NECSA’S BRIEFING TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT By: Ambassador Mochubela Seekoe,...

NECSA’S BRIEFING TO THE SELECT COMMITTEE ON ECONOMIC

DEVELOPMENT

By:

Ambassador Mochubela Seekoe, Chairperson

Mr Phumzile Tshelane, CEO

Ms Mbali Mfeka, Acting Group Executive: Finance and Information Management

11 June 2013

Index

1. Necsa’s Legislative and Policy Mandate

2. Alignment to Government Policy

3. Necsa Group Corporate Plan 2014-16

4. Human Resources

5. Necsa Group Predetermined Objectives and Key performance Indicators for

2013/14 - 2015/16

6. Necsa’s Achievements in 2012/13

2

Necsa’s Legislative and Policy Mandate

Necsa’s Main Functions (in terms of the Nuclear Energy Act, 1999)

To undertake and promote research and development in the field of nuclear energy

and radiation sciences and technology and .… to make these generally available.

To process source material, special nuclear material and restricted material and to

reprocess and enrich source material and nuclear material.

To co-operate with any person or institution in matters falling within these functions.

Also: Execute institutional responsibilities on behalf of government, e.g. operation and

utilisation of SAFARI-1, decommissioning and waste management, international

obligations.

4

Necsa in the Nuclear Energy Policy (2008)

Necsa shall serve as the anchor for nuclear energy research, development and

innovation in South Africa. Necsa shall be encouraged to participate in the uranium value chain. Government, through Necsa, shall undertake/investigate...

– the development of uranium conversion capabilities,

– the viability of developing its own uranium enrichment capabilities and

simultaneously seek to obtain access to established uranium enrichment

programmes,

– a strategy to develop nuclear fuel fabrication capabilities.

Government’s intention is to…establish a modern nuclear technology industry

including manufacturing and construction capabilities as well as services.

5

Alignment with

National Development Plan


7

NDP Priority Area Necsa Group AlignmentProviding Quality Health Care NTP Radioisotopes produces medical radioisotopes, some of which are utilised in the South

African health system for diagnostic studies and cancer treatments.An Economy that will Create More Jobs & Improving the Quality of Education, Training and Innovation

NTP and Pelchem product sales on world markets contributes to SA balance of payments Apprenticeship training offered by Necsa Skills Development Centre (trained 442 people

during 2012/13) DTTC 33 pre-test, 246 trade test preparation and 232 artisans trade test Security learnerships launched in 2011/12 (9 graduates in 2012/13) Necsa Bursary Programme (Graduate-in-training programme 11 students, Undergraduates

15 and 5 postgraduates for 2012/13); Internship programme (36 students for 2012/13); post-graduates and post-doctoral fellows supported with research projects at Necsa (62 for 2012/13) and Universities (36 for 2012/13)

Expanding Infrastructure Necsa has embarked on several key infrastructure projects, including: the manufacturing plant for low enriched uranium (LEU) material test reactor (MTR) fuel;the SAFARI-2 research reactor project;achieved ASME III accreditation for its nuclear manufacturing centre (NMC) so that South Africa may procure localisation benefits arising out of its nuclear energy expansion programme; preparations for a pressurised water reactor (PWR) fuel component manufacturing facility; and The Minister of Energy officially launched the Necsa Visitor’s Centre in February 2011 to assist in improving public understanding of nuclear technologies.


8

NDP Priority Area Necsa Group Alignment

Transitioning to a Low-Carbon Economy

Recognising the role nuclear energy can play in reducing SA’s greenhouse gas emissions as well as the importance of raw material beneficiation for the SA economy and based on the requirements of the NEP Necsa has drafted a report showing the status of local uranium reserves and how these resources can be locally beneficiated through the production of nuclear fuel which is especially pertinent to SA’s nuclear energy expansion programme.

South Africa in the Region and the World

Necsa continues to be extensively involved in technical cooperation projects of the IAEA’s African Regional Cooperative Agreement for Research, Development and Training related to Nuclear Science and Technology Programme (assisted Ghana with site characterisation for its first Borehole Disposal unit for disused sealed radioactive sources. Also undertook successful conditioning missions to Sudan and Tanzania for sealed high activity radioactive sources (SHARS), a world first Necsa developed and designed technology).

