Toshiba invests in uranium producer

Toshiba is to invest $100m in one of the world's largest producers of enriched uranium, as the leading participants in the nuclear industry race to secure their supply chain.

The Japanese group said it would take a stake in New York-listed USEC, which has annual revenues of about $2bn and supplies more than half of the US market with enriched uranium fuel.

The move highlights how the handful of companies that can make a nuclear reactor - including Toshiba of Japan, Areva of France and General Electric of the US - are scrambling to ease bottlenecks and control the complex nuclear supply chain.

A revival of interest in nuclear power prompted by climate change is straining an industry that suffered from several decades of low investment.

Toshiba is buying preference shares that would convert to about 15 per cent of USEC at the current share price.

Babcock & Wilcox, the energy contractor, will also invest $100m in USEC at the same time.

USEC is seeking to build a $3.5bn facility in the north-eastern state of Ohio that will use centrifuges to enrich uranium .

The move takes the Japanese company further into the "front-end" of the nuclear industry, which converts mined uranium into fuel rods that can be used in a reactor.

Toshiba has invested in uranium mines in Kazakhstan and Canada and has set up a uranium trading subsidiary in the UK.

"The nuclear renaissance is moving forwards and this investment will help power its growth by securing the supply of uranium fuel for existing and potential customers," said Yasuharu Igarashi, corporate senior vice-president of Toshiba.

Toshiba said that its customers for new nuclear plants are demanding a comprehensive supply chain - including delivery of the fuel.

While Areva has long provided such a service, Japanese contractors have not done so in the past.

As well as supplies of uranium fuel, the big nuclear companies are concerned about shortages of skilled workers and some core components, such as the large steel vessels at the heart of reactors.

Only a few foundries in the world are capable of making these vessels and nuclear contractors could lose orders if they cannot secure supplies.

In April, Toshiba set up a joint venture with domestic rival IHI that will manufacture casings and nozzles used in the steam turbines that are driven by nuclear reactors.

Other big nuclear companies have been signing similar deals worldwide.

Source: ft.com