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Reprocessing Spent Nuclear Fuel in Indonesia: An Overview of Areva’s Opportunity for FDI

Reprocessing Spent Nuclear Fuel in Indonesia: An Overview of Areva’s Opportunity for FDI. Project Brief & Final Decision. Proposed Project Build and operate a 200 tonne uranium nuclear fuel reprocessing and treatment facility in Indonesia by 2027 Final Decision

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Reprocessing Spent Nuclear Fuel in Indonesia: An Overview of Areva’s Opportunity for FDI

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  1. Reprocessing Spent Nuclear Fuel in Indonesia: An Overview of Areva’s Opportunity for FDI

  2. Project Brief & Final Decision Proposed Project • Build and operate a 200 tonne uranium nuclear fuel reprocessing and treatment facility in Indonesia by 2027 Final Decision • Project is infeasible due to inordinately high risks and uncertain returns Relevant Stakeholders • PT PLN: Indonesian state-owned electric utility • KEPCO: Korean Electric Power Company Investment Criteria • Investment Rationale • Proposed scope, structure, and costs • Investment Risks

  3. Commercial Nuclear Power Value Chain Front End: Mining, conversion, and enrichment AREVA and KEPCO have a joint venture to develop a uranium mine in Niger. KEPCO will use this mine to supply the nuclear power stations it has built around the world. Reactors & Services: Construction and operation of plants KEPCO entered into a memorandum of understanding to build turnkey nuclear power plants for PLN, the state-owned electric utility which will transmit and distribute the electricity generated by the power plant. Back End: Fuel recycling, reprocessing, and treatment Reprocessing and treatment creates new energy resources from 96% of the content of spent nuclear fuel and stores the remaining 4% (final waste). Areva is the world leader in nuclear fuel recycling; KEPCO does not offer this service line.

  4. Investment Rationale • Indonesian growth potential and current macroeconomic stability • Elevation to G-20 status in 2009 • Favorable FDI investment climate • Commitment to nuclear energy: 4 commercial nuclear power plants (first by 2017) • Good fit with Areva’s growth strategy to grow its Back-End Division Sources: CIA World Factbook, IMF, OECD

  5. Indonesia’s Energy Needs & Ambitions Energy Needs • >90% current energy needs primarily fulfilled by natural gas, oil, and coal • Electricity demand is expected to grow 6 - 7% annually • Renewable energy sources must account for 5% of supply by 2025 Nuclear History • Research reactors since 1957 • Member of the IAEA since 1957, signed non-proliferation treaty in 1970 • Passed the Nuclear Policy Act in 1997, establishing a framework for commercial nuclear operations • KEPCO to build 4 commercial reactors Sources: John Chipman, “Preventing Nuclear Dangers” and Indonesian Institute for Energy Economics, “Indonesian Energy Overview,” PowerPoint presentation, July 2007

  6. Project Scope, Structure & Costs • Project: Build 200 tonne uranium nuclear fuel processing facility • Investment vehicle: Joint Venture FDI • Domestic ownership of nuclear FDI must be ≥5% • Proposed joint venture partner: PLN • Primary customer: PLN • Estimated cost: US$5b to US$10b • Financing: Public-Private Partnership • Project start: 2022 • Project duration: 5 years • Operations start: 2027 • Projected annual revenue: $250 m • Projected annual net income: $35 m

  7. Investment Risks

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