Update on Nucelar Energy by Department and Nuclear Energy Corporation of SA

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Mineral Resources and Energy

22 August 2007
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Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
22 August 2007

U
PDATE ON NUCELAR ENERGY BY DEPARTMENT AND NUCLEAR ENERGY CORPORATION OF SA

Chairperson:
Mr E Mthethwa (ANC)

Documents handed out
Draft Nuclear Energy Policy and Strategy for the Republic of South Africa (Department of Minerals and Energy Presentation)
NECSA Presentation to Minerals and Energy Portfolio Committee

Audio recording of meeting

SUMMARY
The Department explained that South Africa was moving toward an enhanced reliance on nuclear energy. The strategy and policy document clarified South Africa’s policy on the issue. South Africa had an abundance of uranium which they had to beneficiate themselves instead of them selling the raw product. Investing in the beneficiation of uranium would yield huge rewards for the country. The policy aimed to establish South Africa as a market leader in the global arena. There was a focus on investing in skills development in the areas of engineering, science and technology. The move to nuclear energy would be done with consideration of the impact on the environment. The Department assured the Committee that the use of nuclear energy would be for peaceful purposes only.

The Nuclear Energy Corporation of South Africa (NECSA) explained that they were in possession of extensive infrastructure, skills and experience to deal with issues raised in the policy. NTP Radioisotopes (Pty) Ltd, a subsidiary of NECSA, were the third largest producers of radioisotopes in the world. It was a great achievement to have been able to take the existing skills and create a successful radioisotopes business. Pelchem (Pty) Ltd, another NECSA subsidiary, was tasked with championing Government’s Fluorochemical Expansion Initiative.

NECSA now needed to be rebuilt to play a pivotal role in the nuclear programme.

MINUTES
Introductory comments by the Chair
The Chair said that the Committee had already discussed the nuclear policy with the Department. The Committee had provided the Department with their views and comments which had been incorporated in the current document. It is for this reason he felt that the presentation should focus on new issues, rather than on the same issues discussed previously.

Briefing by the Department of Minerals and Energy
Mr Tseliso Maqubela (Department of Minerals and Energy Chief Director: Nuclear Energy) apologised on behalf of the Director General who had been unable to attend the meeting. The Department would present the ‘Draft Nuclear Energy Policy and Strategy for the Republic of South Africa’. The strategy was approved by Cabinet on 8 August 2007. The presenters would focus on new issues not raised by the Committee before. The content of the document contained guidance which had been provided by the Portfolio Committee.

Introduction
The President had in his State of the Nation address indicated that Government would accelerate its preparatory work to lead the country’s enhanced reliance on nuclear energy generation. This strategy forms part of this preparatory work.

The framework governing nuclear power generation should be unambiguous and clear. The white paper made provision for nuclear energy but it was tentative and informed by conditions prevalent at that time, which included anti-nuclear sentiment. There were however changes in the nuclear environment. The strategy was aimed at clarifying what was in the white paper.

Factors Influencing the Proposed Policy Direction
There was evidence of a global resurgence of nuclear energy, for example the Russians were involved in extensive programmes focusing on the regeneration of nuclear power plants. The same trends had been observed in Korea and India, where there were significant construction activities. The utilities in the United Kingdom and United States were also planning interventions in this area. One should look beyond the present and instead focus on what the world would be like twenty or thirty years from now. There was a definite bias toward nuclear energy generation, for example spares, equipment, engineering were less supportive of green house emitting technology and there was a move toward nuclear energy.

There was an abundance of uranium in South Africa and certain other African countries. It was important for Africa to benefit from this uranium in ways other than selling it to developed countries. The same happened with crude oil, where countries were endowed but lacked the capacity to refine it, owing to the fact that there had never been a strategy to enable these countries to beneficiate the resource. SA would also find themselves unable to benefit from uranium should they decide not to invest in beneficiation.

South Africa was reinvesting in Energy Generation Capacity. This was an opportunity allowing the country to bring in other energy carriers, like nuclear energy.

Key Nuclear Energy Policy Objectives
These had been based largely on the guidance provided by the Committee. The policy would set the stage for the development of the nuclear industry in SA.

Mr Maqubela explained that the fourth point was important and had not been covered by the Committee previously. There had always been an emphasis on self-sufficiency, but the aim was now no longer just self-sufficiency but becoming global leaders in that area. There was a need to tap into that market and it was therefore important to position South Africa to enable them to play in that space. South Africa’s capabilities existed in private and public sectors and potential participants just had to identify where they would have the competitive edge, which would enable them to obtain global leadership.

