Advancing the South African Nuclear Energy Industry

1. Necsa presentation to Minerals and Energy Portfolio Committee22 August 2007Rob AdamChief Executive OfficerSouth African Nuclear Energy Corporation (Necsa)

2. Presentation Plan •2007 Statement by President Mbeki • History of Necsa • Necsa Group &Corporate Structures • Examples of recent technology successes - NTP & Pelchem • Necsa in the National Nuclear Energy Policy & the National Industrial Policy • Potential Necsa contribution to a future South African Uranium/Nuclear industry. • Budget request for 2008/09

3. President Mbeki stated, “with regard to energy, we will also expedite our work to ensure greater reliance on nuclear power generation, natural gas and the various forms of renewable sources of energy” “State of the Nation Address”09 February 2007

4. Development of SA Nuclear Industry: Research Era - 1959 onwards • The Atomic Energy Board (AEB) instituted as a research organization • Basic nuclear research & South Africa’s national nuclear authority • Four point nuclear research and development programme. • Development and refinement of the SA’s nuclear raw materials • Promotion of nuclear power • Development and utilisation of nuclear technology in industry, medicine, agriculture and for research • Basic research in support of above Uranium Ore

5. SAFARI-1 Research Reactor [PMG note: photos not included]

6. Development of strategic competence 1969 – 1989[PMG note: photos not included] Fuel fabrication Weapons programme Uranium Enrichment

7. Two PWR Reactors at Koeberg[PMG note: photos not included]

8. VAALPUTS Waste Disposal Site – Northern Cape [PMG note: photos not included]

9. VAALPUTS Aerial View [PMG note: photos not included]

10. NECSA GROUP STRUCTURE Necsa Share Holding 100 % Share Holding 100 % Share Holding 51 % Pelchem (Pty) Ltd NTP Radioisotopes (Pty) Ltd Arecsa Human Capital (Pty) Ltd Cyclotope (Pty) Ltd Share Holding 90% Holding 90% Fluoro Pack (Pty) Ltd Share Holding 55% AEC Amersham (Pty) Ltd 40 % Share Holding 40% Pharmatopes (Pty) Ltd

12. NTP Radioisotopes (Pty) Ltd a subsidiary of Necsa Ltd. www.ntp.co.za Reliable suppliers of world-class radiochemicals, radiopharmaceuticals and radioisotope products to Health Care, Life Science and Industrial Markets throughout the world.

13. NTP Product Groups • RADIOCHEMICALS: Mo-99, I-131, P-32, S-35, P-33, Y-90 • RADIOACTIVE SOURCES: Ir-192, Cs-137 • IRRADIATION SERVICES: Neutron Transmutation doping of Silicon, • Neutron Irradiation Services • RADIOPHARMACEUTICALS: PELTEK-F Tc99-m Generator, • Labelling Kits, I-131 Capsules and Solution • RADIATION TECHNOLOGY PRODUCTS: Radioluminescent light • sources, Contract Manufacturing and Consulting, Transport • containers, Dosimetry service

14. NTP Sales Revenue

15. Radioisotopes....3rd in the world! [PMG note: photos not included] Sales to 55 countries…

16. NTP Sales Per Year: Constant Rand Value

17. Pelchem (Pty) Ltd[PMG note: photos not included]

18. Fluorochemicals Fluorspar beneficiation Nuclear cycle Fluorspar mining Uranium Mining/milling Hydrogen fluoride Conversion Fluorine Enrichment Higher value products Fuel fabrication Etc. Etc.

19. Pelchem’s Mandate • Secure supply of HF and F2 for nuclear program • Champion government’s Fluorochemical Expansion Initiative (FEI) • Build non-uranium fluorochemical portfolio into sustainable business • Compliance with regulatory and stakeholder requirements • Deliver what is promised responsibly and safely on schedule within specification and cost competitively

20. Financial Performance

21. Pelchem Plants[PMG note: photos not included]

22. Pelchem Products[PMG note: photos not included]

23. Drivers for investment in nuclear infrastructure in South Africa • Diversification from almost exclusive (90%+) reliance on coal leads to • decision to limit coal contribution to new build to 50%. • Geographic factors in Western Cape & Eastern Cape rule out other • base-load generation sources, i.e. no local coal or hydro present and gas • operation is very expensive . • Costing over the 60 year life time of power stations in a world that is • rejecting un-sequestrated carbon means nuclear comes out cheaper, even • in other regions of SA. • Long term uranium price buoyancy means nuclear fuel cycle investment • is attractive and may be needed to underpin security of supply.

24. Necsa in the National Nuclear Energy Policy & Strategy, the National Industrial Policy & the National R&D Strategy ● Anchor for nuclear R&D. ● Uranium conversion. ● Uranium enrichment. ● Nuclear fuel manufacture ● Study of spent fuel reprocessing. NNEP - DME NIP - the DTI ● Nuclear Manufacturing. ● “Frontier” research programmes. NRDS - DST

25. Uranium supply and demand WNA upper case WNA base case Supplier & utility stockpiles Russian HEU downblend; US govt stockpiles; recoveries Russian HEU? Mine expansions? UxC New mines Production from existing mines

26. U308 Spot Price - Jan 2005 to July 2007

28. SA Uranium Resources

30. Global Uranium Conversion Capacity, 2006

31. World Distribution Uranium Enrichment Capacity /1000SWU

32. Details of the Forecast Shortage of Enrichment & Uranium in 2015.

33. Possibilities for fuel cycle in South Africa • There is an imminent, global shortage of both conversion and enrichment capacity. • Security of nuclear fuel supply is a matter of concern for any country embarking on a major build programme. • Conversion and enrichment therefore need to be carefully examined. • Although there is currently global over-capacity in fuel manufacture, this cannot be relied upon to continue. • Ultimately the industry will move towards a closed fuel cycle. Therefore spent fuel reprocessing must be investigated.

34. Possibilities for High-tech Manufacturing • Existing capacity in local industry stimulated by PBMR. • Government intervention via Necsa yields National Nuclear Manufacturing Centre, intended to develop standards and capacity. • Need to develop localization strategy aligned with preferred bidder(-s) for new nuclear build. • Dual approach based on selected LWR component manufacture under license and PBMR spectrum.

35. Strategic R&D Focuses • Isotope production • Interface between nuclear and biotech • Generation 4 nuclear reactors • Hydrogen economy • Spent fuel management

37. Capital & Infrastructure Projects Priorities • Pelindaba Site & Infrastructure Projects: Pelindaba Buildings, Infrastructure Effluent System & Facilities Security Upgrade • Nuclear Fuel Cycle Projects: Conversion and Enrichment, EURO Project • R&D Capacity Projects: SAFARI Equipment Upgrade, R&D Capacity

38. Proposed Capital & InfrastructureExpenditure

39. Proposed MTEF AdjustmentOperational Funding (VAT Incl)

40. Summary • South Africa has very large reserves of uranium and a very active mining industry on which many other countries will rely for their supplies of uranium. • South Africa can add value to the uranium that it produces by enriching it, in order to maximize its earnings in export markets. • Necsa has already developed and used substantial facilities for the conversion and enrichment of uranium. These were dismantled but the expertise was developed and still exists in South Africa. • Necsa also built a nuclear fuel fabrication factory and a plant for making zircaloy tubing.

41. Overall Conclusions • South Africa will significantly increase its nuclear power capacity over the next 20 years. • This will provide an impetus for a local nuclear industry with many new job opportunities. • The local mining and manufacturing industries are likely to partner with local and foreign nuclear players to create this industry. • Necsa needs to be rebuilt to play a pivotal role in this programme.

42. Thank you!