When Maryland governor Martin O’Malley stood at a podium before the Calvert Cliffs Nuclear Power Plant last spring, he described in the strongest of possible terms America’s need to embrace nuclear energy. Citing reasons of economic, environmental, and social well-being, O’Malley called it “a moral challenge and moral imperative.”
For an industry that has not begun construction on a new nuclear power plant since 1979, O’Malley’s sentiment was the latest signal that if there has not quite been a warm re-embrace for nuclear energy in the United States, there certainly has been a public awakening of a sort not seen in more than a generation. An increasing number of Americans are recognizing the importance and availability of nuclear power as a source of electricity.
There are currently 104 operating nuclear plants in the U.S., producing 20% of the country’s electricity. And, as an increasing number of Americans are understood to be environmentally conscious, nuclear power can make the claim that it is by far the largest available source of electricity that does not result in greenhouse gas emissions.
According to the Nuclear Regulatory Commission, a federal agency, there are now 33 applications from 22 companies on file seeking permission to build new nuclear reactors. While it remains to be seen whether those plants will be built, the applications signify that utility companies, governments at the state and federal levels, and industry, are coordinating their efforts to bring new facilities online within the next seven years.
This could mean a windfall in new business for domestic forgers. There are nearly 200 forgings of various sizes, weights and specifications required for today’s newest generation of nuclear power plants.
But, this demand also represents a monumental challenge. There are dozens of suppliers capable of providing small- to medium-sized forgings, but there are just a few capable of delivering the ultra-heavy forgings that weigh greater than 400,000 pounds. None of these operations are in the U.S.
“The real crux of the issue in the United States comes down to whether we want to produce these large parts,” says Charlie Hageman, executive vice president of the Forging Industry Association. “It’s a supply chain issue. And what we see is that the government policy doesn’t appear to be clear and the companies that would make the large parts are reluctant to invest in adding to their capabilities.”
The pieces in question
Four of the most complex parts of a nuclear power plant — the containment vessel, the reactor vessel components, the turbine rotors and steam generators — are made from over 4,000 tons of steel forgings, and almost none of those components are manufactured in the United States.
The reactor vessel functions like the outer shell of an egg, protecting all the vital internal pieces, including the components in which the nuclear reaction takes place. The outer vessel alone weighs over 500 tons and is made up of seven very large forgings, including several that make up the nozzle.
The newest nuclear plant design on the market, the Generation III Evolutionary Power Reactor (EPR), from French nuclear engineering group Areva, uses four steam generators — each of which weighs up to 500 tons.
A generator rotor weights in excess of 200 tons, according to Craig Hanson, vice president and product line manager for nuclear plant builder for Babcock & Wilcox. And, for each nuclear plant, there are three to four turbine rotors.
“There’s a full-scale market for heavy forging and heavy forged materials in a nuclear reactor, everything from the closure head, to forged rings that make up the vessel head, to internal support plates within steam generators,” says Hanson. “We anticipate our demand for these forgings to be increasing substantially as we begin to prepare for the nuclear renaissance.”
Today, Babcock & Wilcox estimates its demand at 100 heavy forgings per year. But, that demand could more than triple in the next 15 years, says Hanson, as the market in the United States blooms with proposals for new nuclear facilities receiving NRC approval.
Extinction of U.S. capacity
The U.S. steel industry produces over 100 million tons of steel per year. In theory, there should be enough domestic steelmaking capacity to fulfill the demand for forging nuclear components. The problem lies in how those forgings have changed over the last 40 years and the scale of the investment that would be required for U.S. forgers to participate.
The first generation of nuclear power plants built in the U.S. used forgings produced domestically. Most of those components were smaller than what are used today and many were made from different materials. Steam generators, for instance, were made from rolled plate.
In the late 1960s, designers discovered that larger forgings had better mechanical properties, requiring less welding and therefore less inspection requirements over the life of a plant. These larger forgings became a signature of Generation II plants and all others that have followed.
