* Japan nuclear industry hobbled by shutdowns after
* In talks to merge fuel ops as early as spring 2017 -source
* Merger could pave way to combine reactor businesses
(Adds industry executive comment on GE's influence)
By Makiko Yamazaki and Kentaro Hamada
TOKYO, Sept 29 Three Japanese conglomerates are
in talks to combine their loss-making domestic nuclear fuel
operations, people with direct knowledge of the matter said, as
the outlook for restarts of reactors following the Fukushima
nuclear crisis remains bleak.
Hitachi Ltd, Toshiba Corp and Mitsubishi
Heavy Industries Ltd aim to merge the operations as
early as spring 2017, one of the people said, declining to be
identified as the discussions were confidential.
The person added that the three companies may eventually
consider merging their nuclear reactor businesses, although
nothing specific has been discussed so far.
Only three of Japan's 42 reactors are currently operating
after they were idled in the wake of the 2011 earthquake and
tsunami that destroyed Tokyo Electric Power Co's
Fukushima Daiichi power station. Public opposition, safety and
other regulatory obstacles has made the outlook for further
restarts extremely unclear.
The move has also likely been encouraged by General
Electric's growing interest in the market for fuel for
pressurised water reactors (PWRs), said an executive at a
Japanese utility. GE has a controlling stake in a joint venture
with Hitachi and Toshiba called Global Nuclear Fuel, which
provides fuel for boiling water reactors (BWRs).
The traditional dividing line in the U.S. nuclear industry
with GE specialising in fuel for BWRs and Toshiba's Westinghouse
focusing on fuel for PWRs is no longer applicable, he said.
"The merger of Japan's nuclear fuel businesses will to a
large extent take its cues from GE," said the executive,
declining to be identified as he was not part of the
PWRs have been growing in popularity, particularly in
emerging economies like China. As of December 2015, PWRs
accounted for more than 80 percent of 66 nuclear reactors under
The three Japanese conglomerates are aiming to reach a
preliminary agreement by the end of the year, the person with
direct knowledge of the matter said.
The companies said they were considering options for their
domestic nuclear fuel businesses but no decisions had been made.
The conglomerates are likely to first form a joint holding
company for their fuel businesses before merging them into one
entity, the Nikkei business daily reported.
Industry sources said the government has been pushing the
firms to integrate their fuel businesses, raising the chances
that any merger plan will not run into any anti-trust issues.
Until the Fukushima disaster, the nuclear fuel business had
been a stable source of profits for the domestic nuclear power
Toshiba, which has overseas nuclear fuel operations through
its U.S. unit Westinghouse, forecasts that fuel will generate 17
percent of the estimated 870 billion yen ($8.56 billion) in
revenue from its nuclear power business for this financial year.
Hitachi has a global nuclear power alliance with General
Electric Co while Mitsubishi Heavy has one with France's
Hitachi's shares gained 2.4 percent and Mitsubishi Heavy
advanced 2.3 percent on Thursday. Toshiba's stock rose 0.2
percent while the broader market climbed 1.4 percent.
($1 = 101.6100 yen)
(Reporting by Makiko Yamazaki and Kentaro Hamada; Additional
reporting by Tim Kelly in Tokyo and Diptendu Lahiri in
Bengaluru; Editing by William Mallard and Edwina Gibbs)