Necsa presentation to Minerals and Necsa presentation to Minerals and Energy Portfolio CommitteeEnergy Portfolio Committee

22 August 200722 August 2007

Rob AdamRob AdamChief Executive OfficerChief Executive Officer

South African Nuclear Energy Corporation (Necsa)South African Nuclear Energy Corporation (Necsa)

Presentation PlanPresentation 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

““State of the Nation Address”State of the Nation Address”09 February 200709 February 2007

• 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”

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 materialsPromotion of nuclear powerDevelopment and utilisation of nuclear technology in industry, medicine, agriculture and for researchBasic research in support of above

Uranium Ore

SAFARI-1 Research Reactor

[PMG note: photos not included]

Development of strategic competence 1969 – 1989

[PMG note: photos not included]

Uranium Enrichment

Fuel fabrication

Weapons programme

Two PWR Reactors at Koeberg

[PMG note: photos not included]

VAALPUTS Waste Disposal Site – Northern Cape

[PMG note: photos not included]

VAALPUTS Aerial View

[PMG note: photos not included]

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

Holding 90% Fluoro Pack (Pty) Ltd Share Holding 90% Cyclotope (Pty) Ltd

Share Holding 55%

Share Holding 40%

AEC Amersham (Pty) Ltd

Pharmatopes (Pty) Ltd

40 %

NTP Radioisotopes (Pty) Ltd

a subsidiary of Necsa Ltd.

www.ntp.co.za

Reliable suppliers of world-class radiochemicals, Reliable suppliers of world-class radiochemicals, radiopharmaceuticals and radioisotope products to radiopharmaceuticals and radioisotope products to

Health Care, Life Science and Industrial Markets Health Care, Life Science and Industrial Markets throughout the world.throughout the world.

NTP Product Groups

• RADIOCHEMICALS: RADIOCHEMICALS: Mo-99, I-131, P-32, S-35, P-33, Y-90Mo-99, I-131, P-32, S-35, P-33, Y-90

• RADIOACTIVE SOURCES: RADIOACTIVE SOURCES: Ir-192, Cs-137Ir-192, Cs-137

• IRRADIATION SERVICES: IRRADIATION SERVICES: Neutron Transmutation doping of Silicon,Neutron Transmutation doping of Silicon,

Neutron Irradiation ServicesNeutron Irradiation Services

• RADIOPHARMACEUTICALS: RADIOPHARMACEUTICALS: PELTEK-F Tc99-m Generator, PELTEK-F Tc99-m Generator,

Labelling Kits, I-131 Capsules and SolutionLabelling Kits, I-131 Capsules and Solution

• RADIATION TECHNOLOGY PRODUCTS: RADIATION TECHNOLOGY PRODUCTS: Radioluminescent lightRadioluminescent light

sources, Contract Manufacturing and Consulting, Transportsources, Contract Manufacturing and Consulting, Transport

containers, Dosimetry servicecontainers, Dosimetry service

Radiochemical73%

Radiation Services11%

Radiation Technology Products

2%

Sealed Sources7%

Radiopharmaceuticals8%

NTP Sales Revenue

Sales to 55 countries…

Radioisotopes....3rd in the world!

[PMG note: photos not included]

NTP Sales Per Year: Constant Rand Value

0

20

40

60

80

100

120

140

160

180

200

Year

Sal

es (M

R)

Sales 63 77 86 105 113 140 157 188

99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07

Pelchem (Pty) Ltd

[PMG note: photos not included]

UraniumMining/milling

Nuclear cycle Fluorspar beneficiation

Fluorsparmining

Conversion

Hydrogen fluoride

EnrichmentFluorine

Higher valueproducts

Etc.Etc.

Fluorochemicals

Fuel fabrication

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

Financial Performance

Pelchem

0

20

40

60

80

100

120

140

160

180

2008 2009 2010

Financial Year

Mill

ion

Ran

ds

Income

Expenses

Pelchem Plants

[PMG note: photos not included]

Pelchem Products

[PMG note: photos not included]

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.

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.

● Nuclear Manufacturing.

● “Frontier” research programmes.

NNEP - DME

NIP - the DTI

NRDS - DST

Uranium supply and demand

UxC

Supplier & utilitystockpiles

Productionfrom existing

mines

New mines

Mine expansions?

Russian HEU?Russian HEU downblend; US govt stockpiles; recoveries

WNA upper case

WNA base case

UU330088 Spot Price - Jan 2005 to July 2007 Spot Price - Jan 2005 to July 2007

SA Uranium Resources

Planned Uranium Production in South Africa

0

1000

2000

3000

4000

5000

tpa

AnglogoldUranium 11st UraniumTotal

Global Uranium Conversion Capacity, 2006

World Distribution Uranium Enrichment Capacity /1000 SWU

Details of the Forecast Shortage of Enrichment & Uranium in 2015.2015: Uranium and SWU required and

available in Western markets.

50

60

70

80

90

100

30 40 50 60 70 80

MSWU/year

Ura

niu

m, '0

00

ton

/ye

ar

Existing and

Planned SWU and

U

Requirements

• 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.

Possibilities for fuel cycle in South Africa

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.

Strategic R&D Focuses

• Isotope production

• Interface between nuclear and biotech

• Generation 4 nuclear reactors

• Hydrogen economy

• Spent fuel management

NECSA GOVERNMENT GRANT FOR ACTIVITIES APPENDIX B

0

200

400

600

800

1000

1200

1400

1600

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2006 BUDGETREAL REDUCTION IN STATE DEPENDENCE (2005 RAND VALUE)2006 BUDGETREAL REDUCTION IN STATE DEPENDENCE (2005 RAND VALUE)

% = YEAR - ON - YEAR REDUCTION IN STATE DEPENDENCE

CLOSURE OF

NON-VIABLE

ACTIVITIES

PHASE 1 PHASE 2PHASE 3OUTSOURCING AND

NEW STRUCTURAL

DESIGNCOMMERCIAL TURN-

OVER AND FOCUS ERAPHASE 4 DUAL VIABILITY AND STABILITY

-15%

-34%

-20%-10%

-17%-18%

-16%-16%-14%-28%

NOTE: D & D EXCLUDED

R' MILLION

-17% -1%-4%2% 38% 4% 10% -3%-1%

Capital & Infrastructure ProjectsPriorities

• 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

Proposed Capital & InfrastructureExpenditure

2009

MR

2010

MR

2011

MR

404,8 580,8 663,5

Proposed MTEF AdjustmentOperational Funding (VAT Incl)

2009

MR

2010

MR

2011

MR

CURRENT

MTEF

389,4 429,3 451,1

Additional

Operational

302,0 358,0 442,4

MTEF

Proposed

691,4 787,3 893,5

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.

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.

Thank you!