 2016 rates were direct beneficiaries. Industrial gas prices (nitrogen, etc.)
were set inmulti-year group agreements. Argon prices and requirements have been
hedged. For helium, prices and supplies were secured in 2016 through a group
contract valid until 2020.
Subcontracting expense for spacer grid cutting increased in 2016 and this is
expected to continue in 2017, although prices for rod cluster control assemblies
remained low.
Market and competitive position
The Fuel business’s target market is that of fuel assemblies for light water reactors
(LWR). These reactors represent most of the world’s operating reactors and are
divided into two groups: pressurizedwater reactors (PWR) and boilingwater reactors
(BWR).
Approximately 74% of the requirements for light water reactors (excluding VVERs)
are supplied by AREVA, Toshiba-Westinghouse
(1)
and Global Nuclear Fuel (GNF)
(2)
.
As of the end of 2016, AREVA had supplied a cumulative total of more than
229,000 assemblies.
The Fuel Business Unit is upholding its position as a key player in Europe despite
the closure of the German reactors, most of which it served, and it is the leading
challenger in the US market. It is also a long-standing technology partner of key
nuclear companies in China. It should be noted that AREVA does not serve the
VVER fuel segment, for which TVEL remains the majority supplier.
MARKET SHARE OF LIGHT WATER REACTOR FUEL SUPPLIERS,
EXCLUDING VVER REACTORS, IN 2016
10%
GNF
14%
CNNC
35%
Westinghouse-
Toshiba
11%
Others
30%
AREVA
Source: NAC (Fuel Trac, October 2016 edition); average data for 2016 +/-1 year, based on the fresh fuel loaded
in the reactors each year.
Considering that a number of the world’s power plants were taken offline or
shut down (in Japan, Germany and the United States), and despite the growth of
nuclear power in China, the fuel market remained flat at approximately 6,700metric
tons of heavy metal (uranium or plutonium contained in the fuel assemblies) and
approximately 5,900 metric tons excluding the VVERs. There will be no noticeable
increase in fuel demand until a sufficient number of new power plants have been
commissioned.
Outlook and development goals
Fuel reliability remains the principal objective of the Fuel business. Beyond this
major requirement, the Fuel business is pursuing efforts to continually improve its
operating performance, whether in design and fabrication or in terms of nuclear
safety, industrial safety and environmental impacts, with excellence as its goal.
In keeping with its strong technology orientation, innovation is key to the Fuel
business’s approach to development. Thus, the marketing of Atrium™11, a new
generation of BWR fuel, continued in 2016. The same was true for Gaia PWR fuel,
both in Europe and in the United States. In addition, the offering of advanced codes
and methods used to maximum product performance was strengthened with their
review or licensing by the US Nuclear Regulatory Commission (NRC).
In China, AREVA is building on more than 20 years of cooperation to pursue its
development, directly or through joint ventures. Development projects were actively
pursued with Chinese players in 2016.
(1) Toshiba-Westinghouse, including NFI and the share of fuel subcontracted to Enusa in France.
(2) GNF including GNF-A (USA), GNF-J (Japan) and the share of fuel subcontracted to Genusa in Europe.
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2016 AREVA
REFERENCE DOCUMENT