European Commission anti-trust regulators ruled Tuesday that the French government's rescue plans for troubled nuclear engineering firm AREVA were in line with state aid rules.
AREVA, which is 87 percent owned by the French government, has been struggling to return to profitability after major losses that have widely been attributed to an orders slump following the March 2011 disaster at the Fukushima Daiichi generating station in Japan, cost overruns at the Olkiluoto Unit 3 construction project in Finland and the purchase of Canadian mining company Uramin, which was bought in 2007. AREVA later wrote off $2.5 billion on that purchase after discovering the uranium deposits that came with the purchase were of little value.
AREVA suffered losses of $5.07 billion in 2014 and about $2.11 billion in 2015. A year ago, Chief Executive Officer Philippe Knoche said that the half of the losses in 2015 were attributed to “additional provisions for Olkiluoto 3,” which is about nine years behind schedule and half to “reconstruction and impairment related to market conditions.”
In July 2015, AREVA and French utility EDF, also majority owned by the government, said they had signed agreements for EDF to take over a majority position in AREVA NP, the companies nuclear build division, which the companies agreeing to a price of $2.64 billion.
In the meantime, the French government has also been infusing AREVA with funds to stay afloat and maintain jobs. The plan approved by the European Commission involves a cash injection of $4.75 billion. Approval of that plan does not include regulatory permission for EDF to buy AREVA NP, however. That would require another regulatory review, the EU Commission said.