Japan Steel Works is the sole supplier of reactor vessels (besides Russia’s atomic company which does not export as of now) and can currently produce five vessels per year. the company is currently booked up until 2016. This is problem for countries that want to expand their nuclear fleets. Obviously over time either Japan Steel Works will increase production or other companies will enter the market, and this appears to be happening (see article below). I would buy this company but the only thing holding me back is the fact they have a plastics injection molding business that is fairly large and I do not particularly like it. Anyway here is an article from the Business Standard about the reduction in nuclear component suppliers and how it will affect the build out of nuke plants.

In the 1980s, there were about 400 nuclear suppliers and 900 nuclear-certified companies in the US. These have shrunk to fewer than 80 suppliers and 200 certifications.

At present, countries investing in nuclear power programmes, except Russia, have to queue up at one foundry — Japan Steel Works (JSW) — to place orders for their main reactor pressure vessel and its allied equipment. The vessel encloses the radioactive uranium fuel and the nuclear reactions happen inside it.

Two leading private agencies that track developments in the civilian nuclear industry — the World Nuclear Association (WNA) and Bulletin of the Atomic Scientists (BAS) — have warned it will be difficult to meet targets set for plant construction, upwards of 200 by 2030, if JSW continues to produce just five vessels a year.

“The supply challenge is not confined to the heavy forgings for reactor pressure vessels, steam turbines and generators. It extends to most engineered components and with escalating steel and energy prices there is a flow-on to plant costs,” said Jeremy Gordon, Writer and Analyst, World Nuclear Association, when contacted by Business Standard.

The duo said that JSW order book was full till 2016, even before India has even planned its requirement. When contacted by Business Standard, a JSW spokesman, Kouji Tsutsumi, in an email response confirmed the backlog. “Yes. But we do not release specific figure.”

It is said that buyers are paying a premium of $100 million for booking a reactor from JSW, but it could not be confirmed independently. No data is available on Russia’s Rosatom and it did not respond to queries.

But, Tsutsumi said, “We are making capital investment to expand our capacity to 8.5 unit/year by the end of FY2010.” But he confirmed that the company has no plans to collaborate with forging units around the world or setup facilities elsewhere.

UK-based Sheffield Forgers and India’s Larsen and Toubro (L&T) are planning to enter this field. Sheffield Forgers estimated the cost of adding a production facility at 150 million pounds (Rs 1,258 crore), while a spokesman for L&T said the company was willing to invest up to Rs 1,700 crore adjacent to its existing facility at Hazira in Gujarat and that it could be operational in three years.

John Polomny
The Real Deal