The Bottom Line.
In this China Business Insight, Eleonore William writes on the China National Nuclear Corporation (CNNC) – i.e. the entity in charge of overseeing and implementing all aspects of China’s civil and military nuclear programmes. Is the nuclear market dynamic enough for China? How is CNNC developing and with what ambitions? This insight gives you the big picture.
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CNNC: The ambition of nuclear power “Made in China”.
[By Eléonore William]
China National Nuclear Corporation (CNNC), is the largest state-owned company in the nuclear industry in China. Established in 1988 by the Ministry of Nuclear Industry, this group currently oversees all aspects of China’s civil and military nuclear programmes.
It supervises the various stages of the nuclear fuel cycle, it is responsible for nuclear power and weapons production, and it oversees waste disposal facilities in China – which thus gives it a significant scientific research and engineering capacity.
In October 2018, the group overall operated eleven nuclear power plants in China, producing 9.05 Gigawatts of electricity (GWe), or twenty percent of the national production.
Nuclear energy: one of China’s strategic objectives.
China has included in its 13th Five-Year Plan for the Energy Industry, launched in 2016, the ambition to “promote the development of nuclear energy in a safe and efficient manner”.
The country plans to increase the country’s installed capacity to 58 million GWe by 2020, which will require an estimated investment of nearly EUR 71 billion. To achieve this ambition and strengthen the efficiency of the civil nuclear sector – understand, many power plant projects suffering from delays and soaring costs – China has implemented an alliance strategy between state-owned companies in the sector in recent years.
CNNC model: Vertical integration and diversification.
CNNC has thus developed a strategy of vertical integration and control of the entire value chain, from uranium exploration to energy distribution. The group has also broadened its scope of action as it has merged with other public companies and now owns around a hundred subsidiaries and research institutes.
CNNC explores and exploits energy resources and develops associated technologies in nuclear energy as well as in renewable energies such as wind power and photovoltaics.
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In addition to designing and managing its own nuclear reactors, the group also designs and builds oil and petrochemical equipment. Finally, it provides radioactive waste management and decommissioning services for nuclear installations.
In a context of very strong national competition, CNNC wishes to position itself as a credible and structured player. It merged in February 2018 with China Nuclear Engineering & Construction (CNEC), the national nuclear power plant manufacturer. In doing so, CNCC became a giant in the civil nuclear sector, with 150,000 employees, weighing more than USD 100 billion on the stock market.
A Chinese nuclear dynamic?
Other Chinese operators have embarked on the technology race, starting with China General Nuclear Power (CGN) which was until then the country’s main power plant developer.
This emulation between Chinese operators was reflected in the commissioning in 2018, in less than three months, of four so-called third generation reactors. The first of which is an EPR built by CGN, in partnership with Electricité de France in Taishan, followed one day later by the AP1000 American technology (Westinghouse) for CNNC, at the Sanmen site.
CNNC building on partnerships.
For its international development and in order to compete on the global civil nuclear scene, CNNC has established partnerships with more than a hundred companies in more than forty countries in its various fields of activity since the 1990s.
In France, the group has for instance developed partnerships with Framatome and Orano (formerly Areva) for the reprocessing of nuclear power plant fuels. A recycling plant project with Orano, with a capacity of eight hundred tonnes for EUR 12 billion, was announced in June 2018.
CNNC has otherwise been expanding on international nuclear energy markets since 2013, with the export of two reactors to Pakistan for EUR 9.6 billion. Since then, the group has sold seven power plants and eight reactors to seven countries and is in discussions on more than forty projects.
CNNC relies in particular on the China Zhongyuan Engineering Corporation (CZEC), which presents itself as “the only exporter of the nuclear industrial chain in China” and has opened offices in Iran, Saudi Arabia, Egypt and Algeria, demonstrating its intentions to export nuclear products along the Belt and Road Initiative (BRI) to the Middle East, North Africa and Latin America region, while CGN focuses on the European market.
CNNC is also innovating with a third generation reactor model, the Hualong One, which promises longevity, efficiency and safety and aims to compete with the French EPR.
Fourteen of these reactors are under construction, two of which are being installed in Karachi. Nicknamed as the “business card of China”, these advanced and innovative reactors are intended to be a “flagship brand” of Chinese industry on the international scene and along the Belt and Road Initiative. It provides a framework for facilitating China’s access to key decision-makers and the signing of memoranda of understanding, thus opening the door to negotiations on other Belt and Road-labelled projects.
This insight was originally published in French in « La Lettre de la Chine Hors Les Murs » n 26, 21/11/2018 by the French External Trade Advisors (Comite National des Conseillers du Commerce Exterieur).
Eleonore William | China Expert Contributor
Expert in China – France economic relations, Eleonore William is Head of Communication and Studies at the France China Committee, a major actor in the Franco-Chinese economic relation, gathering French enterprises active with China in the long-term.
Former Manager of the technical cooperation with China and with Sub-saharan Africa for the French ministries of Economy and Finance, Eleonore William has a 15 years experience as a specialist in business development, institutional and international relations and as an observer and analyst of China political and economic evolutions.
Disclaimer: The views expressed are those of their author(s) only and do not reflect those of The Asia-Pacific Circle or of its editors unless otherwise stated.
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