Business & Opportunities in the Chinese Nuclear Power Market Manchester China Forum November 2014

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Susan Atkinson
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1 Business & Opportunities in the Chinese Nuclear Power Market Manchester China Forum November 2014 Arnaud Lefevre T , C:

2 Who is in my league? Largest market in the world (26 NPP in construction) Largest new projects (6 NPP approved in 2014) Largest diversification of Technologies (PWR/ Candu/ Gas Cooled/ Sodium cooled) Largest investment in the closed fuel cycle Main business agreements with France, USA, Russia and Canada Overseas development in Pakistan, Argentina, Romania and UK Acquisition of mines in Namibia, Niger, Australia, Kazakstan, and Uzbekistan

3 The home team Large local supply chain (203 leading factories) 18 Engineering and Design Institutes Involvement in the overall design and manufacturing chain However 92% do not have ASME stamp

4 Do you fit in my market?!

5 Market versus Strategy 650 Billion CNY of new investments already approved (source CNNC) 85% localization rate for Gen II+, and 60% for Gen III Services or products? Supply to EPC, Research centers, Operators, and local manufacturers

6 The naughty boy: NNSA Originally a subsidiary of CNNC Low budget Highly political More regulations with HAF 604 vs. 601 New regulations for non safety products Control of import: protectionism

All your friends joined the party France USA Germany Russia Japan Italy UK South Korea Luxembourg 0% Czech 0% Belgium 0% Romania 0% France 29% India 0% Switzerland Ukraine 1% 1% Sweden 1% Canada 1%

7 All your friends joined the party France USA Germany Russia Japan Italy UK South Korea Luxembourg 0% Czech 0% Belgium 0% Romania 0% France 29% India 0% Switzerland Ukraine 1% 1% Sweden 1% Canada 1% Austria 1% Spain 2% South Korea 2% UK 3% Italy 4% Japan 5% Spain Austria Canada Sweden USA 19% Germany 16% Russia 15% Switzerland Ukraine India Belgium Romania Luxembourg Czech

8 The bride is waiting CNNC SUFA Technology Industry Co., Ltd. Valve Flowserve (USA) & Darda Dalian Danai Pumps Co., Ltd. Pump Flowserve (USA) & Darda Dalian Deep Blue Pump Co., Ltd. Pump Lewa & Moyno Pumps (USA) & Hermetic Pumpen Dalian Hermetic Pump Co., Ltd. Pump Hermetic Pumpen (GER) Dongfang Areva Nuclear Pump Co., Ltd. Pump Areva (FR) Jiangsu Biaoxin Jiubaotian Industrial Co., Ltd. Pipes and pipe fittings Kubota (JAP) Nanjing Sun Tola Ripple Tube Co., Ltd. Ripple tube expansion joint Technoflex &Tola (JAP) Shanghai Cable Factory Cable Fujikura (JAP) Shanghai Yidian Foxbolo Co., Ltd. Cabinets Foxboro (USA) Shanghai KSB Co., Ltd. Shanghai Electric Pump KSB (GER) Shenzhen Shiyingda Pipeline Co., Ltd. CNNC 23 Pipes and pipe fittings Spie Thermatome (FRA) Xi'an Nuclear Instrument Factory Sensor Honeywell (USA) Yantai Taihai Manoir Nuclear Equipment Co., Ltd. Pipes and pipe fittings Manoir Industries (FRA) Sulzer (Dalian) Pumps&Compressors Ltd. Pump Suzler (CH) HOPPECKE Power System (Wuhan) Co., Ltd. Battery Hoppecke (GER) Pall Filtration (Beijing) Co., Ltd. Pressure vessel Pall (USA) Shanghai Morimatsu Pressure Vessel Co., Ltd. Pressure Vessel and Heat exchanger Morimatsu (JAP) Dalian Hitachi Machinert Equipment Co., Ltd. Pressure vessel, Heat Exchanger and Gate Hitachi (JAP) Dalian Diguo Canned Motor Pump Co., Ltd. Pump Teikoku Electric (JAP)

Increase of localization 2006-2014 USA 7% Misc 8% Germany

9 Increase of localization USA 7% Misc 8% Germany 5% UK 6% Japan 1% Austria 1% Italy 1% Switzerland 1% China 47% Germany 8% France 2% UK 5% USA 3% Japan 3% France 23% China 79% Biddings Biddings since January 2013