Necsa Group Corporate Plan 2014-2016

Key Objectives of the Necsa Group

Nuclear Power Cluster

To establish the Nuclear Manufacturing Centre as a viable entity.

To implement Pelchem’s strategy for growth and sustainability, including an

increase of income from R178.0m (2012/13) to R376.1m by 2016/17.

To assess the viability of a future nuclear fuel cycle (front end) services

industry in South Africa and to progress towards the development or

demonstration of required processes and technologies.

10

Continues…


Radiation Science and Applications Cluster

To maintain full operational capability of SAFARI-1 and implement the

reactor’s ageing management programme.

To expand SAFARI-1 based R&D facilities and outputs.

To achieve the project targets for the establishment of an LEU fuel and target

plate manufacturing plant.

To continue with the feasibility study on a multipurpose research reactor to

replace SAFARI-1 at the end of its operational lifetime.

To grow NTP Group income from R937.3m (2012/13) to R1513.4m by

2016/17.

11

Continues…


Necsa as Host of Nuclear Programmes Cluster

To increase Necsa’s research, development and innovation outputs.

Maintain and improve the Necsa Group safety culture, SHEQ processes and

procedures, audit and reporting practices to ensure full compliance with all

regulatory and best practice requirements.

To achieve a reduced but sustainable salary bill within existing funding

constraints.

To maintain infrastructure at a suitable level.

12

Cross-cutting Executive Management Driven Priorities

In addition to the strategic objectives already listed Necsa Executive management

has selected the following main management priorities for the near term:

– Obtaining early Shareholder support for key strategic projects.

– Raising the performance of R&D, NMC, NURAD, the NTP Group

(specifically its off-shore subsidiaries) and the Pelchem Group.

– Increasing the awareness of Necsa research and production outputs and

the positive impact thereof.

– Finding sustainable funding models for the expansion and enhanced

viability of Necsa subsidiaries.

13

Continues…

- Expanding R&D collaboration with iThemba LABS and the rest of the National System of

Innovation, including government departments such as DST.

- Future proofing of Necsa activities through the SAFARI-2 feasibility study, ensuring LEU fuel

and target plate security of supply and commercial sustainability, and driving SAFARI-1 life

extension within a proper regulated framework.

- Maintenance of site infrastructure based on the risks and potential liabilities associated with

such infrastructure.

- Strengthening Necsa’s project management and business development capabilities.

- Skills development and transformation by advancing employment equity, growing the pipeline

of graduates and lowering the average age of researchers.

- Ensuring optimisation and efficiency of all Necsa resources

14

Cross-cutting Executive Management Driven Priorities

Key Risks for the Necsa Group

Growing financial constraints experienced by Necsa Corporation. The fixed

cost base which increased at a higher rate than the government grant and

self-generated income;

Ageing equipment and infrastructure as well as production plant availability;

Business sustainability challenges and extremely tough global market

conditions experienced by both the NTP Group and the Pelchem Group,

which are being addressed though a range of interventions aimed at the

restoration of Pelchem’s financial viability and removing some constraints

among offshore subsidiaries of NTP;

15

Critical Success Factors for the Group

Improved sustainability of Necsa

Expand efforts to access research based and other grants from the DST and

its entities

Obtain external funding for commercial projects.

Optimise the business relationship between NTP and its subsidiaries to

ensure that the required growth and profitability targets are achieved within an

appropriate governance framework

External direct investment in Pelchem is vital for its future development and

sustainability

16

Government Grant – Total 2010/11 to 2015/16R’000

17

NECSA Group Total Income 2013/14

18

Necsa Group Income: Per category (Rm)

19

NECSA Group Expenditure 2013/14

20

Necsa Group Capital Expenditure 2013/14 to 2016/17 – Classification

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Classification

Budget Plan Plan Plan

2013/14 2014/15 2015/16 2016/17

R’000 R’000 R’000 R’000

Necsa Group Consolidated

Land & Buildings 5 195 10 200 6 000 6 000

Plant 86 126 99 664 85 052 49 934

Furniture & Fittings 984 314 331 342

Motor vehicles and transport containers 3 418 422 3 815 425

Office Equipment 492 192 415 379

IT equipment 12 649 2 701 2 648 1 619

Research Facilities 50 - 200 -

Leasehold improvements 43 125 - -

Machinery and equipment 38 891 32 804 25 212 20 776

Component spares - - - -

Startup Costs - - - -

Intangible assets 804 1 813 269 227

Total 148 652 148 234 123 940 79 703

Necsa Group Capital Expenditure 2013/14 to 2016/17 – Per company

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Company

Budget Plan Plan Plan 2013/14 2014/15 2015/16 2016/17

R’000 R’000 R’000 R’000

South African Nuclear Energy Corporation SOC Limited 81 298 66 835 51 813 45 015 AEC Amersham SOC Ltd 534 180 701 99

