Seite 1 von 6 Valinox Nucléaire: the first choice for the Chinese customers Thursday, 26 July 2012 13:15 As a 100% subsidiary of VALLOUREC and world leader in the field of tubes for nuclear power plant, Valinox Nucléaire produces since 1974 at Montbard (Burgundy, France) U-bent steam generator tubes and other stainless steel tubes for pressurized water nuclear reactors. Dynabond Powertech Service Co., Ltd had a chance to sit down with Mr. Gerard Kottmann, Chief Operating Officer of Valinox Nucléaire to discuss Valinox Nucléaire s presence in Chinese nuclear power industry. Mr. Kottmann has been in the VALLOUREC Group for thirty years and in charge of Valinox Nucléaire since eight years. Being a great admirer of China, he has many years of experience in communicating with Chinese people. Mr. Kottmann runs Valinox Nucléaire Montbard and starts the project of a new factory in China. Valinox supplied 80% of all steam generator tubes for existing Chinese plants, in construction and approved. DPS: What is the historical background of VALINOX NUCLEAIRE in the international nuclear power industry? Mr. Gerard Kottmann: Valinox Nucléaire Company is a 100% subsidiary of VALOUREC, a world leader in the manufacture of steel tubes and pipe for various applications especially for oil and gas, energy, petrochemical and mechanical industries. Vallourec Group is present in many countries, France, Germany, England, Brazil, USA, China and India. The first settlement in China was in 1995. Founded in 1974, Valinox Nucléaire has a specialized activity in nuclear energy. VALINOX NUCLEAIRE is the only entity in the VALLOUREC group dedicated entirely to nuclear power. Its origin is rather special. Under the Presidency of General de Gaulle in the late sixties, the French government decided to embark on a major nuclear program. The Planning Commission has left several companies specializing in the manufacture of individual components. In the case of tubular products, there were two potential candidates, PECHINEY, which no longer exists since, and VALLOUREC. There are two types of tubes the fuel cladding tubes which contain the fuel cells and are installed in the reactor vessel and the tubes for steam generators, which are the interface between the primary loop and the secondary loop. The pressurized water leaves the reactor, passes through the steam generator tubes leading to a heat exchange with the water of the secondary loop which turns into steam, and then returns to the reactor. Contaminated water from the primary circuit passes through the tubes and uncontaminated water from the secondary circuit feeds the turbine. PECHINEY won the
Seite 2 von 6 manufacturing of the cladding tubes and VALLOUREC the steam generator tubes. Valinox Nucléaire has chosen to locate in Burgundy, near Montbard. The existing plant is the historic factory. Valinox Nucléaire provided all the tubes for the French nuclear program and now for the Chinese nuclear program. Since last year, Valinox Nucléaire s capacity got multiplied by three through significant investment in Montbard. At the same time, Valinox launches a nuclear steam generator tube plant in Nansha, China. In 2013, when the Nansha plant starts, total capacity will be multiplied by 4 compared to five years ago. Aerial view of Valinox in Montbard, France These two plants both manufacture tubes for steam generators. The factory located in China is only meant for China, while the one in France is in charge of other markets, like England, Scandinavia, USA, South Africa, South Korea, Japan, Arab countries, etc. Today, Valinox Nucléaire holds a majority market share. It's a niche market where experience, branding, quality and customer relations are essential. I arrived in China at the time when steam generator tubes were free issued by foreign engineering contractors who had projects in China using Chinese companies as sub-contractors. Later, China embarked on the design and manufacturing of steam generators independently. We were there when the first customers wanted to buy directly. I knew their mother companies previously because I was in charge of VALLOUREC tubes for coal plants before. I came to China since 1986 and I love working with the Chinese. Valinox Nucléaire Montbard employs 500 people and VALINOX Nuclear Guangzhou when it starts, will employ 200 people. We have laid the foundation stone of the factory in Canton on May 26, 2011 and we plan the opening ceremony in late May 2013. Valinox Montbard and Valinox Guangzhou are sister companies. They work in parallel but act independently and autonomously. DPS: What is VALINOX NUCLEAIRE presence in Chinese nuclear power industry? Mr. Gerard Kottmann: Valinox has a majority market share. We have long-term contracts with AREVA and with the American company Westinghouse. We are major supplier to two Chinese customers Dongfang (Guangzhou) Heavy Machinery Co., Ltd (DFHM) and Shanghai Electric Nuclear Power Equipment Co. Ltd. (SENPEC). DFHM is our neighbor in Nansha and SENPEC is located in Shanghai. These are the two largest nuclear Chinese boilermakers. The peculiarity of our company is that we have two markets. Although it is the same product, we have a market of New Build and a market in replacement. Today in France, EDF has announced a major program of replacement of steam generator because the majority of them are over twenty years. These were built with an old material (alloy 600) that had a tendency to stress corrosion after a couple of decades. Since then, EDF and all other nuclear designers adopted a more resistant material (alloy 690) but there are still some plants that have not been replaced.
