Business / Corporate

Hitachi pulls plug on U.K. plant due to investment shortfall, in latest blow for Japan's nuclear export ambitions

Kyodo

The Hitachi Ltd. board decided Thursday to suspend a plan to build two nuclear reactors in the U.K. after facing difficulties in finding investors to help finance the ¥3 trillion ($27.5 billion) project.

The freezing of the project in Anglesey in Wales would mean that all major overseas nuclear projects involving Japanese companies have seen setbacks amid the government’s efforts to promote exports of nuclear technology.

Hitachi said it will book a special loss of ¥300 billion in the year ending in March, and cut its net profit outlook for the year to ¥100 billion from its previous forecast of ¥400 billion.

“We’ve reached limits in further investing (in the British nuclear project),” Hitachi President Toshiaki Higashihara said at a news conference, noting that the Japanese conglomerate will focus on domestic business over nuclear power operations “in the years ahead.”

Higashihara said he cannot rule out restarting the project but that the prospects of doing so are unclear. He denied that the political turmoil regarding the Brexit deal affected the decision-making.

The project, which Hitachi joined in 2012, was part of the conglomerate’s strategy to expand its nuclear power business abroad, amid dimming prospects for new reactor demand in Japan in the wake of the Fukushima meltdowns that was triggered by the March 2011 earthquake and tsunami disaster.

Hitachi’s Japanese rivals are facing more or less the same situation. Toshiba Corp. decided in 2017 to exit its nuclear power businesses outside Japan after incurring huge losses in the United States, while Mitsubishi Heavy Industries Ltd. is considering withdrawing from a nuclear project in Turkey amid ballooning safety-related costs, according to company sources. Hitachi had planned to secure ¥2 trillion from the British government and financial institutions, but the prospects of raising the rest has proved problematic.

Hitachi has said it also wants to remove its wholly owned unit, Horizon Nuclear Power Ltd., which oversees the project, from its group structure, amid growing business uncertainties. By reducing its stake in Horizon, Hitachi is hoping to avoid adverse business repercussions for its entire group. It acquired Horizon from two German companies in 2012.

In December, Hitachi Chairman Hiroaki Nakanishi said the company told the British government it “can’t go any further” with the current construction plan.

Hitachi and the British government had aimed to start construction of the advanced boiling water reactors in 2019, and to begin operations by 2025.