Japan, India and non-proliferation commitments
India’s refusal to sign the nuclear non-proliferation treaty may delay—or even halt—the delivery of massive reactor pressure vessels from Japan Steel Works (JSW). New Delhi has plans to build 20 gigawatt electrical (GWe) of new nuclear reactors in the next 10 years. Two, and perhaps six, of those reactors will come from Areva, which wants to order parts for them from Japan. These “parts” aren’t just pumps and pipes—they are 400- to 600-tonne reactor pressure vessels that form the core of a potentially deal-breaking dispute. A civil nuclear agreement between the two countries is the key for India’s ambitions to build $150 billion worth of nuclear powered generation capacity.
However, before Japan permits JSW to supply reactor components to India, it is demanding that India should provide a guarantee that it will not conduct a nuclear test, or use its civilian nuclear reactors for military purposes. For its part, the Indian government sees having the option to test its nuclear arsenal as a deterrent to military threats from Pakistan, and as a means to remind China to take India’s stand seriously in border disputes and Asian security matters.
Japan has made it clear that it wants India to ratify the Comprehensive Test Ban Treaty. Japanese diplomats have emphasised that an Indian nuclear weapons test will not only end the supply of new reactor components, it could also trigger a recall of any parts and fuel that have already been shipped for use in new reactors.
India does not have the ability to make its own pressure vessels, and is at least five to 10 years away from being able to reliably manufacture them. A nuclear test could trigger draconian commercial consequences. Most significantly, India would lose access to global nuclear fuel markets that it restored in 2008 after a 30-year lockout.
Japan faces another problem—while it has domestic political reasons for pursuing a diplomatic initiative with India, it faces competition for India’s nuclear business from South Korea. The government in Seoul is ready to sell reactor components to India, regardless of whether or not India plans to test a nuclear device.
The wrench in the works
India’s immediate need for Japanese reactor pressure vessels comes from deal for two Areva 1600-megawatt (MW) reactors to be built in Jaitapur. In early January this year, Luc Oursel, a top Areva executive, told the Times of India that Japan’s demand for India to sign the test ban treaty is comparable to throwing a monkey wrench into the works.
Mr Oursel called for a “bilateral agreement” between India and Japan on the issue. He added that until such an agreement takes place, the Jaitapur project is not a done deal. Whether India actually signs the treaty (which is unlikely), or provides some other credible guarantee (which is more likely), does not matter to Areva as long as the issues can be put away. Weighing in on the balance is an agreement to build four more Areva EPRs, each worth about US$4 billion.
A secondary issue is that, similar to the Russians and American reactor vendors, Areva is unhappy with India’s domestic supplier liability law. Mr Oursel said that he wants to see adherence to international standards—a reference to an International Atomic Energy Agency convention on nuclear liability that has been signed by India, but not yet ratified by its fractious parliament.
Japan’s short-term competitive edge
Japan’s leading global role in the manufacture of reactor pressure vessels is temporary at best, despite a four-year backlog of orders. South Korea’s Doosan Heavy Industries is ramping up to manufacture these types of reactor components to supply them as part of a contract to build four 1400-MW reactors in the United Arab Emirates.
The Russians have long been capable of producing reactor pressure vessels. They will supply them for the 18 reactors they are planning to build for India. The first 12 will be 1000-MW VVER designs and the next six will be uprated to 1200-MW.
In the United Kingdom, Sheffield Forgemasters may get a government loan in 2011 that will support construction of a factory to make reactor pressure vessels for Westinghouse AP1000 reactors. Westinghouse is a potential investor in the new factory if the government provides the loan. In the future, Westinghouse could conceivably get the pressure vessels it needs for Indian plants from the United Kingdom.
Among the major commercial nuclear powers, only the United States lacks the capability and/or plans to forge components for large pressure vessels. Paradoxically, US-based firms may develop expertise in forging pressure vessels for small modular reactors, such as those less than 300-MW, before they advance their capability to forge large ones such as 1000-MW.
India’s plan to forge ahead
India’s efforts to have its own large forge began last year as part of a joint development project between GE-Hitachi, Larsen & Toubro (L&T), and the Nuclear Power Corporation of India Ltd. They are building a reactor pressure vessel manufacturing facility in Gujarat that also will be the site of at least two GE-Hitachi ESBWR reactors if the liability law can be revised to meet American needs. L&T said in a statement in February 2010 that the plant will be able to produce ingots up to 600 tonnes, which would make it the largest in the world.
Building one such factory takes time—it takes even more time for a factory to become a reliable producer of more than one unit per year. It could take India the better part of a decade to attain that outcome.
Pressure on Japan’s home front
Some of these developments are somewhat circular since the Japanese half of GE-Hitachi would be affected by any diplomatic agreement with India—or the lack of one. The United States has been pushing Japan since last June to sign a nuclear trade agreement with India because of GE’s involvement with Hitachi. Furthermore, Japanese manufacturing giants Toshiba (which owns Westinghouse) and Mitsubishi want a deal with India because they fear a loss of market share to South Korea if the diplomats drag their feet in coming to an agreement.
Japan has leverage for now with its grip on the global market for the giant reactor parts. Japan also has an edge when it comes to providing steam generators and other crucial components for new reactors.
The realist perspective
Japan may turn to the United States and France, asking them to help enforce a non-treaty agreement with India to forego any nuclear tests. It would most likely be based on a threat of revoking India’s permission to buy nuclear fuel on global markets. India knows that a nuclear weapons test, for any reason, would undo the agreement it got in 2008 from the Nuclear Suppliers Group that allows it to buy fuel for its reactors for the first time in three decades.
It comes down to a race in Japan to seal a diplomatic deal with India in time to open up the markets for its heavy manufacturing firms, before South Korea takes advantage of the gap. If not, the diplomats may win a round, but at the cost of tens of thousands of Japanese jobs and billions in export earnings.
In mid-January 2011, defying non-proliferation hawks, a Japanese envoy indicated that negotiations for concluding a civil nuclear deal with India are on track and may be wrapped sooner rather than expected.
Realism may prevail in the end—Japan may find that accepting a promise will be as good as a signature on an international treaty. India may find that accepting an agreement with Japan to uphold a unilateral moratorium on nuclear tests, without signing the test ban treaty, might get it the reactors, fuel, and components it wants from Japan, France, and the United States.
Dan Yurman publishes Idaho Samizdat, a blog on nuclear energy. He is a contributing reporter for Fuel Cycle Week and a frequent contributor to ANS Nuclear Cafe, where this article first appeared. Courtesy: ANS Nuclear Cafe