Gammatec Aseana NDT Supplies 221 12 13 13

Gammatec Middle East Trading 152 16 18 19 Gammatec NDT Supplies SOC Ltd 2 192 1 257 1 092 898

Lectromax Australia 51 342 236 219 NTP Europe 3 187 - - - NTP Logistics SOC Ltd 274 85 855 295 NTP Radioisotopes SOC Ltd 48 643 44 507 34 212 33 145 Pelchem SOC Ltd 12 100 35 000 35 000 -0

Total 148 652 148 234 123 940 79 703

Necsa Corporation Capital Expenditure 2013/14 to 2016/17 Classification

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ClassificationBudget Plan Plan Plan

2013/14 2014/15 2015/16 2016/17R’000 R’000 R’000 R’000

The South African Nuclear Energy Corporation Limited Land & Buildings 5 035 10 200 6 000 6 000 Plant 36 290 26 917 19 827 19 459 Furniture & Fittings 187 179 189 192 Motor vehicles and transport containers 421 - - - Office Equipment 194 127 141 156 IT equipment 8 152 1 536 1 602 840 Research Facilities 50 - 200 - Leasehold improvements - - - - Machinery and equipment 30 969 27 877 23 856 18 367 Component spares - - - - Startup Costs - - - - Intangible assets - - - - Total 81 298 66 835 51 813 45 015

PFMA S54 (2) (D) Approvals Required for CAPEX The following capital projects are above the significance level as per the significance

and materiality framework, and will be subject to a section 54 approval process. All of these projects are scheduled to be undertaken over the MTEF period:

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Item Classification

Company Total estimated Cost over MTEFRm

The LEU Fuel and Target Plate Manufacturing Facility

Plants Necsa SOC Ltd R50.5

SAFARI-2 Plants Necsa SOC Ltd R 19.8

HEU Recovery from NTP Tailings Plants Necsa SOC Ltd R5.5

1701 HVAC System Plants NTP Radioisotopes SOC Ltd R43.1New Radiopharmaceutical production facilities

Plants NTP Radioisotopes SOC Ltd R35

Kabelo II Plants Pelchem SOC Ltd R50

SAFARI-1 Ageing Management Programme

Mainly Machinery and Equipment

Necsa SOC Ltd R80.8

Ketlaphela (Pelchem only a 10% shareholder)

Plants Pelchem SOC Ltd R1 553

Necsa Corporation Income: per category (Rm)

25

Necsa Corporation Expenditure: per category

26

Human Resources

Human Resource Development Priorities

Increase the ratio’s of technical staff in regard to support staff.

Increase the number of Previously Disadvantaged Individuals (PDI) technical

staff.

Increase the number of researchers with Masters and PHD degrees.

Establish a nuclear education and training unit within the Necsa Learning

Academy.

Establish an advance manufacturing skills welding centre of excellence.

Launch the Radiation Protection Training Centre.

2828

Human Resource Development Priorities

ProgramNumber of Beneficiaries

2012/2013 2013/2014Study Assistance Scheme (SAS) 165 190 Mentoring & Coaching 96 110 Adult Education and Training (ABET) 76 88 Necsa Graduate Support Program (NGSP): Graduates-in-Training Scheme (GiTS) 11 7 Undergraduates 15 10 Postgraduates 5 6 Necsa Internships 76 85 Necsa Skills Development Centre: Apprentices and Learnerships 442 450 Toolmakers Apprentices 46 90 Safety & Security Learnerships 10 0Decentralised Trade Test Centre (DTTC): Pre-test preparation for Trade Tests 33 30 Trade Test Preparation required by SETAs 246 240 Artisan Trade Tests 232 240

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Necsa Learning Academy (NLA)

Nuclear Skills Development Centre (NSD)

• The NSD continues to grow and fulfill its mandate in terms of the National Skills

Development Strategy and has increased the number of students in its facility by

catering for the following clients: – Department of Public Works (42 students)– Development Bank of South Africa (46 students) – Grinaker LTA (96 students)– Sesto (55 students)– NTIP (46 students)– Others (157 students)

3030

Necsa Learning Academy (NLA) Apprenticeships and Learnerships

- The NSD plans to train 218 at its facilities.

