Potential Victim
The Doosan Group is reeling from Moon Jae-in Administration’s nuclear phase-out policy.
Doosan Heavy Industries & Construction is the only company that can produce and deliver nuclear reactors such as reactors and steam generator turbines in Korea. This fact makes the company fall victim to the nuclear phase-out policy. In particular, the company accounted for one-third of the Doosan Group’s sales in 2016.
The Korean business world and the Korean energy industry predict that if the new administration’s nuclear phase-out policy scrubs plans to build nuclear power plants with capacities to produce 8800MW in total such as Shin Hanul 3 & 4, Cheonji 1 & 2, Daejin 1 & 2, Doosan Heavy Industries & Construction will incur a sales loss of at least 6 trillion won.
In particular, Doosan Heavy Industries & Construction will suffer more damage as the company not only supplies main equipment for nuclear power plants but build nuclear power plants. Most of all, Doosan Heavy Industries & Construction has been in a hurry to supply its products to new nuclear power plants since early last year because its right to exclusive supply of products for power generation facilities will come to an end next year.
The reason why the Doosan Group is very concerned about nuclear phase-outs is that the group has weak liquidity. The Doosan Group received stock-backed loans and issued BWs in order to improve its financial structure this year.
Of course, some believe that the group will be able to recover damage from nuclear phase-outs by seeking out opportunities in the nuclear dismantling industry. However, the nuclear dismantling business is a mid- to long-term market that will open after three years even in Korea, and Doosan Heavy Industries & Construction has no dismantling technology that can be used immediately not only in the domestic market but in the overseas market.
The nuclear power plant dismantling market itself is not large. It is also unclear whether Doosan Heavy Industries & Construction will be able to win orders to take apart Kori Unit 1 as the power plant will be shut down for good and dismantled. Even if the company wins some orders, the orders will amount to several tens of billions of won at most. The nuclear dismantling business is known to make about 700 billion won per power plant (1000MW).