Areva - Reference Document 2016

06

BUSINESS OVERVIEW

6.4 Operations

Market and competitive position Projects for the construction of Generation III reactors designed by AREVA are currently among themost advanced in the world. Its competitors areWestinghouse/ Toshiba, General Electric of the United States, Hitachi of Japan, Mitsubishi of Japan, FAAE of Russia, AECL of Canada, KHNP of South Korea and Rosatom of Russia. Despite a slowdown due to the Fukushima accident, reactor construction is still a market with substantial growth prospects (see Section 6.1.2 for a discussion of nuclear power markets). Outlook and development goals In addition to these activities, and with the objective of always offering high-quality services and assistance, the entity set up a program to optimize and improve the EPR reactor’s competitiveness. This program, established jointly by AREVA and EDF and endowed with shared resources, illustrates the Large Projects Business Unit’s commitment to bringing together under a single leadership all optimization activities undertaken by the two groups since 2008 to harvest operating experience and evolve the concept to reduce costs and secure project execution. p large forgings or castings and machined parts used in the manufacturing of heavy components for the nuclear steamsupply systemand in process industries such as petrochemicals; p heavy components: reactor vessels, vessel heads and internals, steamgenerators, pressurizers, primary system legs and support elements (1) , which are the main components required to manufacture nuclear steam supply systems; p mobile components: reactor coolant pump sets (pump, motor and sealing system) for the primary cooling system and control rod drive mechanisms that regulate the functioning of the reactor core. The “monitoring/diagnostic systems” product line has been assigned to the Installed Base Business Unit as from February 1, 2016. All of the other product lines contributing to instrumentation and control operations were combined in the Instrumentation and Control Business Unit as from July 1, 2016. p In 2016, anomalies were discovered in the manufacturing and inspection of forgings at the Creusot plant, which led to the verification of all manufacturing files produced at that site (more than 6,000 files for nuclear components). This mobilized considerable resources, including close to 150 people and the digitization of approximately 2.5 pages of documentation. These verifications and the processing of any new anomalies that may arise will continue in 2017. As soon as the first anomalies were discovered, the Creusot site strengthened the inspection and traceability of manufacturing in progress. The deployment of a quality improvement plan, especially quality culture improvement, continues. On December 19, 2016, AREVA NP met a new and important milestone by presenting the work completed and the results obtained in the different areas of this program to EDF. Operations and highlights 6.4.2.1.4. Components Businesses The Components Business Unit mainly designs and manufactures:

p The discovery of high concentrations of carbon on the channel heads of steam generators in EDF’s fleet also gave rise to a large program of inspections, tests and analyses to demonstrate the suitability for service of those components and to recommend strengthenedmanufacturing processes to ASN guaranteeing that these phenomena are under control. The channel heads concerned are mainly subcontracted parts and are not forged at le Creusot. The analyses provided in 2016 enabled the restart of the reactors in the EDF fleet. p The Saint-Marcel plant completed themanufacturing of six 900MWe replacement steam generators, but the quality deviations detected on a certain number of forgings used in these steam generators during the Creusot audit resulted in a significant postponement of the receipt of the Conformity Certificates. The Saint-Marcel plant launched the manufacturing of two new quadruplets (2) of 1,300 MWe replacement steam generators for EDF. p The Jeumont plant delivered the Flamanville 3 and Taishan 2 pressurized control rod drive mechanisms. All of the pads of the thermal barriers concerned by welding defects detected in 2015 have been repaired. Manufacturing of EDF 900 MWe and 1,300 MWe replacement mechanisms began in 2016. All of the procurement for the Fanchenggang 3&4 project (first CGN project of a Hualong pump) has begun. HEAVY EQUIPMENT The Creusot plant in France’s Saône-et-Loire Department has production capacity for forgings and machined parts. Its production plant consists mainly of machining facilities and a forge equipped with two presses (9,000 metric tons and 11,300 metric tons). The site is deploying a large-scale quality plan to deal with the anomalies identified during the audit, strengthen procedures and control of processes, and develop cooperative programs with the steelmaker Industeel (ArcelorMittal group). The foundry operations taken over from Industeel made it possible to cast and beginmachining five volutes for the reactor coolant pump sets. The Saint-Marcel plant near Chalon-sur-Saône in France’s Saône-et-Loire Department is dedicated to the manufacturing of heavy nuclear equipment. The main building covers a surface area of 39,000 m 2 and has a hoisting capacity of 1,000 metric tons. In 2016, a decision was made to invest in a pre-manufacturing workshop for primary legs to be used in the Hinkley Point EPR project. The plant has already begun industrial deployment of automated ultrasound inspection systems. MOBILE EQUIPMENT The Jeumont plant in northern France manufactures mobile equipment for the nuclear island. It specializes in the design and manufacturing of reactor coolant pump sets and control rod drive mechanisms, as well as the replacement parts for this equipment. The Jeumont plant has a reactor coolant pump set test center in Maubeuge. AREVA NP is also present in China through the AREVA Dongfang Joint Venture formed between AREVA NP and the DEC group to manufacture AREVA NP-designed reactor coolant pump sets for the Chinese market. Human and industrial resources

Market and competitive position

HEAVY EQUIPMENT AREVA NP is a leading supplier of heavy equipment leader in France. There are two suppliers of nuclear forgings: Creusot Forge and its leading competitor, the Japanese company Japan Steel Works (JSW), which together cover

(1) Equipment used to support and hold the main components of the primary cooling system. It also reduces the vibration to which the components are subjected during earthquarkes or accident conditions. (2) Set of four steam generators manufactured for a single reactor.

86

2016 AREVA REFERENCE DOCUMENT