Although the article below is 2 years old, once again it is, as or more, relevant today. Although it refers to a letter written under former French President Sarkozy’s administration, all signs indicate that President Hollande is continuing to push 87% State-owned Areva forward. Areva’s new contract for Hinkley Point, in the UK, is in conjunction with 84.48% French State owned EDF, as recommended in this letter. Hollande’s recent military intervention to protect Areva’s uranium mines in Niger, suggest that he is willing to do anything and everything necessary to protect Areva (and the nuclear energy dependent French economy). Areva is in serious financial difficulties, at least in part, due to apparent poor management in the construction of Finland’s new nuclear plant, Olkiluoto 3, which contributed to its construction not being according to specified safety standards. This has led to tripling of original cost, which most likely will be born by Areva, as well as a lawsuit by the Finnish power company. Areva’s new nuclear plant construction at Flamanville, France, has been characterized by apparent mismanagement, doubling of costs, serious and worrisome construction faults which are strikingly similar to the ones in Finland, and a worker death: http://www.dailymail.co.uk/news/article-2477202/Deaths-chilling-safety-lapses-lawsuits-huge-cost-runs-delays-Why-trust-French-Britains-nuclear-future.html These financial problems pre-dated Fukushima, which only exacerbated Areva’s financial woes.
“FRANCE PRESSURES AREVA ON POST-FUKUSHIMA PROFITS
A letter obtained by OWNI highlights the pressure the French government are putting on French nuclear reactor builder Areva to increase profits and satisfy shareholders demands, in the wake of massive losses and the Fukushima disaster.
BY CLAIRE BERTHELEMY ON NOVEMBER 17, 2011
OWNI has obtained a copy (available [at link] at the bottom of this article) of a four-page letter from the French Minister for the Economy, Finance and Industry, François Baroin, addressed to Jean-Cyril Spinetta, Chairman of the Supervisory Board of the French energy multinational and nuclear specialist Areva. The minister details the group’s disastrous financial results and sets out profitability targets that appear less than compatible with the lessons learned in the wake of the Fukushima disaster. With a negative cash flow following losses of over a billion euros for the years 2009 and 2010, Baroin presses for an acceleration ‘of efforts to redress the profitability’ of the company, demanding a double-digit operating margin.
Speed, efficiency and profitability
The detailed schedules are clear: priority is to be given to partnerships with EDF, the second largest French energy company, and finances to improve the welfare of shareholders. The objectives set by the state take the focus away from safety, which is no longer the primary requirement. For the Minister, it’s essential to keep in mind:
‘in the face of the major challenges that have arisen post-Fukushima, the need to restore the profitability of the group to enable it to finance its development projects.’
Specifically, the economic necessity is presented as ‘a high expectation of the state.’ The management board must be willing to implement the recommendations ‘with little delay.’ The fears of employees and their expectations of the strategic action plan, scheduled for mid-December, are understandable.
Baroin leaves no alternative but to make the group’s finances and strategic choices transparent:
‘Areva’s industrial strategy will aim to be decreased rapidly in a number of specific objectives, both quantitative and qualitative, for each operational unit.’
The watchword: speed. Areva is caught in a vice [vise], its only solution to obey ministerial orders.
‘Under these conditions […] it appears even more essential to accelerate efforts to restore profitability. These efforts seem all the more necessary given that Areva must re-gather some financial leeway in order to pursue a more balanced investment policy, which is just as critical to its development over the long term. The management board must strive to achieve the new fixed objectives for 2012 and a double-digit operating margin as quickly as possible, and certainly by 2015 at the latest. The group must also apply greater transparency to itself with respect to its shareholders.’
Baroin’s intentions are commendable. The French state, which owns more than 90% of Areva, is entitled to demand accountability. Meanwhile the other shareholders, smaller but nonetheless important, require results.” (some bold added by us for emphasis). Original licensed under Creative Commons Non-Commercial may use with Attribution; Share and share alike. Original and letter found here: http://owni.eu/2011/11/17/france-pressures-areva-on-post-fukishima-profits/
NB: The original says “vice” but we think they meant “vise”. We don’t think that Baroin’s actions were commendable – intention, perhaps, as said above. But, the road to hell is paved with good intentions.