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 But even with a painful overhaul and lean years ahead for the
nuclear sector, the fuel which after World War Two powered France's
rise to the Group of Seven nations remains the bedrock of its energy
independence and is so strategically vital that Paris will not let
Areva fail.
That is the premise underpinning a new industrial strategy due to be
announced by Areva and domestic utility EDF in coming months, while
President Francois Hollande is softening his resolve to reduce the
share of nuclear in France's electricity mix.
"Neither the government nor EDF can afford to let Areva die," said
former Areva executive Bertrand Barre, who noted that U.S. nuclear
giant Westinghouse suffered a 30-year order drought but survived -
albeit as part of Japan's Toshiba.
Areva's record 4.83 billion euro 2014 loss underlined the troubles
of a group which since its 2001 creation never managed to become a
world leader in nuclear newbuild.
Over the last few years a series of shockwaves have jolted the case
for nuclear: the 2011 Fukushima disaster; Germany's exit from
nuclear; rising renewable energy output; and the U.S. shale gas
revolution.
Already weakened by billions of euros lost on a fixed-price, turnkey
reactor project in Finland and an African uranium mine, Areva had
limited reserves to ride out the storm.
Hollande has charged Areva's new management team, led by Philippe
Varin, to work with EDF to come up with a new industrial and
financial strategy by end July.
Details are scarce so far, but industry sources agree that one
likely outcome is a deeper involvement of EDF, possibly a capital
stake, in Areva's reactor business and a possible sale of part of
its uranium mines to Chinese investors.
Economy Minister Emmanuel Macron told Reuters on Monday the two
firms could forge an industrial alliance and that EDF may consider a
capital investment in Areva's reactor business.
ROYAL "TURNAROUND"
At the same time, there has been a toning down of Hollande's
campaign promise to cut the share of nuclear power in France's
electricity generation from 75 percent to 50 percent by 2025.
"We never said we wanted to exit nuclear energy altogether. We want
to exit the previous all-nuclear policy," Energy Minister Segolene
Royal said in January.
Despite repeated questions, including from Reuters, Royal has
refused to commit to Hollande's 2025 target, made during his
election campaign, and has come out in support of building new
nuclear plants to replace older ones, the first time for a member of
this government.
It remains to be seen whether the target will survive Royal's energy
transition bill, which is currently going through parliament, but
analysts notice a subtle shift.
Montpellier University professor Jacques Percebois said France
realizes that if it wants to sell reactors abroad, it needs to be
careful about how it winds down nuclear at home.
"That is what is behind the turnaround that we are seeing now -
including from Segolene Royal," he said.
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That turnaround would come at a political cost to Hollande, whom
ecologists will accuse of breaking his promises. But with the
Ukraine crisis pushing security of supply to the fore, France -
which gets just 15 percent of its gas from Russia - suddenly feels
quite comfortable about nuclear.
Even if it were to reach its 2025 target, France is so deep into
nuclear that it is unlikely to want to spend much on German wind
turbines or Chinese solar panels and will focus on saving the
220,000 jobs in its nuclear industry.
Half of EDF's 58 reactors will reach their designed age limit of 40
years in the 2020s and the utility has estimated it will cost about
300 billion euros to modernize its fleet and replace it with new
reactors from 2030 onwards.
AREVA'S FUTURE
This is a potential windfall for Areva, which will work on extending
the lifespan of EDF's nuclear fleet while it waits for France to
start building new reactors again.
When it finishes the sole reactor it is building in France, Areva is
expected to get a significant part of EDF's 55 billion euro budget
to extend the lifespan of its reactors.
It can also make money from countries getting out of nuclear
altogether.
In Europe, where dozens of reactors will be dismantled in Germany,
Britain, Belgium and other countries in the next decade, Areva is a
top player in nuclear decommissioning, which already generates 500
million of its 8.3 billion euro revenue.
"Areva is well placed, as it is one of the few players with
experience in decommissioning various types of nuclear
installations, including reactors," an Areva spokeswoman said.
The company has built nearly 100 reactors around the world, in
France, Belgium, Germany, Switzerland, Spain and China and is
servicing more than 250 of the 440 operating reactors worldwide.
More than half of these reactors are over 30 years old and 73 are
more than 40 years old, IAEA data show.
"It's a future engine of growth, even if it's not revving up yet"
said Jean-Marie Chevalier, a energy economics professor at Dauphine
University in Paris.
(Editing by Mark John and Anna Willard)
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