Can Korea Maintain Lead in New Atomic Race?

Korea Usurps Thunder From France, US, Japan With $20 Bil. UAE Deal

By Kim Tae-gyu

Staff Reporter

During the Cold War era, the ``atomic race'' was about building up as large a nuclear arsenal as possible to maintain the balance of terror between the United States and the Soviet Union.

The term currently refers to the competition to win lucrative contracts to construct nuclear power generators and Korea remains ahead of the pack as demonstrated by its success in the $20-billion deal in the Middle East of late.

Conventional powerhouses such as France, Japan and the U.S. are not sitting idle to allow Korea to run away ― they are joining forces to check Korea while Asia's fourth-largest economy is ready to strike back.

``Foreign nuclear giants have linked up over the past few years. The trend is expected to accelerate after Korea won the United Arab Emirates (UAE) deal last year,'' said a Seoul analyst.

``They would check Korea down the road. In this climate, the country does not have the luxury to remain complacent due to past success. The atomic race is set to start in a full-fledged manner. The losers cannot survive in a winner-takes-all race.''

Much-Envied UAE Feat

Korea has been just a small blip on the world's radar for nuclear power generators compared to international giants such as the U.S., France, Russia, Canada and Japan.

In the race to win the UAE deal, the state-run Korea Electric Power Corp. (KEPCO) was regarded as an underdog against such favored candidates as Areva of France and General Electric (GE) of the U.S.

But the utility company silenced analysts, who had predicted a victory for Areva or GE, once and for all by winning the mega deal on the strength of its cost competitiveness ― KEPCO tendered a bidding price much lower than those of its rivals.

Over the waning days of 2009, KEPCO eventually signed a $20 billion contract to construct nuclear power plants in the UAE, the biggest-ever energy deal awarded in the Middle East.

Together with a dozen subcontractors, mostly Korean construction entities, KEPCO plans to break the ground on the project whose value could ultimately be worth as much as $40 billion, late this year.

This boosted the brand value of Korea Inc. in the nuclear world, thus helping a second-round of export booms. This January, the Korea Atomic Energy Research Institute won a bid to build a research and educational reactor in Jordan.

The research-oriented reactor is valued at around $200 million, just 5 percent of commercial ones. But experts point out it could lead to contacts for expensive power-generation facilities in Jordan later.

Midway through last month, KEPCO reached a final agreement on nuclear energy cooperation with a Turkish state power firm. This is good news for KEPCO, which is vying to clinch the bid for nuclear power plants in Sinop, Turkey.

``All of a sudden, all eyes are on Korea after sealing the UAE contract. When I meet people in the global nuclear industries, everybody talks about Korea and the UAE deal,'' professor Hwang Joo-ho at Kyung Hee University said.

Global Alliances

Foreign outfits have already minted a partnership for global nuclear deals. For example, GE joined up with Westinghouse Electric, a subsidiary of Toshiba Corp., for the UAE bid and Areva came hand-in-hand with Mitsubishi.

In Jordan where Korea has won a research reactor bid, corporations from France and Japan forged a coalition to win the bid for the commercial reactors.

Even the second-richest man on earth ― Microsoft founder Bill Gates ― has thrown his hat in the ring as a firm backed by him and Toshiba are reportedly in talks to jointly develop a small nuclear reactor.

The Nikkei business daily reported of late that the two would join forces to generate a futuristic compact reactor, which can run for a century without refueling to provide emission-free energy.

``From the perspective of the existing nuclear plant exporters, they are shocked at Korea's exploits in the atomic race. They are now scrambling to remain keen in the rivalry with Korean forces armed with both price and quality competitiveness,'' professor Hwang said.

``Hence, the partnership of the conventional juggernauts is understandable ― they get together to survive. The tendency will continue for the time being and Korea is also required to find its own alliances.''

Counterattacks

Korea is also moving fast in order to grapple with the strengthening global alliance in the atomic race, headed by the government.

The Ministry of Knowledge Economy (MKE), which is in charge of overseeing the nation's nuclear policies, established a new team this week dedicated solely to supporting the export of nuclear power plants.

``Nuclear energy agreements involve not only contracting parties of private firms but also their governments. Without pan-governmental back-up, mega contracts are off limits to companies,'' said MKE Director Kang Kyung-sung, who leads the new team.

``In addition, a long-lasting rapport between the two governments involved is crucial. We will act as a kind of a control tower by building a long-term relationship with nuclear energy importers or by coming up with strategies to help our firms.''

The ministry pointed out that Korea's unique experiences will be of a great help. The fact that the small nation has leapfrogged from one of the poorest states back in the 1960s to one of the most developed economies today is remarkable.

``Those who newly need nuclear power are mostly developing economies, which in many cases hope to learn how to boost their growth in gross domestic products in a short-period of time,'' Kang said.

``Experience brought us a knack in chalking up fast growth. If we can combine our experiences with advanced nuclear technology, our competitive advantage will outpace those of our rivals.''

Plus, President Lee Myung-bak, who has also played a role in the KEPCO's bids for the UAE deal, is spearheading the country's forays into the international nuclear power generation scene.

In a bilateral summit with visiting Belgian Prime Minister Yves Letrme earlier this week, Lee asked for the Belgian government to include Korea in the MYRRHA project of the European country.

MYRRHA is a multi-disciplinary research project regarding next-generation nuclear energy. It aims to develop the technology for converting nuclear fuel into less radio-toxic substances.

The total economic influence of the long-term project is estimated to be in the vicinity of 13 billion euros.