South America has been a special part of my life for four decades. I have lived many years in Brasil and Peru. I am married to an incredible lady from Argentina. I want to share South America with you.
China has agreed to finance and build two nuclear power plants in Argentina in a deal that will showcase Chinese technology and could be worth up to $15bn, according to Chinese state media and reports from Argentina.
The deal comes amid a push by Beijing to export its homegrown atomic technology, often by offering cheap technology and generous financing. It also follows China’s move last month to take a one-third stake in a French-led project to build the first in a new generation of UK nuclear plants.
The agreement with Argentina, signed in Turkey during the G20 meetings, will see Chinaprovide most of the financing for the two new plants at a time when Buenos Aires is locked out of global credit markets.
The first plant will cost about $6bn and use Canadian “Candu” nuclear technology while the second will use China’s homegrown Hualong One reactor, which Beijing is trying to promote for export around the world.
Both will be built by state-owned China National Nuclear Corp in co-operation with Argentina’s state-owned Nucleoeléctrica.
When finished, they will roughly double the country’s nuclear power capacity provided by its existing three nuclear plants.
“The construction of two new nuclear power plants will ensure our energy supply in the future,” Axel Kicillof, Argentina’s economy minister, was quoted as saying by Argentine media. The agreements with CNNC “are very favourable” and will “give us energy and competitiveness”, he said.
Chinese banks and companies will provide loans and investment to cover 85 per cent of the projects’ costs, with the loans to be paid back over 18 years with an annual interest rate below 6.5 per cent, according to Argentine media reports.
Julio de Vido, Argentine planning minister, was quoted as saying the deal marked the biggest investment ever made in Argentina “considering the preferential interest rate and the payment terms that were included in the agreements”.
CNNC’s domestic state-owned rival, China General Nuclear Power Group (CGN), will apply to UK regulators next year for approval of its similar nuclear power technology as it seeks to build more plants in Britain.
CGN has already agreed to take a one-third stake in the French group EDF’s £18bn ($27bn) Hinkley Point power station, and wants to build a series of new reactors in the UK.
Analysts say success in exporting its nuclear technology to Britain will help China sell more nuclear plants around the world because of the perceived rigour of the UK’s regulatory regime.
“We have our first foot in the UK,” Zheng Dongshan, senior vice-president at CGN, told the Financial Times during a visit to the UK last month. “This could have a good effect to kick the door of other countries.”
Chinese economic planners have identified more than 60 countries between China and Europe as potential customers. They hope to provide 30 of the 200 nuclear plants they estimate will be under construction in those countries by 2030.
Back home, China already has 26 reactors under construction, eight of which it plans to complete by the end of this year.
In recent years Beijing has stepped in to provide financing and investment to several countries locked, like Argentina, out of international credit markets or shunned by global investors because of war, sanctions or corruption.
Latin America has been an area of particular interest because of the ruling Communist party’s desire to expand Chinese influence into America’s traditional “backyard”.
China has already made enormous investments throughout Latin America, including in ports, dams, railways and energy projects in Argentina.
Some in Argentina have raised concerns about the country’s growing reliance on China and Buenos Aires’ decision to sign the deals immediately before a presidential electoral runoff next weekend, after which President Cristina Kirchner will step down at the end of her second term.
Presidential hopeful Mauricio Macri has promised to review all agreements signed between the current government and Beijing if he wins the November 22 run-off.