Areva Slumps as Japan Accident Raises Doubts on Nuclear Future

Areva SA (CEI), the largest provider of nuclear equipment and services, fell the most in more than two years after an earthquake and explosions at Japanese atomic power plants raised concerns about expansion in the industry.

Investment certificates for the company fell as much as 10.4 percent, the biggest drop since November 2008. The non- voting shares were down 3.12 euros, or 9 percent, to 31.73 euros at 12:22 p.m. in Paris trading.

“The group could be severely impacted by a shift in momentum in the nuclear industry,” Alex Barnett, an analyst at Jefferies International Ltd., wrote in a research note today. “The severe nuclear incident in Japan has put a global nuclear renaissance into question.”

Lawmakers and industry executives in nations including India, the U.S. and the U.K. have called for reviews of atomic safety procedures as Japan deals with the worst nuclear accident since the 1986 Chernobyl disaster in Ukraine.

Areva is trying to complete the sale of two reactors plus nuclear fuel to India, and of two other reactors in China. The Paris-based company is providing equipment for four reactors being built in France, Finland and China, and is competing to sell as many as 10 reactors in the U.K., which plans to start replacing old plants in the next decade. The company is also bidding for nuclear business in countries including Italy.

India, which had been planning to increase its nuclear power generation, will reconsider its expansion in the wake of the Japanese accident, Nuclear Power Corp. of India said.

‘Big Dampener’

“This event may be a big dampener for our program,” Shreyans Kumar Jain, chairman of India’s state-run monopoly producer, said by phone from Mumbai yesterday.

In December Areva and NPCIL signed a preliminary agreement for the construction of two reactors, the first of a series of six at Jaitapur in western India.

“Areva could see some delays in orders” including Jaitapur, Louis Boujard, an analyst at Aurel-BGC in Paris, wrote in a note today.

China may also weigh the effects of the accident as it completes its energy plans, Xie Zhenhua, vice chairman of the National Development and Reform Commission, said in Beijing yesterday. China plans to triple its number of reactors, according to the World Nuclear Association.

The pace of the country’s nuclear development won’t be affected by events in Japan, China National Nuclear Corp. President Sun Qin said in an interview in Beijing today.

French Reactors

France, which has 58 reactors, more than any country other than the U.S., will continue to rely on nuclear power, Environment Minister Nathalie Kosciusko-Morizet told Europe 1 radio.

“We can’t switch to renewables overnight,” Kosciusko- Morizet said. “For the foreseeable future, we will need nuclear.” Electricite de France SA, the world’s biggest operator of nuclear reactors, is building its 59th reactor and plans a 60th in coming years.

The U.S., where Areva is building a nuclear-fuel recycling plant and has a joint venture to build reactor parts, should slow construction of new plants until officials can assess whether the Japan situation signals a need for more safety measures, said Senator Joseph Lieberman ofConnecticut, an independent who heads the Homeland Security Committee.

Asia Expansion

There are 442 reactors worldwide supplying about 15 percent of the world’s electricity, according to the London-based World Nuclear Association. There are plans to build more than 155 additional reactors, most of them in Asia. Sixty five reactors are currently under construction, the association said on its website.

The French government and state-owned Commissariat a l’Energie Atomique and Caisse des Depots et Consignations together own 85.7 percent of Areva. State-controlled EDF holds 2.2 percent.

Areva spokeswoman Patricia Marie declined to give a breakdown of sales in Japan. The company and Japanese partners including Mitsubishi Heavy Industries sell nuclear fuel to Japanese power companies.