But, by choosing larger forgings, even the most powerful domestic steel producers, such as U.S. Steel and the now-defunct Bethlehem Steel, were shut out of the supply chain.
“In the interest of efficiency, the companies that built nuclear reactors made their reactors bigger,” says Mike Kamnikar, senior vice president for marketing and business development at The Ellwood Group, a forging group. “The biggest ingot that could be made by Bethlehem Steel or U.S. Steel in the 1970’s was roughly 380 tons. Bethlehem and U.S. Steel each had 8,000- ton presses, but the presses didn’t have enough clearance to make these big rings, which were over 200 inches in diameter.”
Today’s newest nuclear power plants, Generation III, follow designs that require steel ingots weighing between 500 to 600 tons each. No steel producers in the U.S. can handle that kind of size or weight, says Chris Levesque, Areva’s president and general manager at its Newport News, VA, facility for fabricating heavy reactor components. “Forgers are limited because while [a forger] can make his press bigger and he can make his machine tools bigger, he needs a larger ingot,” says Levesque. “He’s limited by the steel mill and the ability of not just a mill that can make that big of an ingot, but also transport it to him by rail. You’re talking about a piece of metal that’s huge and needs to stay hot and get from the mill to the forge. One of those mills can’t exist just to supply the forge.”
Another significant factor is that in the 40 years since the U.S. stopped producing these large forgings, a host of international rivals have filled the void of supplying the parts necessary for the 40 nuclear plants currently under construction in 11 countries.
The largest and best-known supplier of heavy forgings is Japan Steel Works (JSW), which claims 80 percent of the world market for large forged components for nuclear power plants, including the steam generator, reactor pressure vessels and turbine shafts. JSW is contracted to supply Areva with large forged parts until at least 2016 — enough to build six nuclear plants per year.
Heavy forging capacity is also available in China (China Fi rst Heavy Industr ies) and Russia (OMX Izhora), along with new capacity emerging in South Korea (Doosan), and France (Le Creusot), and it’s being planned in the U.K. (Sheffield Forgemasters) and India (Larsen & Toubro).
JSW’s Muroran plant in Hokkaido has 3,000 to 14,000 ton hydraulic forging presses, the latter able to take 600- metric ton steel ingots, and a 12,000-metric ton pipeforming press. Its capacity was limited to producing just four reactor pressure vessels and associated components per year, but that was before aggressively upgrading its technology in the past year. JSW believes it will be able to triple its production by 2012 thanks to $837 million worth of expansion in the next three years. It has commissioned another 14,000 ton forging press.
So what’s the hold up?
For a lot of forgers, the capacity question is not whether (or not) there is going to be demand for ultra-heavy nuclear forgings, but whether (or not) the potential reward is worth the financial risk.
“I think it boils down to a question of whether you can make money doing these forgings,” says B&W’s Hanson. “If you do it right, you can probably develop a North American capability, but it’s going to require real smart thinking.”
In recent years, the Ellwood Group considered expanding its large heavy-forging capacity. The company, which produces heavy metal sections for the oil and gas, mining, metals processing, and power generation industries, among others, calculated how much investment it would take to compete internationally.
The projected investment totals were staggering. According to Kamnikar, the tab started at $1 billion.
“You’re talking about a lot of money in equipment,” says Kamnikar. “The biggest expense of all is the melt shop, which has to be capable of making a 600-ton ingot. Those are capable of making nearly a million tons of steel a year. But only about 70,000 tons are required to make all the huge forgings in the U.S. So what do you do with the rest of the steel?”
There is also the element of patience that must be considered. According to B&W’s Hanson, nearly four years can pass between the time a company puts forth the money to upgrade its facility and its first orders are ready for manufacturing.
“If you combine that time frame with the fact that some people are unsure of when these orders [for nuclear forgings] are going to actually go through, that’s what’s driving the hesitancy to invest substantial amounts in these facilities right now,” says Hanson.