Mr Maqubela referred to the last point and said that there was a focus on investing in skills, which included higher education in the areas of engineering, science, technology. The spin-offs would be felt outside the nuclear sector, for example they would be advancing the intellectual capabilities of South Africa as a whole.

Nuclear Energy Policy Principles
With regard to the second point, the presenter pointed out how the focus on nuclear energy would create jobs. This would happen when infrastructure was developed, in the mining of uranium, and also during the rollout of the beneficiation of uranium.

He emphasised the second last point, which was that nuclear energy would only be used for peaceful purposes.

Furthermore, he emphasised that the policy sought to mitigate the impact of nuclear energy on the environment, for example uranium mining should not leave a legacy.

He emphasised the legal and regulatory framework governing nuclear energy and said that it was based on best practice and not on some outdated framework. The Department had already started engaging with other countries on the policy and strategic document in order to obtain their views. It had also been submitted to the International Atomic Energy Agency for comment.

He also stated that uranium had to be used in a sustainable manner. The concept of recycling of uranium was introduced in this regard. This would involve the reprocessing of uranium, which entailed the re-use of recycled uranium.

Mr Maqubela referred to the safeguards and security measures, saying that South Africa was entering a commercially driven programme, which necessitated the need to secure patents so that the South African economy benefitted.

Key Interventions
Government was expanding nuclear energy programmes regarding generation and the presenter believed that more than fifteen percent of generation would be from nuclear energy within the next fifteen to twenty years.

In order to ensure a successful programme it was important to invest in nuclear research and development. This was the focus of the Nuclear Energy Corporation of South Africa (NECSA), as well as other institutions which played a role in uranium beneficiation.

It would also become necessary to intervene in the uranium market in order to ensure its availability. While South Africa would still pay market prices, there would however be a need to reserve uranium for use in this country in order to ensure sufficient supply for the next fifty to one hundred years. One could not have the situation where South Africa ran short of uranium while it was being exported to other countries.

There was a need to beneficiate uranium. It was better to have the capabilities to perform this function in South Africa. Ideally it would be done with international partners, but could be done alone if the need arose. Uranium enrichment was a very attractive opportunity, as profit margins were huge. There was however a need to invest in the necessary technology upfront.

He referred to the ring-fencing of nuclear activities, among which were
- the introduction of a skills development programme for nuclear energy
- the security of nuclear supply. This was important in order to ensure the availability of this resource

Institutional Arrangements
The Committee had previously raised the problem of lack of co-ordination at executive level. The alignment of the energy programme would be achieved the co-ordination of the following:
- Nuclear Research, Development and Innovation- this was done by NECSA, which had the resources for it
- Nuclear Power Generation Organisation- This would be done by Eskom, although they could form partnerships with the private sector
- Nuclear Power Generation Organisation
-  Integrated Nuclear Safety Regulator- this body would deal with nuclear safety and radiation matters. This was currently being dealt with in the different Departments and regulators. There had to be one standard. Integration would improve efficiency.
- Nuclear Security Agency- There would be one co-ordinated point for nuclear security. This could either be a directorate, for example Safety and Security. It could also possibly be an Intelligence Agency. It would deal with issues of border control, security of technology and establishing standards. This body would work closely with the Nuclear Safety Regulator.
- Nuclear Architectural Capability- One had to be certain that the public and private sector players had the necessary capabilities, for example if a valve had to be manufactured, there should be sufficient capabilities in South Africa to do so.
- Radioactive Waste Management Agency- the policy governing this issue had been approved in 2005. The Bill creating this agency would soon be submitted to Cabinet. The Agency would eventually manage waste disposal. The recycling of uranium was however the preferred approach.

Cross-cutting Issues
Mr Maqubela highlighted the issue of awareness creation as it was necessary to alleviate the apprehension surrounding the use of nuclear energy.

He referred to the Human Resource Development and highlighted achievements of certain South African graduates in the area of nuclear engineering. He referred to the young black South African woman who had obtained her MSc in Nuclear Engineering. Another example was the 30 year old South African who obtained a PhD in Nuclear Engineering three weeks ago. There were many graduates emerging from the North West. This had to be celebrated.

Mr Maqubela referred to the issue of environmental protection and said that all actions undertaken with regard to the programme had to be done in the open. There had to be no secrecy. The legislation therefore allowed the public to comment on how best to protect the environment.