- NSD was accredited as the preferred training provider to train the Master Tooling artisans for Industry

(DTI project). The first 46 students are enrolled and the number will be extended to 96 during the year.

- NSD has extended it’s welding division to accommodate Coded Welding which will be launched in

August. The project is funded by Alstom.

Decentralised Trade Test Centre (DTTC)

The target for the DTTC is to increase the number of people coming to 2880 for the following:

– pre-tests to determine the readiness of candidates for the final trade tests

-Trade test preparation required by the SETAS, and

- trade tests assessments and

-Those who pass their trade tests (53%).

3131

Necsa Group Predetermined Objectives and Key Performance

Indicators

Necsa Group Predetermined Objectives and KPIs for 2013/14 - 2015/16

33

KPA KPI 2012/13 Actual

2013/14 target 2014/15 target

2015/16 target

2016/17 target

Necsa Corporate financials

External sales revenue

R309.9m(target not achieved)

≥R391m ≥R420m ≥R435m ≥R457m

NTP Group financials

Revenue and profit after tax

R937mR137m(targets exceeded)

≥R1017m≥R93m

≥R1235m≥R162m

≥R1396m≥R158m

≥R1514m≥R200m

Pelchem Group financials

Revenue and profit after tax

R178.7m(R20.5m)(targets not achieved)

≥R 217m≤(R11m)

≥R 239m≤(R6m)

≥R256m≤(R11m)

≥R375m≥R13m

Research outputs

Research publications

34 (target not achieved) ≥40 ≥45 ≥50 ≥55

Innovation value chain

Innovation disclosures

17 (target exceeded)

≥14 ≥17 ≥20 ≥23


34


2013/14 Target 2014/15 Target

2015/16 Target

2016/17 Target

Nuclear fuel cycle (NFC) programme initiatives

Achievement of programme objectives

Progressing well towards next revision of enrichment prefeasibility study report.NFC strategy in place and remains the same; awaiting roll-out of nuclear programme.

Strategic plan for establishment of viable NFC front end in SA

Negotiation with selected NFC vendors on localisation in alignment with NPP procurement process

Begin compilation of detailed business plans for conversion, enrichment and fuel fabrication.

Finalise detailed business plans for conversion, enrichment and fuel fabrication.

Establishment of LEU fuel and target plate manufacturing plant

Achievement of project objectives

Basic design and construction SAR not completed. Project suspended due to delivery challenges

Business plan for LEU fuel and target plate plant

Construction SAR approved by NNR

Plant construction

Plant construction


35

KPI 2012/13 Actual

2013/14 Target

2014/15 Target

2015/16 Target

2016/17 Target

SAFARI-1 operation

Operational availability (days per year)

304.7 days available(target exceeded - 100.7% availability)

303 303 303 303

D&D programme execution

Execution of Annual Plan of Action as approved by DoE

110% (Programme target exceeded)

100% 100% 100% 100%

Compliance to SHEQ, license and other regulatory requirements

Disabling Injury Incidence Rate (DIIR)

Not a target in 2013 ≤0.8 ≤0.7 ≤0.6 ≤0.5

Public dose impact (expressed as % of allowable limit)

5.5%0.0096 mSv for the 2012 calendar year, i.e. 3.85 % of the allowable annual public dose

<20% KPA <20% <20%


36


2013/14 Target

2014/15 Target

2015/16 Target

2016/17 Target

Staff composition

Technical staff as % of total staff

48.84%(target achieved)

50% 52% 55% 58%

Black technical staff as % of all technical staff

45.76%(target achieved)

