Jan. 24 (Bloomberg) -- Bidding for Westinghouse Electric Co., designer of 61 percent of the world's nuclear reactors, signals increasing demand in the atomic energy industry for the first time in decades.

Toshiba Corp. plans to pay about $5 billion for Pittsburgh- based Westinghouse, according to two people with knowledge of the discussions who declined to be identified. The cost is more than four times what the U.K. government paid for the business almost seven years ago, when oil prices were about $20 a barrel. Today, crude is close to $68.

A nuclear-power boom is following one in oil, as Asian countries plan new reactors needed to meet energy demand and Western nations seek an alternative to fossil fuels, which are blamed for global warming. After three decades of stagnation, the nuclear industry may receive more than $200 billion of investment by 2030, according to the International Energy Agency.

``For most of the major economies of the Western world, nuclear energy should play a key part in providing the diversity in fuel and technology that is essential for security of supply,'' said Mark V. Hughes, European utilities leader in London at PricewaterhouseCoopers Corporate Finance & Advisory Services.

Demand for nuclear power investments stretches across the industry. FPL Group Inc. of Florida agreed in December to buy Constellation Energy Group Inc. of Baltimore for about $11 billion, doubling the size of its nuclear business. The shares of Saskatoon, Canada-based Cameco Corp., the world's largest uranium supplier, jumped 92 percent in the past year.

Energy Bill

The first new nuclear power plants in about 30 years are being considered for the U.S., augmenting a generation built after the Arab oil embargo in 1973-74 caused crude oil prices to soar. An energy bill that President George W. Bush signed into law last year includes tax breaks, government insurance for project delays and loan guarantees to encourage construction of nuclear plants.

The nuclear power industry collapsed following the meltdown at Three Mile Island in Pennsylvania in 1979 and the 1986 explosion at Chernobyl, Ukraine, that sent radiation as far away as Sweden.

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., was quoted in the Wall Street Journal in June saying that the threat of climate change means he's open to investing in nuclear energy.

Asian nations are building 20 reactors and plan to add about 40 more to meet rising power demand and cut emissions of greenhouse gases, according to the Uranium Information Centre in Australia. The biggest market is China, which plans to increase nuclear output fivefold to as much as 40,000 megawatts by 2020.

Like many U.S. utilities, China favors the so-called pressurized water reactor technology developed by Westinghouse, now a U.S. unit of British Nuclear Fuels Plc. Toshiba offers a competing technology.

Westinghouse's New Design

In China, Westinghouse is one of the two candidates, along with Areva SA of France, likely to win a contract to build four new power plants in the eastern Zhejiang province and in southern China's Guangdong province, the state-owned China Daily reported on Dec. 2.

The other bidders for Westinghouse were General Electric Co. and Mitsubishi Heavy Industries Ltd. Initially, more than a dozen companies inquired to participate in the sale.

``Demand for pressurized water reactors is increasing, especially in Asia and the U.S., so companies are interested in acquiring Westinghouse's technology to boost their profitability and technical capabilities,'' said Masatake Higashi, vice president of Central Research Institute of Electric Power Industry in Tokyo.

Customer Interest

Westinghouse said last month that it won approval from the U.S. Nuclear Regulatory Commission for its AP1000 nuclear plant design and had received ``strong'' interest from potential customers in the U.S., Asia and Europe.

Expanding nuclear power is boosting the price of uranium, used as fuel in reactors. That has prompted a boom in projects to mine the metal and might spur corporate takeovers.

Uranium prices reached $37 a pound on Jan. 20, about 80 percent higher than a year ago, and may reach $50 a pound in 2007, said John Wilson, an analyst at Resource Capital Research in Sydney.

Prices may reach more than $500 a pound in 2015 because of a supply deficit, Kevin Bambrough at Sprott Asset Management said in a Jan. 4 report. Sprott expects a consolidation among smaller uranium exploration companies in Canada that may later lead to a single New York-listed company to compete with Cameco.

``The kind of interest by lots of countries in trying to maintain access to energy resources is just going to escalate,'' said Hugh Outhred, joint director at the University of New South Wales's Center for Energy and Environmental Markets.

Kansai in Kazakhstan

Kansai Electric Power Co., Japan's second-biggest power producer, yesterday said it will develop a uranium mine in Kazakhstan together with Sumitomo Corp., Japan's third-biggest trading house, to secure supplies of the fuel. Japan is the third-biggest generator of power from nuclear reactors.

``Nuclear energy is expected to grow because it's becoming perceived as a clean energy, which will help cut global emissions,'' said Shinzaburo Hino, assistant general manager of mineral resources at Sumitomo.

The company, which has stakes in uranium mines in Canada, Australia and Niger, wants to secure supplies amid an expected decline in reprocessed uranium, said Eiichiro Otsuka, assistant general manager of the company's nuclear energy department.

``We're interested in acquiring additional stakes in uranium mines as the market is expected to stay tight,'' Otsuka said.

Mega Uranium Bid

This month, Canada's Mega Uranium Ltd. made a A$16.2 million takeover bid for Hindmarsh Resources Ltd. in Australia. Adelaide-based Hindmarsh owns exploration rights in South Australia state and the Northern Territory, two of the regions most likely to allow development of new mines.

``Companies are now taking a five-year-plus view,'' said Gavin Wendt, a resources analyst at Fat Prophets Funds Management in Sydney. ``That's why we're probably going to see a greater level of merger and acquisition activity among our explorers, as a number of them have sizable resource bases.''



To contact the reporter on this story:
Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net.
Last Updated: January 23, 2006 19:29 EST