With regard to the issue of employment creation, it was important for Government to set themselves goals in the areas of mining, uranium ore processing, construction of power plants and the manufacture of equipment.

Challenges and Implications
Mr Maqubela referred to the competition for scarce skills globally and said that it was therefore important for Government to develop a Human Resource strategy to ensure that they have a pipeline of persons, which would mean that it was easy to replace a person who chose to leave. He assured the Committee that where there was a vibrant nuclear industry, people would not want to leave. Whereas this industry had not offered much opportunity in the past, this was all starting to change and people were in fact returning to South Africa.

With regard to the global supply chain constraints, Mr Maqubela informed the Committee that there were insufficient manufacturers to deal with the demands around the building of plants in the various countries. This presented South Africa with the opportunity to fill the gap. Mining companies had identified and then taken the opportunities which had arisen in the area of uranium supply. These investments were paying off. The rest of the engineering companies should now see where in the value chain they wished to get involved.

The presenter explained that nuclear power was a long term commitment (of approximately one hundred years).Thus there was a need for institutions that were able to fulfil these obligations.

The opposition to the issue of beneficiation presented a challenge, which Mr Maqubela believed was driven mainly by commercial interests. This was because there were existing companies who would want to minimise the competition in this arena.

It was also important to communicate this initiative adequately, as failure to do so would result in the incorrect conclusions being reached as to the reason for embarking upon the nuclear programme.

Conclusion
The era of investment in nuclear energy had arrived. Those who had invested in this in the past had benefited the economy. The time had arrived to invest in order to benefit this and future generations.

Mr Maqubela read through the remainder of the remarks in the Conclusion of the document.

Discussion
Mr S Louw (ANC) indicated that he was not satisfied that the Department was sufficiently focused on creating awareness of the advantages of nuclear energy among the youth.

Mr Maqubela said that other departments had been working with the Department of Science and Technology (DST), who were championing the programme of skills development. They focused on recruitment and awareness creation in schools. In addition NECSA was planning on introducing a Nuclear Science Centre, which would serve as an attraction for the youth. People were realising that the nuclear programmes would not only necessitate a need for qualified nuclear physicists, but also engineers, geologists and chemists, etc.

Mr L Greyling (ID) expressed concern that the Department had failed to provide any idea as to how much the programmes would cost.

Mr Maqubela responded that both Eskom and NECSA were still in the process of negotiating with potential suppliers. He felt that these bodies were best placed to provide the figures, so that information provided would not compromise their negotiations. He however estimated that they were expecting profits in excess of R15 billion from the beneficiation of uranium.

Mr C Kekana (ANC) felt that the media should be used to promote the field of nuclear engineering. There were not sufficient graduates from the Engineering faculties in South Africa, especially if compared to first world countries.

Mr Maqubela replied that the Department would provide the Committee with the report on the details of the Skills Development Programme. The information would include the number of students graduating in engineering in the undergraduate, postgraduate and Masters programmes.

Mr Kekana referred to the relationship between uranium and gold and asked if could be the presence of uranium without gold being present.

Mr Maqubela answered that the fact that there was very often a close proximity between uranium and gold deposits, was in fact a South African phenomenon. However in areas like Beaufort West there have been uranium deposits with no gold nearby.

Prof I Mohamed (ANC) said that the product resulting from the beneficiation or enrichment of uranium was plutonium. He asked what plans the Department had to deal with the lethal waste matter resulting from this process.

Dr Skalk De Waal (Department of Minerals and Energy Nuclear Specialist) explained that this issue was governed by Act 47 of 1999. The Act was aimed at protecting South Africa against nuclear damage in terms of safety standards and regulatory practices. He referred to the plutonium waste and said that intermediate level waste disposal was well-managed. There was a facility in Namaqualand which had been managed by NECSA. With regard to high level waste, South Africa would engage in re-processing, in terms of which 95% of the recyclable material was removed for re-use. The remaining 5% would be smelted into glass, which would be placed into stainless steel containers and stored.

Mr J Combrinck (ANC) sought clarity about the fact that the Nuclear Security Regulator was not a public entity but would still adhere to the standards of the Safety Regulator.

Mr Maqubela responded that the issue of security was a work in progress. They were already developing capacity in the security agencies on nuclear security. On the one hand the intelligence agencies would train the Department’s agencies, like Eskom and NECSA. Although the possibility may arise that a dedicated public entity would have to be created for the purpose of security, the Department preferred to create nuclear security expertise in the existing security structures. This would become increasingly important as the need to protect intellectual property arose.

