lundi 16 mars 2015

Today's article will deal with Areva's present crisis although the company is a world champion.
Here are the views of Anne Lauvergeon, former CEO of Areva:

Anne Lauvergeon and Areva's present crisis

Anne Lauvergeon, about Areva’s crisis: “I have got my share of responsibility”

Les Échos

After Areva’s sky-rocketing losses, Anne Lauvergeon criticizes some kind of “untruth”. She highlights the State’s obligations, then Fukushima consequences and unveils details about the mining division.

Last year, Areva recorded nearly a €5 billion loss. In what way are you responsible of this?
Four years ago, I left Areva after two mandates. As everyone, I was surprised and shocked, mainly because all financial analysts following Areva were recommending it as an investment, before November 2014 profit warning. Having spent ten years at the head of a group, I have compulsorily a share of responsibility and I am still linked to this company and to its staff. But I can’t bear anymore the kind of untruth, which are leaking here and there.

Areva : History

Nevertheless, Areva’s history is the same as yours?
In 2001, Areva was registered, following the common political expectations of a right-wing president and a left-wing government, including environmentalists. The public authorities were aware that it was high time to stop the dissentions between Cogema and Framatome and that it was time to integrate these companies. This model has been deemed relevant, as Rosatom, in Russia, has subscribed to the same strategy. The president and the government agreed on the fact that a €3 billion increase in capital was necessary to redeploy Areva’s industrial capabilities, which dated back from the seventies. But I regret that the increase in capital has been postponed many times. Only in 2010 the group was able to rise €910 million. It should have been enough. But there were two upheavals. First an energy crisis happened in Europe, whose consequences are as follows: Alstom was compelled to sell its energy division to General Electric, GDF Suez recorded some €15 billion depreciations in 2013 and the German operators were doing badly. Then Fukushima changed the nuclear landscape.

But Fukushima did not weaken all the nuclear operators to such this extent…
The other operators of this field are either conglomerates working in many fields like General Electric, Hitachi or Mitsubishi, or companies associated with a central state, like in China or in Russia. In the view to reduce Areva’s sensitivity in case of a nuclear accident, we diversified its activities. But the State requested to sell a third of our turnover by transferring Areva T&D in 2010 (activity of power distribution). Refocusing Areva on nuclear was a political decision.

Thus, the blame is on the State acting as a shareholder?
The State played its part well in the Supervisory Board I knew. Nevertheless, the State took time to award Areva the necessary means to face international competition.

The Financial Authority has criticized the conditions of the Finland EPR, OL3. And all major projects come from….
The spokesman criticized many points! The Finland EPR will cost three times its initial price. Like this one built by EDF in Flamanville. Construction costs have increased everywhere in the world, because of the rise of steel and concrete price. Many major and complex projects costs have soared sharply, for instance in aeronautics with the A380 or the B777-X, as well as have done the major architectural projects: The Paris Philharmonie budget has tripled. In Finland, we have sent our best elements, like Philippe Knoche, who has been responsible for the construction. We have got a client who has refused any “change order”. An arbitration case is pending.

But the EPR is considered as your creation?
The EPR was born in 1991, ten years before my arrival (at the head of Areva), coming from a German-French political and industrial will, involving Framatome and Siemens, then the power operators and the safety agencies. The European customers wanted this huge third generation reactor. I arrived in a company where the EPR was already designed.  Then, the Atmea reactor is my creation: that’s a 1,000 Megawatt reactor, designed jointly with Mitsubishi. In 2012, Turkey bought four reactors, such heralding the first significant order registered after Fukushima.
A preliminary investigation has been launched about Uramin’s acquisition conditions. Do you acknowledge a kind of strategic mistake?
In 2007, we owned several mines in Canada close to their end of life, then there were some geopolitical risks in Niger and finally, we faced a buoyant demand from our customers, mainly from China. We implemented an organic growth in Kazakhstan and Mongolia. But it was not enough. Everybody buying raw materials in the first semester of 2007 paid more than in 2009: nobody forecast the subprime crisis. After Fukushima, 10% of the world demand disappeared, which justified the mothballing of some mining projects and as such, the recording of some depreciations – I would have done the same. There is uranium in Uramin. Even there are 9,000 tons more than previously expected. Look at Areva’s reference documents published these last three years: you will find the amounts of the first two deposits. About the South African deposit: it was sold for the pathetic amount of USD5 million to Australia’s Peninsula in late 2013, who has found since then 25,000 tons of uranium, featuring operating costs lower than the present spot market price.
Shall Areva be divided?
Aggregating, dividing then aggregating: business bankers are fond of this. But today, Framatome would be dead if the company were left alone: Framatome did not get the means to finance alone the opening costs of the third generation, and facing world competition, it has been able to take profit of the profitability given by Cogema in the fuel cycle. The best solution would be a joint work between EDF, GDF Suez and Areva. Today, all conditions seem advocating this solution.
The nuclear “business model” is not yet dead, so?
No, the nuclear sector is not yet dead. This topic will be discussed during the COP 21 conference in Paris. I used to say that nuclear power is not the ultimate solution, but there is no solution without the nuclear sector. Moreover, let’s stop the “French bashing”. We can scratch the sores until the end of times, but Areva is still a world champion. But now the new nuclear sector mainly needs state financing. Our main competitors have got such financing, on the contrary of Areva. That’s a major challenge for France and all infrastructure industries. 
Véronique Le Billon, Les Echos
David Barroux, Les Echos

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