Life Cycle Management of Cobalt 60 from a User/Operator Perspective

1. Life Cycle Management of Cobalt 60 from a User/Operator Perspective Paul Wynne Director and General Manager iia

2. Issues in the spotlight • 2016 Code Meeting: Stated that not all States require the end-user to have financial guarantees that may be used to cover the costs of return to the supplier, or the costs of the long-term storage or disposal of the source should return to the supplier not be possible • 2013 & 2014 Regional Meetings: Agreed that financial provisions/insurances/guarantees should applied but did not reach consensus how it might be implemented and harmonized

3. Supply Chain Partners Supplier Manufacturer Operator 2016 Code Meeting: Recognized that current lack of a disposal route for disused sources is a challenge and may remain a challenge despite many years of national logistical and financial efforts

4. Supply Chain Partners Supplier 5+ Member States 7+ Member States 50+ Member States Manufacturer Operator 200+ panoramic irradiators with ~ 400 Mci of installed Cobalt 60 ~ 50% Co60, 25% plants are in the USA

5. Current State of Play • 2016 Code Meeting: Included a conclusion that: “…Considerable progress has been made by both States and users in assuring that the safe and secure management of disused sources is now addressed prior to the acquisition and authorizationof new radioactive sources.” • “Financial guarantees are established to ensure that the source will be managed according to regulatory requirements and licensing conditions in cases where the User/Operator doesn’t comply with its responsibility”. • Payments • Insurance • Agreements Before considering these options it is necessary to calculate a “monetary value”

6. Points for Consideration • Monetary Value. A value must be calculated before any form of guarantee can be put in place. • End of Life. The assumptions made will have an impact on the calculated monetary value. • Return Options. Will also have an impact on monetary value - “To the supplier, storage or disposal” - the 2016 Code Meeting. • Calculating Methodology. Accepted methodologies would be useful but flexibility should retained to allow for changing circumstances.

7. End of Life • End of Life. The source becomes “disused” -Either the point at which the source (a) ceases to have an economic value to the User/Operator or (b) the end of the license period. • Economic Value. The higher the disposal cost the longer the economic economic life. In some cases sources can be used in a low dose irradiator and in other sources can be re-encapsulated to extend economic life. This is different to recycling. • Storage. May be economically appropriate when costs are high, when denial of shipment is an issue or where take-back contracts can’t be enforced.

8. Return Options • Return to Supplier. This is usually addressed in the supply agreement. Terms could change over time so is this covered by the latest agreement or each supply agreement? • Storage. By the user, by the supplier, by the user MS, by the MS of the supplier, MS of the manufacturer or by an international storage facility. • Disposal. 2016 Code Meeting: Recognized that current lack of a disposal route for disused sources is a challenge so how do we include it in calculations.

9. Calculating Disposal Costs. • Zero Cost Returns. Until recently many supply contracts include a zero cost return clause albeit that this may be conditional on new cobalt being purchased. In this situation cost would be limited to the removal and transport cost. • High Activity Sources. High activity pencils could have a monetary value as other Users may be interested in purchasing them. The income received would be expected to cover the removal and transport cost. Residual cost zero. • Other Sources - disposal costs. Are now generally expected at the end of live. These would consist of three elements (a) returns charge (b) a removal cost (c) transportation cost.

10. Calculating Disposal Cost • Defining High Activity Sources. Sources such as C188, GIK A-6, RSL 2089 and CN 101 which have an activity of 10-12k Curies at installation. Above about 7k Curies may have an economic value and hence zero disposal cost. • Variability of Disposal Costs. Disposal cost that will be impacted by: (a) the supplier (b) the purchasing power of the User/Operator in negotiating price (c) internal engineering competency (d) location (e) disposal route. • Present Value v Future Cost. Assumptions have to be made about the equivalence of today’s cost estimates and tomorrows actual cost in monetary terms.

11. Calculating Disposal Costs • Disposal Costs Vary. The greatest disposal cost and hence burden could/will fall on small users/operators in remote / developing locations / countries. • Large Users/Operators. In my experience large users/operators already have established practices & policies agreed with regulators. • New v Legacy Sources. 2016 Code Meeting –“that the safe and secure management of disused sources is now addressed prior to the acquisition and authorizationof new radioactive sources”.

12. Alternative Forms of Financial Security • Payments / Bonds. Full payment to day to cover a future uncertain liability would at best create great stress on the finances of most, if not all, companies & at worst cause them to fail. • Insurance. Introduces a 3rd party (the insurance company) and provides the calculated monetary cover without full upfront payment of the full sum – less stress on the User/Operator • Agreements. To assume responsibility for the material at a given future time/event. Challenging in most situations. • Guarantees. From a 3rd party what form could / should this take? Parent company / third party / other? • Provisions. An accounting mechanism not necessarily a source of cash

13. International Irradiation Association • NGO - history of working with the IAEA. Members includes suppliers, manufacturers, users in over 40 countries. • Technology Neutral – gamma, electron beam and x-ray. • Science & Industry – we act as a bridge • Professional– formal structure, independent management and oversight board. • Connected– via affiliation agreements, partnerships and working relationships.

14. Conclusions • Financial Provisions. Are important and a focus of this meeting but solutions to storage, disposal and denial of shipment challenges require input from MS’s. • Monetary calculations – can be complex and will vary over time. • Benefits to Society. The recent IAEA ICARST conference highlighted the benefits that irradiation delivers in healthcare, food safety and security and environmental issues. • Users/Operators - Large Users/Operators are already doing much of what is being discussed. Think about the smaller players operating single plants in potentially remote locations. • Industry. Effective engagement via Associations / iia

15. Reflections on Day 1 • The Responsible Party. The consequences of effective supplier take-back agreements • Actual Experience. To-Date, Financial Provisions. • Calculating Methodology. Standard but flexible guidelines would I believe be useful, involving accountants and lawyers. • Insurance Pooling. May be an option building on the great work achieved by some to-date.

16. Conclusions Thank You Paul Wynne pwynne@iiaglobal.com www.iiaglobal.com