The French engineering group Areva confirmed Wednesday it has dropped negotiations with Horizon Nuclear Power, a joint venture set up in 2009 to replace the existing twin, 40-year-old nuclear reactors at Wylfa on the Welsh island of Anglesey in a $13 billion effort.
The plant, which features obsolete Magnox-type reactors, is to be decommissioned by 2014.
Horizon's partners, German energy companies E.ON and RWE, put their license up for sale in March, seeking new investors to move forward with the plans. They said then the move was prompted by the global economic crisis as well as Germany's decision to phase out nuclear power in the aftermath of the Fukushima accident in Japan.
Areva had worked with the state-owned China Guangdong Nuclear Power Group in preparing a bid to buy Horizon but the consortium revealed Wednesday it decided not to submit the proposal before last week's deadline.
"I can now tell you that Areva and CGNPC have suspended their interest in the planned sale of Horizon Nuclear Power and did not submit a bid," an Areva spokeswoman told the broadcaster.
Two other bids are believed still on the table -- one from the U.S. engineering group Westinghouse and another led by Hitachi of Japan.
But the pullout of Areva, which boasted the most advanced design with its European Pressurized Reactor-style reactor and deep-pocketed Chinese backers, was seen as a blow to Britain's "private-finance only" policy for a new generation of nuclear plants, the BBC said.
The Welsh government declined to comment directly on the move, saying only, "The sale of Horizon is a commercial process which is being led by the current owners and their sales advisors Nomura."
But Westminster last month touted the potential of foreign backers creating nuclear energy jobs in Wales, deeming Wylfa "a vitally important piece of national infrastructure" and tabbing it as one of its chief infrastructure priorities.
New Secretary of State for Wales David Jones -- given the job by Prime Minister David Cameron last month in his first major Cabinet reshuffle -- said there was "strong overseas interest" in the Wylfa station, expressing confidence that plans for a replacement would go ahead, The Western Mail reported.
"There are a number of interested parties who have personally assured me that their intention is very serious," he said before a trip to Anglesey, adding, "You'll certainly find there's a strong interest from overseas. There are a number of overseas companies and entities interested in it."
But interest on the part Chinese financial backers has in fact now waned, The Guardian reported.
"The Chinese could not get the commitments they were looking for from the British government," an unnamed source told the newspaper, adding the problems were technological ones rather than political.
That Chinese skittishness has also extended to Westinghouse's potential consortium, where the state-owned China National Nuclear Power Corporation has also withdrawn, the report said.