Ms N Mathibela (ANC) commended the achievements of those young graduates in the field of nuclear engineering, as it showed that the field was no longer the domain of older people. She however was concerned that young people would be trained and then simply be lost to the private sector. She asked what plan Government had in place to prevent this from happening.

Mr Maqubela replied that this would not be a problem if there were sufficient people in the pipeline to ensure that those who left could be replaced. The Department had in fact created contract posts for the purpose of training individuals. Even though they knew that these people would be lost to the Department itself, some of these people went to work for Eskom and NECSA, while others did in fact leave for the private sector. This was not a problem, since Government wanted the private sector to participate in the opportunities provided by nuclear energy. In addition, introducing competition would in the long run increase South Africa’s ability to compete in the global markets.

Ms Mathibela referred to the situation in Iraq and asked if South Africa would not be placed in a similar position, which was that they could be accused of possessing nuclear weapons by the United States.

Mr Maqubela said that this would not be a problem, as South Africa had signed all the International protocols. In addition South Africa had been the first country to give up its nuclear weapons programme. There was also demonstrable evidence that the Government had no clandestine nuclear facilities as inspectors could go and investigate any areas without prior warning.

Adv H Schmidt (DA) said that there was a difference between an awareness campaign and public consultation. One should bear in mind that there were communities who were not in favour of the nuclear programme. He said that if Cabinet’s decision would override the views of the public, it would be a dangerous road to follow.

Mr Maqubela responded that the document had been approved for public comment. The Department would make copies available to the public. It would also be published in the Government Gazette for sixty days. This process could however not be dragged out due to commercial imperatives. Investments in regeneration need to be made, as there was a need for a new power plant on the coast by 2016. The Department would also be available for public meetings with the affected communities. This would have to be co-ordinated as there was no purpose in extending the period of public meetings which might not even add value to the process.

Adv Schmidt asked if private sector participation was welcomed in the area of generation, for example.

Mr Maqubela explained that private sector participation would be allowed in the area of beneficiation, but it had to be done in partnership with Eskom, who would be the majority partner.

Mr Greyling asked why discussions on this issue were taking place in silos. The issue had been discussed from a very different perspective in the Portfolio Committee on Environmental Affairs and Tourism. He asked why there was no mention of the Wonderfonteinspruit radiation, which had been focused on by that Committee.

Mr Maqubela responded that the Wonderfontein issue had not just been identified as a nuclear issue. While radioactivity was an issue, there were also issues of toxicity and chemical effects. Radioactivity might not even be the most hazardous issue there. He however acknowledged that this area definitely required an intervention by the Departments of Environmental Affairs and Tourism, Water and Forestry, Minerals and Energy; as well as mining companies. These entities would need to provide a presentation to the Committee explaining that the problems in this area are not nuclear-related, but due to contaminated sediment resulting from mining activities in the 1960s.

Mr Maqubela said that public meetings would be held in areas where sites had been identified. The purpose would be to explain to people the need to enrich the resources which were available.

Mr Greyling insisted that the issue of costs had to be addressed if the Department were to push for the use of nuclear energy. This was important, as it was necessary to determine if these costs were justified or if other technologies would in fact be preferable.

Mr Maqubela reiterated that Eskom and NECSA would be best placed to respond to this question.

The Chair concluded the discussion, saying that it was very important that the process was consultative. There were still issues that had to be explained by the Department before finalisation of the report, so it addressed the interests and concerns of the people represented by the Committee.

Presentation by the Nuclear Energy Corporation of South Africa
Owing to the fact that the Department’s presentation had been fairly lengthy and comprehensive, Mr R Adam (CEO of the Nuclear Energy Corporation of South Africa) read through the presentation document, briefly commenting where necessary.

The presentation focused on:
1)2007 statement by President Mbeki

2)History of NECSA
Mr Adam explained that when the Government had shut down the nuclear programme in the mid 1990s, there had been ‘serious’ infrastructure, hot cells, fuel testing centres and skilled staff which had threatened to become redundant. It was for this reason that they had decided to employ this technological muscle in other ways and on other programmes, which allowed them to preserve the national skills base in the nuclear domain. If this had not been done, the country would have been much worse off for it.

3) NECSA group and Corporate Structures

4) Examples of recent technology successes- NTP & Pelchem
NTP Radioisotopes (Pty) Ltd, a subsidiary of NECSA were ‘reliable suppliers of world class radiochemicals, radiopharmaceuticals and radioisotope products to Health Care, Life Science and Industrial Markets throughout the world.

