With losses of €4.8 billion (US$5.4 billion) this year and €500 billion last, and sales expected to drop 5% in 2015, French nuclear giant Areva “has ten tons of financial debt on a five-ton truck,” blogger Dan Yurman reports on The Energy Collective this week.
“After several years of smacking the bumper with a 2 x 4 to keep half of the IOUs in the air, the truck has hit a red light and all the weight of that debt has come down in one place and at one time,” he writes. “Essentially, the firm is underwater, and needs a huge infusion of capital from the French government.”
To survive, “we have to cut our costs and master difficult projects,” admits Areva’s new CEO, Phillip Knoche. Yurman says the company will freeze wages and may lay off “a substantial number of workers,” but will not enter into a merger with nuclear generation company Électricité de France.
“Many of Areva’s debt issues result from its own mistakes,” Yurman writes, including the costly purchase of an African uranium mine as well as a flagship, third-generation nuclear reactor project in Olkiluoto, Finland that “is nearly a decade behind schedule and is responsible for €720 million in charges this year alone for schedule delays and cost overruns.”