Seite 3 von 6 Rearview of a finished steam generator(source: Areva) The second market for new power plants is mainly in China, some in India and South Korea, where we provide tubes for steam generators. China holds the major share in our turnover. Since 2006, China is our largest customer, followed by France. France will take a more prominent place because of the replacement program of steam generators. This is also why we built this plant in China because we knew that we have a market in France that would develop and we need a large capacity to serve our Chinese customers who trust us. DPS: Which projects did you participate to China? And which projects are achieved and which are planned? Mr. Gerard Kottmann: Today, we have provided tubes for different types of plants, like French technology CPR1000, and U.S. Gen Ⅲ technology AP 1000. In addition, we also supply Canadian technology and Chinese CNP 600. For example, we have provided the steam generator tubes for Hainan, Lingao and Daya Bay. DPS: What was your experience feedback on your Chinese projects? Were your initial objectives achieved? Mr. Gerard Kottmann: The best answer I can give you is if targets were not achieved, we would not have built the factory in China. Thanks to the strong relationship established with customers, their confidence in us, the technical quality of our products recognized by the Chinese customers and design institutes, we could predict and implement projects in China. Work with the Chinese is a pleasure because they have the same motivation to succeed. It is a "Win-Win" relationship. To give you an example, we were extremely busy at VALINOX NUCLEAIRE during 2009. We had a full booking in early 2009. A client requests us to manufacture in emergency an additional set of steam generator tube bundles. We found a compromise that our factory worked every weekend. We worked seven days on seven, so we added a hundred days of work over one year and we were able to add this additional order in the existing backlog. All our other orders kept on time delivery. DPS: Why do you choose Guangdong for the new factory and what are the main obstacles and / or technological challenges you have encountered? Mr. Gerard Kottmann: We have chosen to settle in Guangdong. First, there is a very important final customer in this region for French technology which is CGNPC. Secondly, a number of French companies in the nuclear have located in this region. We automatically take advantage of a network. Also, infrastructures in Guangdong are highly developed with three international airports nearby (Guangzhou, Shenzhen and Hong Kong). VALINOX NUCLEAIRE GUANGZHOU is located at the water's edge, which facilitates the supply of tools and raw materials. In addition, Guangdong is a major world port.
Seite 4 von 6 View of future Valinox Nansha factory The technological challenge we met is the factory is seaside and in a very humid environment. Therefore when we started digging in the earth, we quickly found water. Our factory contains heavy equipment; hence, we were forced to build hundreds of piles that are 26 meters deep into the rock. The second major challenge we encountered is the training of Chinese operators. They need to acquire know-how. We will train some Chinese operators in France so that they can operate successfully our machines. We want to be Chinese in China! DPS: What s your strategy to maintain VALINOX s competitive edge worldwide? Mr. Gerard Kottmann: Our force against competition is our long-experience, legitimacy and the French brand. The Chinese are very appreciative of the French nuclear power as they know we are the most experienced country in this field. VALINOX NUCLEAIRE s seniority in the market gives our customers a sense of trust in the product. We have developed a strong relation with our Chinese customers based on mutual confidence. They know that they can count on us for technical advice. DPS: Which material do you use for making tubes? Mr. Gerard Kottmann: Our material is mainly alloy 690 composed of 60% nickel and 30% chromium. This alloy is very expensive and the tubes are the most expensive within the VALLOUREC group because they are very difficult to manufacture and require much expertise. The chemical composition is strictly controlled. There are not many companies who have mastered the production of this metal. We have exclusive agreements with carefully selected European manufacturers. This alloy is used almost exclusively for nuclear power. Being a key element, we need a supplier who has an outstanding experience in the metallurgy of this alloy. Today we have not yet found a source in China able to offer us this same level of quality. The tubes that we shall manufacture in China will be initially made with imported raw material. It is a guarantee of quality for the first phase.
Seite 5 von 6 DPS: Do you invest in R&D every year? What does your R&D focus on? Mr. Gerard Kottmann: Nuclear is very conservative. Technical changes on the existing designs will be minimal. The only things that can change are some additional requirements. Nevertheless, we have an activity of research and development for future generations of models. We are currently working on the fourth generation and we have an advance because we manufactured tubes for Superphénix in France already in the 90 s. VALINOX NUCLEAIRE supplied fuel cladding tubes, hexagonal wrapper tubes and steam generator tubes for Superphénix. And now we work at the request of Commissariat à l Energie Atomique (CEA) for the study of the prototype ASTRID (Advanced Sodium Technological Reactor for Industrial Demonstration). We have a research and development programme in France to manufacture these products and we are open to participate to the Chinese nuclear fast breeder programme. In the nuclear field, all projects are carried out in a very long term. This prototype will be set up between 2015 and 2017 to be fully operational in 2023 and we will test it for fifteen or twenty years before launching the serial production for this type of plant. DPS: How do you protect your intellectual property in technology? Have you suffered from industrial espionage? Mr. Gerard Kottmann: First, we have confidential agreements with all our customers. Secondly, it is a very difficult competence to copy and we possess a know-how that you do not find in books. A nuclear plant is very expensive. Our product is key because it is the border between the contaminated pressurized water coming from the reactor and the noncontaminated steam going to the turbine. If the tubes are not good, they must get plugged, causing a reduced efficiency.
Seite 6 von 6 When you invest in a nuclear power plant, you take suppliers for critical components in which you fully trust. It's not worth to take risks in the case of steam generator tubes that represent less than 2% of the plant total value. I think Chinese people are smart enough to recognize that this is a key matter for safety and it is of their benefit to choose an experienced and trusted supplier like VALINOX NUCLEAIRE.