10 A local team but cost are rising 38% of foreign companies listed by the NNSA are established in China ( source DPS) 35% of staff change jobs over 2-4 years (source: Hays) Chinese Employees Witness Average Salary Increase of 8.5% and 14.3% (source: Hewitt)

11 80% of all foreign firms in China were unionized by the end of Misc Allowance Rep 4% Casher Assistant Office 38% Transport None 58% Office Sales manager '0 '500 1'000 1'500 2'000 2'500 3'000 3'500 4'000

12 Communicate!! Your website in Chinese ( 33%) Technical documents in Chinese (18,8%) Newsletter or E- Magazine (16%) Member of a lobbying group or Chamber of Commerce (12,3%) Use of Wechat and local application (9,6%)

13 UK companies in this market

14 UK companies shown in a better way

15 Where is the business? Remodeling of the key players Create National Champions The education market is burgeoning The reprocessing business is not born yet ACP100 Supply Chain

16 Forget projects in decommissioning 821: Decommissioning of Military facility in Sichuan, not open to foreign companies 401: Decommissioning of HWR with a budget of IAEA And that is all!

Three Gorge group invests in the inland nuclear power plants with each traditional operator (Yangtze Power

17 Three adults and two toddlers Three traditional operators looking for foreign and domestic supply chain and experts. SNPTC and CPI merger will create new opportunities in the AP1000 and CAP1400 projects. Three Gorge group invests in the inland nuclear power plants with each traditional operator (Yangtze Power Co.) Huaneng 5% CNNC CGNPC Huaneng CPI CGNPC 36% CPI 19% CNNC 40%

18 CGN: I am the cash machine CGN has a long history with the Areva and EDF, but the French cannot cover all the needs of the holding. Ex: Ovivo (UK) supplies water treatment systems for Daya Bay. CGN needs support in the fuel cycle, such as design and manufacture of line of production of nuclear fuel. CGN wanted to export its ACPR1000 and remains constraint to Areva s IP of the M310 reactor: new solution with the Hualong. CGN wants to create a manufacturing for BORON and avoid the monopoly of US firms.

19 CNNC: I want your technology CNNC covers all the nuclear power market and its EPC, CNPE has good relation with the UK industry. The partnership with overseas nuclear groups is right now the strategy of CNNC. Before 2020, CNNC will create a strong supply chain that can be trusted overseas (Ex. IOM, the subsidiary of Invensys, is black listed from future domestic and international projects). CNNC needs support in operation management, maintenance, tooling and logistic for its subsidiary CNPO (AMRC could partner with CNPO).

20 SNPTC: would you be my friend? Westinghouse signed a strategic partnership with SNPTC. However, several US companies frustrate SNERDI and SNPEC (Ex. EMD for the RCP, Lockheed Martin for the DCS). SNPTC is the key player for the international market and needs to expand its partnership and need to increase the localization rate. SNPTC is looking to acquire mines of uranium, and needs to create an expert team for overseas prospection. SNPTC wants to launch its own small modular reactor (a first MOU was signed with Westinghouse). Note: Sheffield Forgemasters is a subcontractor of Curtiss- Wright Flow Control for the AP1000 in Sanmen NPP and will get orders for others reactors in China.

21 Hunt with your Chinese partner NDRC plan : SOE go global CAP1400 & Hualong China and Argentina example Decommissioning and waste management Acquisition of local manufacturer and service company

22 International prospection

23 Involve SOE in overseas projects

24 What can this forum do for you?

25 Budget for Market intelligence Build a consortium Examples: France China Electricity Partnership (PFCE) Spanish Nuclear Group for Cooperation (SNGC) Organization Canadian Nuclear Industry (OCI) China Nuclear Energy Association (CNEA)

user You meet your peers, partners, buyers and

26 Increase your brand awareness in China You can use an established network You can promote directly to the end user You meet your peers, partners, buyers and competitors in specific seminars You bring back opportunities on UK soil

27 Action without thinking is the cause of every failure Peter Drucker

New Trends in the Chinese Nuclear Market for 2011

New Trends in the Chinese Nuclear Market for 2011 1 Agenda Main Stakeholders Fukushima s influence Regulations and certifications The Chinese equipment manufacturers The local competition Market opportunities