Not everyone is sitting idle. Areva has made owning a portion of its supply chain part of its business strategy. For that reason, the French builder of nuclear plants purchased SFARsteel in 2006, along with a 1.3-percent equity in Japan Steel Works late last year.
In July, Areva broke ground on a $360-million joint venture with Northrop Grumman to build a factory at its shipyard at Newport News, VA. The facility is designed to be a twin to Areva’s Chalon-St Marcel plant in France, which machines large forgings, such as reactor pressure vessels, steam generators, and pressurizers, and finishes them for installation.
Areva Newport News is expected to be ready by 2011 and will machine components for at least seven reactors in the U.S. Areva claims that 80 percent of the components for its U.S. reactors will be built in North America.
But, while that might go a long way toward ensuring enough forgings for Areva’s nuclear projects, it also suggests that the company’s strategy is not to wait around for U.S. forgers to join the fray.
Several industry experts described an international race between countries gunning for capacity for the nuclear renaissance, with China, Russia, South Korea, France, India, and the U.K., all hurrying to catch up to Japan’s forging capacity. The U.S. is conspicuously absent from the list of contenders.
“I think it’s analogous to the Concord [supersonic jets] of the 1960s,” says the Ellwood Group’s Kamnikar. “There was this big race to see what country would be the first to have supersonic commercial jetliners. The U.S. decided to pass, while Brits and French went forward. And while it’s impressive and flashy, at the end of the day it was a stupid idea. How many of them are flying around these days?”
If it takes years to build the kind of operation necessary for producing ultra-heavy forgings, by the time a plant is up and running, the international market could be oversaturated with suppliers.
Which is why Kevin Handerhan, chief operating officer at the Ellwood Group, is skeptical.
“Even if we supplied all the components for all the reactors that are being talked about in the United States, you’d be talking about 70,000 tons of steel a year,” he says, “and that’s just not enough to pay for the investment.”
Market emerges for smaller forgings
Though ultra-heavy forgings continue to come from overseas, the United States is still providing forgings for the nuclear-energy market, albeit in smaller sizes.
With as many as 17 new nuclear facilities scheduled to be built by 2020, according to the Nuclear Regulatory Commission, there are thousands of components needing to be forged, mostly closed-die, including nozzles, rings, sleeves, joints, heat exchangers, piping and turbines.
“I think it’s going to explode,” says Kevin O’Connell, of McInnes Rolled Rings, citing the nation’s push for cleaner energy.
But it also means significant work ahead. Forgers will need to be accredited from the American Society of Mechanical Engineers (ASME) for the “N” Stamp, which authorizes vendors to produce commercial nuclear-grade components in accordance with the ASME Boiler and Pressure Vessel Nuclear Codes and Standards.
“For commercial parts, ISO 9000 is great,” says Ray Hoglund, strategic development manager at Scot Forge, “but if you tell the NRC you have ISO, they’d laugh at you. Nuclear parts aren’t in the same league. You’re held to a way higher standard. If you want to be a player in this, you’d better have all your ducks in a row.”
The economy has had a devastating effect on forgers, says Mike Kamnikar, senior vice president for marketing and business development at The Ellwood Group. At a time when forgers are begging for business, the nuclear industry can help fill the vacuum.
“If you think about it, everybody talks about how 2008 was the hottest year ever for forgings, but 2009 has been one of the coldest,” says Kamnikar. “A lot of companies built a lot of capacity in recent years under the premise that 2009 would be even bigger than 2008. So there’s been a bit of a crash in our business.”
But, whether or not supplying forgings for nuclear projects represents the new frontier is far from clear.
“On paper, the demand looks very promising,” says Scot Forge’s Hoglund. “But, there are so many factors at play – and the financing of these plants is a major, major one. They say this nuclear renaissance is coming, but we haven’t broken ground on one yet. Is it promising? Yes, but there’s still a long way to go.”