China cautious but still committed to nuclear -CNNC

Tue Nov 13, 2012 1:31am EST

* Pace of project approvals to be slower

* Public opinion, not technology, now the main hurdle

* Overseas uranium acquisitions still on agenda

By David Stanway

BEIJING, Nov 13 (Reuters) - The pace of nuclear project approvals will be slower in the next few years as China seeks to allay safety concerns in the wake of Japan's Fukushima crisis, but commitment to the sector remained undimmed, the head of the country's biggest nuclear firm said.

Sun Qin, the chairman of the state-owned China National Nuclear Corporation, said development was at an early stage and setbacks were unavoidable, but nuclear power remained an essential component of China's energy strategy and the industry needed to do more to persuade the public of its virtues.

"There will be problems here and problems there but finally the world will have to depend on nuclear energy -- it won't be today's nuclear energy, but something like fusion, but we first need to learn," he said on the sidelines of China's Communist Party Congress in Beijing, late on Monday.

It was not technology or finance now holding back the sector in China, but the need to gain public acceptance, he added.

Before Fukushima, many in the sector were expecting China to set a 2020 capacity target of around 80-90 gigawatts (GW), up from the current 12.57 GW. The new target has now been scaled back to 58 GW, but Sun said Beijing's determination to develop the sector remained undiminished.

"The pace of approvals will certainly be slower but the overall direction cannot be changed," he said.

China suspended new approvals in March 2011 after a tsunami devastated Japan's northeast coast and left the ageing Fukushima reactor complex on the brink of catastrophe. Sun said the process is now back to normal following the publication of new guidelines for the sector in late October.

The guidelines stipulated that only the highest "third-generation" reactor safety standards would be permitted, and until at least 2015, China would only allow reactor construction to go ahead on the coast.

Sun said the suspension of a number of planned projects in China's interior regions had nothing to do with technological deficiencies or safety risks, but was more because the country had "no experience" building such projects and had to make sure the public were on their side.

"Ordinary people need to accept -- we will probably build in inland regions in the thirteenth five-year plan period (2016-2020) but there is no specific time frame right now."

GLOBAL AMBITIONS

China's ambitions for the sector include the creation of its "own brand" of reactor that will allow companies like CNNC to compete for nuclear project contracts abroad. The company currently has just one overseas project in Pakistan, which uses relatively old "second-generation" technology.

Sun said any future overseas projects would use advanced "third-generation" reactor designs, but CNNC still had to make sure that the advanced technologies transferred from abroad were fully "localised" before it could bid overseas.

China is using the AP1000 reactor designs of the U.S.-based Westinghouse as the basis of its own brand of reactor following a 2007 technology transfer agreement.

The world's first AP1000 is expected to go into operation in Sanmen in the eastern coastal province of Zhejiang in 2013, but according to the conditions of the agreement, China can only build them at home.

CNNC's own third-generation reactor is likely to be commercially ready by 2014-15, Sun said. The design uses some of the "passive" safety features of the AP1000.

The company has also been trying to secure fuel supplies, buying stakes in foreign uranium mines in Niger, Kazakhstan and elsewhere. He said the current global environment would make it easier for CNNC to acquire overseas uranium.

Asked if CNNC would consider bidding for Westinghouse, now owned by Japan's Toshiba, Sun was diplomatic.

"If the U.S. government allows it, we are prepared to cooperate more with Westinghouse. We have already set up a joint venture. In fact, it doesn't matter whether we acquire Westinghouse or not -- strengthening cooperation is probably more realistic, more feasible."

CNNC is the parent company of the Hong Kong-listed uranium trader, CNNC International. Sun said CNNC was still making preparations to list the whole group, probably on the Shanghai stock exchange, but the schedule would be determined by state regulators.

"We are currently planning to list on A-share market but it hasn't been settled and there would be no obstacle to listing in Hong Kong as well," he said.

(Editing by xxxx)