TheChek News Flow

All sides are keen to reach an investment decision in July after years of delay and months of negotiations

Centrica is set to take a 15 per cent stake in the UK’s Sizewell C nuclear project after years of delay and months of drawn out negotiations.

All sides are keen to reach a final investment decision on the project before parliament’s recess on July 21, according to people familiar with the discussions.

The final cost of Sizewell — set to be only the second new nuclear plant built in a generation in Britain — could be close to £40bn, the Financial Times reported in January based on assumptions from industry experts. Sizewell’s management has rejected that figure although no new estimate has been given.

The planned investment by Centrica means that the FTSE 100 energy company behind British Gas would have the same size stake in Sizewell C as French state-owned energy group EDF, which has progressively reduced its position in the Suffolk project to 15 per cent. Centrica already holds a 20 per cent stake in the parent company of the entity that operates EDF’s existing nuclear assets in the UK.

Centrica and EDF declined to comment.

The investment in Sizewell could still come in time for French President Emmanuel Macron’s visit to London for an Anglo-French summit on July 8. However, timetables have slipped, according to the people familiar with the situation, putting that goal in doubt.

Brookfield Asset Management is still in talks about a similar investment in Sizewell C and could be prepared to take a larger stake than Centrica, according to people familiar with the discussions. Brookfield declined to comment.

Apollo, the US private capital group, said last week that it would provide £4.5bn in financing to EDF to support the French group’s other main investment in a UK nuclear power plant, at Hinkley Point C in Somerset.

The UK government is focusing on nuclear power to help Britain’s transition to low-carbon electricity with the energy secretary, Ed Miliband, calling it a “golden age” for nuclear power.

The government said in a statement: “By taking back control of our energy we will protect family finances, boost energy security, and tackle the climate crisis.” It added that 10,000 jobs will be created through building Sizewell C.

The UK pledged £11.5bn of new state funding for the Suffolk project earlier this month taking taxpayer investment so far to £17.8bn. The project claims it will provide 7 per cent of the UK’s energy needs for at least 60 years and power 6mn homes as well as creating 70,000 jobs across the supply chain.

Centrica has previously confirmed its interest in the project but chief executive Chris O’Shea declined to give details of the size of stake it could take. In February, O’Shea said the stake could be “between 1 per cent, or 2 per cent and 50 per cent”.

Sizewell C was initially proposed by EDF and China General Nuclear Power Group (CGN) but the UK government owns about 84 per cent of the project after removing CGN in 2022 over concerns about Chinese influence, spending £679mn of taxpayer funds to buy out its stake.

Autonomous weapons have same operating and AI strike systems used to target Russian tanks and oil rig

Taiwan has developed suicide drones equivalent to those at the heart of Ukraine’s defence against Russia, the clearest sign yet of progress in the country’s effort to build up rapidly its autonomous weapons capabilities to resist a potential attack from China.

The Taiwanese military’s weapons research arm and Thunder Tiger, one of the country’s leading drone makers, have completed live-fire testing and certification of an attack drone. It was powered by the same systems, from US-German software company Auterion, as those in drones that Ukraine uses against Russian tanks and naval assets, said Thunder Tiger and Auterion.

The drone, named Overkill, is equipped with Auterion’s artificial intelligence strike system and camera. Auterion chief executive Lorenz Meier said those features give Taiwan the same capabilities that Ukraine used to take out Russian T-90M tanks in August last year and destroy the radar of a Russian oil rig a few weeks ago.

“Here is the weapon,” Meier said, referencing footage of the live-fire tests. Taiwan’s military this month revealed the drone, which was jointly developed by Thunder Tiger and the National Chung-Shan Institute of Science and Technology (NCSIST), in a video of a test conducted in March. It did not release specifics at the time.

Suicide drones are manoeuvrable munitions that are destroyed in the process of hitting their target. Overkill is a first-person view drone (FPV), which is operated by an individual, as opposed to larger fixed-wing or switchblade drones.

While there were big differences between Taiwan and Ukraine, Meier noted, lessons from Ukrainian drone warfare were “one-to-one applicable” to a potential war with China over Taiwan.

“If you replace the [Russian] oil rig with a Chinese destroyer, that would be a destroyer without air defence from that moment,” he said.