Mr Adam identified the NTP product groups (page 7 of the presentation document). NTP Radioisotopes (Pty) Ltd was the third largest producer of radioisotopes in the world, selling products to 55 countries. Uranium being used came from the weapons programme and was then converted to doses which could assist in the treatment of cancer and also the production of scans for detecting bone fractures. The problem with the production and supply of isotopes was that they ‘decayed’ easily resulting in a third of the product being lost within three days. Because they only got paid for what was delivered, NECSA was therefore hugely reliant on logistics (especially a rapid transport system). Mr Adam noted that it was a huge achievement on NECSA’s part to have been able to take the existing expertise and create a successful business in radioisotopes. The business grew extensively and they already exceeded their performance target by 12%. This would continue with the growth of nuclear medicine.

Pelchem (Pty) Ltd was the other subsidiary of NECSA. Their business had been based on the expertise developed during the ‘nuclear fuel cycle days’. The focus was on the conversion and enrichment stages. Once developed, conversion capacity could be deployed in other ways, which would leave one with relatively few competitors. South Africa had the largest capacity with regard to flourochemicals in the southern hemisphere and had the largest reserve of fluorspar in the world. A huge range of products, including anaesthetics, were derived from this process.

Mr Adam read through the slides on Pelchem’s mandate and financial performance.

5) Necsa in the National Nuclear Energy Policy and National Industrial Policy
Mr Adam said that NECSA was positioning itself to fulfil their role in the National Nuclear Energy Policy and was interacting with the Department in this regard.

In terms of the National Industrial Policy, NECSA’s focus would be on nuclear manufacturing. They worked closely with the Department of Trade and Industry, but also approached the Departments of Minerals and Energy, as well as DST for the resources to build manufacturing capacity. Specifications in nuclear manufacturing went beyond what was required in other industries. There was a need to develop capabilities to ensure that there was no need to look abroad to meet capacity requirements.


6) Potential NECSA contribution to a future South African Uranium/ Nuclear industry
Mr Adam read through the slide on ‘Capital and Infrastructure Projects’.  With reference to the R&D capacity projects, he stated that NECSA were providing 175 bursaries and were even employing pensioners in order to hold onto skills.

7) Budget request for 2008/2009
It would take investment in nuclear technology to revitalise this industry. Mr Adam referred the Committee to the slides on the ‘Proposed Capital and Infrastructure Expenditure’ and ‘Proposed MTEF Adjustment Operational Funding (VAT incl)’.

Discussion
Mr Molefe asked if NESCA was happy with what they were doing in terms of R&D.

Mr Adam responded that NESCA was much happier about their achievements regarding capacity-building than they had been one year ago, as much progress had been made during the past year. As Mr Maqubela had mentioned, many people who had been working abroad were now returning to South Africa to work here. In addition Eskom had held discussions with the University of Cape Town about modifying the existing courses in mechanical and chemical engineering to include modules in nuclear engineering. Thus in the next few years the university would have engineering courses which would meet the needs of Eskom in this regard. The same would start happening at other universities in the future.

Mr Louw referred to the fact that part of the radioisotopes got lost within three days. He asked what NESCA was doing about this. He asked if they had security arrangements in place to stop this occurrence.

The Chair asked if the presenter had indicated that the product was lost or used

Mr Louw insisted that the presenter had said that the product got lost.

Mr Adam said that there seemed to be a misunderstanding. The product did not actually get lost. Instead it converted into another substance within that period- it was a matter of chemistry which unfortunately could not be changed, as it was simply the nature of the substance involved.

Mr Kekana referred to the question as to whether beneficiation was affordable. He argued that it was not a matter of affordability- beneficiation was a necessity if one wanted to challenge colonial practices, which was that Africa would sell the raw product to first world countries and then have to buy back the finished product at huge prices. It was therefore imperative that the money be found for the purpose of beneficiation or the people of South Africa would continue to live in poverty.

Mr Kekana referred to the international protocols on atomic weapons and asked if the United States was also subject to these inspections. He criticised the fact that some countries were in the position to dictate to the rest of the world. He asked what happened to the nuclear weapons built in the United States during the Cold War.

Mr Adam said that this issue could perhaps be dealt with by the Department of Foreign Affairs. He however agreed that this was not a level playing field and that some countries were not subject to the same treatment as others, which is why countries like India had refused to sign the protocol.

The Chair concluded the meeting, saying that there were still issues in the report which needed to be addressed. It was the duty of the Committee to assist the process by specifying areas what these issues were.

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