Japan Nuclear Fuel (JNFL) and Mitsubishi Heavy Industries (MHI) have entered into an agreement to acquire 10% stake in NewCo, a new company formed by Areva, for €500m ($536m).

The two companies will acquire a minority stake of 5% each in the new company being spun off from AREVA to handle business relating to the nuclear fuel cycle.

NewCo will focus on uranium mining, enrichment and conversion, and recycling of spent fuel.

With acquisition of a stake in NewCo, MHI plans to strengthen its ties with Areva in the exchange of human resources and technologies.

MHI president and CEO Shunichi Miyanaga said: “For many years AREVA has lent its support to the development of nuclear power generation in Japan.

“Now that we have reached this general agreement on the terms for investing in NewCo, I'm extremely pleased to be able to contribute to the reorganization of France's nuclear power industry.”

In parallel with investing in NewCo, MHI is in discussions to acquire a similar minority stake in AREVA NP, an AREVA Group company that specializes in NPP engineering and equipment supply.

Areva said that the capital of NewCo will remain open to other strategic investors for investment.

Earlier this month, Areva completed the sale of its stake in the offshore wind joint venture Adwen to partner Gamesa, as part of its efforts to focus on nuclear fuel cycle activities.

The joint venture was equally owned by the two groups.

Recently, the European Commission (EC) has approved French government's plan to inject €4.5bn ($4.8bn) in the troubled nuclear engineering firm Areva.