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S. Africa has opportunity for nuclear entrepreneurs

- Associated Press - Wednesday, May 9, 2012

JOHANNESBURG — Power-starved South Africa plans to increase its nuclear reactor capacity, and energy companies around the world are lining up to bid for contracts.

The project has an estimated cost of more than $40 million, South African Energy Minister Dipuo Peters said. However, it is still unclear what contracts will be offered or how much of the business will be set aside for local companies.

South Africa is the only country in Africa with a nuclear power plant. The two-reactor Koeberg facility near Cape Town has been operating since 1984.

The government is committed to building at least six more reactors at three or four sites by 2030 as part of a plan to decrease its dependence on electricity plants that use coal.

South Africa now depends on the coal plants for at least 90 percent of its energy needs. Eskom, the state electricity utility, also is a major supplier to South Africa's neighbors.

Preparing for future

An energy crisis in 2008 blamed on poor planning led to frequent and widespread blackouts that hit mining and other key industries.

The government fears energy supplies will be tight for the next few years, hobbling its efforts to expand the economy and create jobs in a country where a quarter of the workforce is unemployed.

South Africa wants to assist local skills and local businesses as it expands its nuclear capacity, Ms. Peters said.

"It is not just about building power plants, but how we build them," she said at a nuclear seminar organized by a labor group. "We are not about to turn South Africans into mixers of concrete."

Ms. Peters presented the plans for the reactors, along with those for wind and solar plants, just days after an earthquake and tsunami hit Japan in March 2011, sending three reactors at the Fukushima Daiichi nuclear plant into meltdown there. Germany permanently shut down one of its aging reactors because of what happened at Fukushima.

Ms. Peters said she is confident the new nuclear technology South Africa plans to import is safe. No serious incidents have been reported at Koeberg during its 28 years of operation.

South Africa's nuclear program, though, has had setbacks, including a failed effort with America's Westinghouse Electric Co. to develop a new generation of reactors.

The multibillion-dollar project missed several deadlines before it was abandoned, and prospects for customers were uncertain.

South Africa is not alone in forging ahead with nuclear projects since the Fukushima crisis. Turkey is pursuing plans to build its first nuclear power plant.

Even as Japanese engineers were fighting to cool reactors, officials from Russia and Belarus were signing a deal for a $9.4 billion nuclear plant in Belarus.

South Africa's prospects

South Africa is "one of several significant prospects on the radar," said Ian Hore-Lacy, spokesman for the London-based World Nuclear Association, which represents the industry.

American and French companies involved in building Koeberg may have an advantage when it comes to involvement in South Africa's nuclear buildup because of their long-standing relationships, Mr. Hore-Lacy said in a telephone interview.

He added that Russian, Chinese and other companies cannot be discounted in the competition for nuclear business in South Africa.

Russia's State Atomic Energy Corporation, known as Rosatom, has been among the most active in seeking South African business.

Rosatom held a seminar in Johannesburg in early April to introduce itself to the South African government and business officials. It sent a vice president back later in April for more talks.

Alexey Kalinin, head of Rosatom's foreign operations, said his company would get as much as 60 percent of supplies for projects in South Africa from South African companies.

He said that could mean more than $15 billion in earnings for South African companies, $3.4 billion in tax revenue for the South African government, and 15,000 new jobs. He also said Rosatom is ready to draw South African companies into its global supply chain.

Mr. Kalinin said his company is looking ahead to helping Nigeria develop a nuclear industry and already is involved in uranium exploration and mining in Tanzania and Namibia.

South Africa "can be indeed regarded as a possible gateway to other African countries and a driver of nuclear energy development in the region," Mr. Kalinin said.

Such expansion is just what Yves Marignac, a Paris-based energy expert and anti-nuclear campaigner, fears. He would rather see developing countries taking the lead in developing safe, clean renewable energy sources like wind and solar.

But South African officials assert that renewables alone cannot deliver enough energy.

Mr. Marignac, speaking in a telephone interview, also said he is concerned the nuclear energy industry may be pushing new markets to sign contracts before all the questions raised by the Japanese crisis are answered.

"South Africa is probably one of the next big chances for the nuclear companies trying to sell reactors in the world," said Mr. Marignac.

He sees a race between "the ability of the companies to acquire new contracts ... and the ability of the international community to develop new standards."

Ms. Peters said she will not be rushed to sign contracts because safety is a top priority.

She also said South Africa is interested not just in building new reactors, but in developing an entire cycle, from mining more of its uranium resources to disposing of nuclear waste.

That presents a range of opportunities for foreign companies, as well as the possibility of South Africa one day exporting its own nuclear technology.

Ms. Peters has faced challenges from a nascent South African anti-nuclear movement and powerful labor unions concerned she is not choosing the energy options that will create the most jobs.

"We, as South Africa, are convinced that we need an energy mix," Ms. Peters said. "We cannot discard any technology."

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