Sheffield Forgemasters moves closer to nuclear reactor deal

Last £20m needed for purchase of new press that would enable UK to supply forgings for use in Britain and overseas
Tim Webb
The Observer, Sunday 24 January 2010

Sheffield Forgemasters is closing in on a £170m financing package which will enable British manufacturers to supply new nuclear reactors built in the UK and overseas.
The government, European Investment Bank and nuclear group Westinghouse have offered about £150m of the sum required to build a new 15,000-tonne press to make large forgings used in new reactors.
The company, whose origins go back to the 1750s, is trying to raise the remaining £20m from other companies involved in the nuclear industry.
About £65m in cheap loans has been offered by the government, whose efforts have been led by business secretary Lord Mandelson, but it is pressing for the remaining funds to be secured soon, otherwise it will find another use for the cash.
Industry sources said that the financing could be completed within days but negotiations have been going on for months and they stressed this weekend that there was still some uncertainty over the outcome. Concerns that government support could fall foul of European state aid rules have also complicated efforts.
Westinghouse has offered to pay £50m upfront for its order of reactor forgings. The European Investment Bank will provide about £35m in loans, which the government has agreed to underwrite. It would also create 150 jobs.
If the fundraising efforts come off, it would mark a much-needed boost for the government's policy of "industrial activism". This took a blow last week when US foods giant Kraft increased its bid for Cadbury, threatening the future of some of Cadbury's 5,000 workforce in the Midlands.
The Sheffield firm is one of only a handful around the world that can make the special forgings, which would otherwise have to be imported for up to 10 reactors being built in the UK. There is increasing political pressure on nuclear companies in Britain to source as many components as possible from the UK.
Dougie Rooney, national officer for the union Unite, said: "The government is putting its money where its mouth is. This would be a clear signal from government they will support British engineering and manufacturing industry."
The French firm Areva, which wants to build dozens of reactors in the UK in coming decades, has admitted that only half the components from the first couple of reactors could be sourced from the UK. It has set a target to award 70% of the contracts to UK firms.
Jean-Jacques Gautrot, head of Areva's UK division, told the Observer: "What we mean when we say we'd have up to 70% of the work available to British suppliers is saying we are willing to go as far as possible from the beginning. It could be 50, 60 or 70% for the first two reactors. But in 10 years, we could source 80% or close to 100% from British companies."