Three of Japan's most prominent industrial firms, Hitachi Ltd., Toshiba Corporation and Mitsubishi Heavy Industries Ltd., are discussing a merger of their domestic nuclear fuel operations as a method to consolidate their losses sustained and expected as a result of the Fukushima Daiichi power plant disaster of March 2011.
With only three of 42 Japanese reactors back on line in the five plus years following the disaster, which prompted a nationwide moratorium and an upgrade in safety standards, sources told Reuters that the companies could go so far as merging their nuclear power operations, as well, the news service reported.
The nuclear power industry in Japan faces popular and political opposition, as well as prohibitively expensive safety upgrades that challenge a plant's ability to turn a profit if they can even make it through the regulatory hurdles required for a restart.
The first step towards a merger is reportedly to be the formation of a holding company that would acquire the nuclear fuel assets, but not merge them together. In addition, one executive who declined to be named, as he was involved in the discussions, said that the deal would depend on General Electric, which owns controlling shares of Global Nuclear Fuel, which is jointly owned by Toshiba and Hitachi.
Global Nuclear Fuel is fuel supplier for boiling water reactor (BWR). Toshiba, however, also owns U.S. based Westinghouse Electric, which is a supplier of fuel for pressurized water reactors (PWR), a market that GE is said to find enticing, especially with the growing market for PWR fuel, which will be needed by more than 80 percent of the 66 nuclear reactors currently under construction.
Nuclear fuel operations are a substantial portion of Toshiba's nuclear business, generating almost a fifth (17 percent) of its revenue. Hitachi, meanwhile, has ties to General Electric similar to the alliance Mitsubishi Heavy Industries has with AREVA SA of France.