S.Africa considers nuclear fuel cycle facilities

By Wendell Roelf

CAPE TOWN, April 2 | Mon Apr 2, 2012 5:52am EDT

(Reuters) - South Africa is mulling the re-establishment of its uranium enrichment and conversion facilities, which were dismantled during the apartheid era, as it seeks to secure fuel for a new fleet of nuclear power stations.

Africa's largest economy, which announced more than 40 years ago that it would enrich uranium as part of a military-linked strategy during the Cold War, wants another 9,600 megawatts of nuclear energy to help shore up a power grid under pressure from rising demand and decades of under investment.

"The studies confirmed that fuel for the power reactor fleet should be manufactured in South Africa for reasons of security of supply when the nuclear component is expected to be around 13 percent of installed capacity," Chantal Janneker, Necsa's group spokeswoman, told Reuters.

Necsa, the country's nuclear energy corporation, is being encouraged to revive its participation in the nuclear value chain - including enrichment, conversion and nuclear fuel manufacturing - to reduce South Africa's current dependence on imported reactor fuels.

The country has some of the world's largest uranium deposits and the new nuclear fleet is likely to use 465 metric tonnes of enriched uranium a year by 2030.

"Earlier feasibility studies have shown that the fuel requirements of a nuclear reactor fleet of about 10,000 megawatts makes uranium enrichment a viable undertaking," Janneker said.

Necsa will investigate developing its own enrichment technology or partner with an international company.

However, power utility Eskom, which oversees the continent's only nuclear power station Koeberg near Cape Town, said the plan was for the enrichment facilities to develop together, and not ahead, of the expansion programme so that fuel production plants can be economically sustainable.

"Eskom is in close liaison with Necsa to ensure that its nuclear fuel supply contracts are aligned with South Africa's nuclear fuel production localisation strategies," Tony Stott, a senior manager at Eskom's generation division, told Reuters.

Necsa supplied nuclear fuel to the 1,800 MW Koeberg power station between 1988 and 1994, but discontinued the service because its operations were globally uncompetitive.

Areva and Toshiba's Westinghouse Electric Corp at present supply Koeberg with 30 metric tonnes of enriched uranium a year for its two units.

POTENTIAL POLITICAL FALLOUT

The plan by South Africa, which voluntarily gave up its nuclear weapons, takes place against the backdrop of rising global concern that countries, such as Iran, could use enrichment technology for weapons development. Iran denies these charges.

"Some political pressure can be expected. It is, however, generally accepted that a local enrichment capacity for peaceful purposes can be justified if the country has a local demand or expansion plan of 10 gigawatts nuclear," Stott said.

As a party to the Nuclear Non-proliferation Treaty, South Africa is required to allow the International Atomic Energy Agency to monitor all nuclear materials in the country to verify they are not being diverted from peaceful activities.

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South Africa Considers Building Nuclear, Coal-Fired Power Plants

Location: South Africa

Feb. 22 (Bloomberg) -- South Africa is considering spending more than 600 billion rand ($78 billion) on new nuclear plants, another coal-fired plant and a hydropower project in the Democratic Republic of Congo to stave off power shortages in Africa’s largest economy.

In the 2012 budget released today, the National Treasury allocated 844.5 billion rand toward new energy, transport, housing, telecommunications and water projects in the three years through March 2015. The budget lists 43 infrastructure programs worth a total of 3.2 trillion rand that are in progress or under consideration for implementation by 2020.

“No good project will be short of funding,” Finance Minister Pravin Gordhan told lawmakers in his budget speech in Cape Town. “South Africa has deep and liquid capital markets through which long-term capital can be raised at competitive rates.”

President Jacob Zuma announced plans for a “massive” infrastructure drive in his Feb. 9 state-of-the-nation speech to help spur invest and support growth in Africa’s biggest economy.

Proposals to spend 300 billion rand on nuclear plants with the capacity to generate 9,600 megawatts of energy by 2029 are in the “final stages of consideration,” the Treasury said. The government may also build a new 111 billion rand new coal-fired plant, in addition to the Medupi and Kusile plants under construction.

Grand Inga

An investment of 200 billion rand in Congo’s 40,000 megawatt Grand Inga hydropower project is at the “assessment stage,” while a study into a 200 billion-rand solar park is due for completion this year.

Transport projects being considered include a 37 billion- rand upgrade of Transnet SOC Ltd.’s rail line transporting coal from the eastern Mpumalanga province to the port of Richards Bay. A 300 billion-rand high-speed rail line between Johannesburg and the eastern port of Durban is still at a conceptual stage, the Treasury said.

The government is also considering a proposal for state petroleum company, PetroSA, to build a 200 billion-rand, 360,000 barrel-per-day refinery at the eastern port of Coega.

Public-sector borrowing will start “rapidly rising” after 2015 as infrastructure investment accelerates, Gordhan said.

The government has been struggling to implement capital projects, spending just 68 percent of the 260 billion rand allocated in the year through March 2011, Gordhan said.

Selling State Assets

“In addition to long delays, we have often experienced significant cost overruns,” he said. “We shall step up the quality of planning, costing and project management so that infrastructure is delivered on time and on budget.”

The government is reviewing its investment in a number of state-owned companies and may sell non-priority assets, the Treasury said.

New regulators may also be established to oversee the water and transport industries, to ensure the services they provide are correctly priced, while the Department of Energy is reviewing of its power-pricing policy, it said.

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