NCSIST and Auterion announced a deal this month for multiyear joint development of drones. But the Overkill drone shows that this development is already well under way.

Separately, Thunder Tiger has agreed to buy Auterion software licences for 25,000 drones, some of which will be manufactured for export, Meier said, indicating a steep scale-up of Taiwan’s drone production.

The country launched an effort three years ago to build a domestic supply chain for military use drones. It has also worked to forge closer co-operation between its drone industry and that of the US.

Washington is seeking to replace Chinese components in its drone supply chain, while Taipei hopes selling to the US will make it easier for its drone companies to build the capacity needed to fill future orders from its own military.

But both initiatives have been slow to show results. Taiwan’s entire drone industry produced fewer than 10,000 units in the 12 months to April, according to government-backed think-tank Research Institute for Democracy, Society and Emerging Technology — less than 6 per cent of its target for 2028.

Thunder Tiger general manager Gene Su called the 25,000 units cited by Meier a “ballpark figure” but confirmed that the company was in talks with several potential export customers.

“We think export is very big opportunity, in the near term south-east Asia,” he said, naming the Philippines, Vietnam, India and Indonesia as potential markets. “None of them want Chinese parts.”

Su added that he was confident that Taiwan’s armed forces would acquire large numbers of the drones once parliament approved a special budget for arms procurement.

The government is expected to submit the budget this autumn.

Low altitude, lofty ambitions

China is betting on its army of civilian drones to help it drive new sources of growth, writes the Financial Times’ William Langley.

The country dominates the production of commercial drones, accounting for 70-80 per cent of global supply, according to analytics provider Drone Industry Insights.

There were about 2.2mn drones registered with the Civil Aviation Administration of China by the end of last year, deployed to do everything from controlling crowds to fighting fires.

But Beijing’s ambitions go much further than that. The CAAC expects the market size of the low-altitude economy — which refers to airborne activities occurring less than 1,000 metres above ground — to grow fivefold to Rmb3.5tn by 2035.

That means finding new uses of the technology from private companies. The logistics and food delivery sectors are early adopters, with Meituan and its rivals already employing unmanned aircraft on some routes.

The country’s farms are also big users. About a third of industrial drones are also used in agriculture or forestry, according to 2022 figures from the Guanyan Tianxia Data Center.

But some in the highly competitive UAV industry say that it will be difficult to replace the buying power of big government and military buyers, while strict export controls have limited their potential reach overseas.

Drone-flation

Chinese government regulations adopted in September requiring export permits for dual-use goods have more than tripled the price of drone components shipped to the US, according to a report by Nikkei’s Itsuro Fujino.

The analysis of Chinese customs data shows that the overall export volume of infrared devices, a key drone part enabling visibility in the dark, fell roughly 30 per cent between last September and April, while the export value rose nearly 50 per cent. The price per unit doubled during this period, stemming mainly from a tightened supply-demand balance. Exports to the US, which is the largest destination, dropped roughly 60 per cent by volume while the unit price jumped 3.5 times.

“Today, China has captured 90% of the U.S. market for commercial drones.” This statement comes from a 2024 report from the office of then-senator Marco Rubio, now the secretary of state, on the Chinese manufacturing sector. Rubio is surely well aware that Beijing could use drones as effective leverage in trade negotiations.

Nitto Boseki, or Nittobo, for short, may not be a household name, despite having a history that stretches back more than a century. But its products are so crucial for the AI supply chain that executives from Nvidia, AMD and Microsoft have been coming to Japan to pay it a visit.

In a collaborative work by Nikkei Asia’s Lauly Li and Cheng Ting-Fang in Taipei and Ryohtaroh Satoh in Tokyo, they explain how this relatively little-known AI-enabler is currently the only company in the world able to provide the highest-end glass cloth, a material essential for making high-powered AI servers.

Japan boasts several examples of seemingly obscure material makers that underpin the global tech supply chain. Nittobo, however, has a particularly interesting history. It was one of the “top 10 cotton-spinners” in Japan before second world war and helped lead the country’s economic reconstruction in the postwar era. As competition from other Asian economies pushed the entire industry to the corner, Nittobo became one of the most successful examples of a company transforming itself away from a sunset industry, while many of its peers perished. The boseki in its name, meaning cotton-spinning, is a reminder of that history of adaptation.