47% 49% 52% 55%

Abbreviations ANSTO – Australian Nuclear Science and Technology Oragnisation CTBTO – Comprehensive Test Ban Treaty Organisation D&D – Decontamination and Decommissioning DST – Department of Science and Technology IAEA – International Atomic Energy Agency iThemba LABS – Ithemba Laboratory for Accelerator Based Sciences LEU – Low Enriched Uranium MTR – Material Test Reactor NMC – Necsa’s Nuclear Manufacturing Centre NURAD – Necsa’s Nuclear and Radiation Services Division PWR – Pressurised Water reactor R&D – Research and Development SETA – Sector, Education and Training Authority SHARS – Sealed High Activity Radioactive Source SHEQ – Safety, Health, Environment and Quality SIP – Strategic Infrastructure Project of the Presidential Infrastructure Coordinating

Council

37

38

Thank You!!!

Government’s Programme of Action

39

Government Outcomes and Outputs

Necsa Group Outputs

Outcome 6: An efficient, competitive and responsive infrastructure network

Necsa has embarked on several key infrastructure projects, including: the manufacturing plant for low enriched uranium (LEU) material test reactor (MTR) fuel;the ‘dedicated isotopes production reactor’ (DIPR)achieved ASME III accreditation for its nuclear manufacturing centre (NMC) so that South Africa may procure localisation benefits arising out of its nuclear energy expansion programme; preparations for a pressurised water reactor (PWR) fuel component manufacturing facility; and The Minister of Energy officially launched the Necsa Visitor’s Centre in February 2011 to assist in improving public understanding of nuclear technologies.

Outcome 10: Environmental Assets and Natural Resources Protected and Continually Enhanced

Recognising the importance of raw material beneficiation for the SA economy and based on the requirements of the NEP Necsa has drafted a report showing the status of local uranium reserves and how these resources can be locally beneficiated through the production of nuclear fuel which is especially pertinent to SA’s nuclear energy expansion programme.


40

Government Outcomes and Outputs

Necsa Group Outputs

Outcome 11: Create a Better South Africa and Contributing to a Better and Safer Africa in a Better World Output 5: Enhanced African Agenda and Sustainable Development

As the focal point for technical cooperation between the IAEA and the Government, Necsa continues to facilitate the implementation of the African Regional Cooperative Agreement for Research, Development and Training related to nuclear science (assisted Ghana with site characterisation for its first Borehole Disposal unit for disused sealed radioactive sources. Also undertook successful conditioning missions to Sudan and Tanzania for sealed high activity radioactive sources (SHARS), a world first Necsa designed technology.


41

Government Outcomes and Outputs Necsa Group Outputs

Outcome 2: Health Output 1: Improve life expectancy

NTP Radioisotopes produces medical radioisotopes, some of which are utilised in the South African health system for diagnostic studies and cancer treatments.

Outcome 4: Decent Employment through inclusive economic growth Output 4: Increased competitiveness, to raise net exports, grow trade as a share of world trade and improve its composition

NTP and Pelchem product sales on world markets contributes to SA balance of payments

Outcome 5: Skills Output 3: Access to occupationally directed programmes in needed areas and thereby expand the availability of intermediate level skills (with a special focus on artisan skills)Output 5: Research, development and innovation in human development for a growing knowledge economy

Apprenticeship training offered by Necsa Skills Development Centre (trained 442 people during 2012/13) DTTC 33 pre-test, 246 trade test preparation and 232 artisans trade testSecurity learnerships launched in 2011/12 (9 graduates in 2012/13) Necsa Bursary Programme (Graduate-in-training programme 11 students, Undergraduates 15 and 5 postgraduates for 2012/13); Internship programme (36 students for 2012/13); post-graduates and post-doctoral fellows supported with research projects at Necsa (62 for 2012/13) and Universities (36 for 2012/13)

Alignment with IPAP 2013/14-2015/16

Pharmaceuticals – The Government supported Ketlaphela project to manufacture

active pharmaceutical ingredients for antiretroviral treatment of patients with HIV-

AIDS will be implemented in partnership between Pelchem, the IDC and Swiss

company Lonza. Nuclear Energy – Necsa participates in the Nuclear Energy Sub-working Group

(NESWG) on Skills, Localisation and Industrialisation which is tasked with the

development of localisation strategies and plans to support local industry.

42

Alignment to SIPs

43

Electricity expansion• SAFARI-2 provides infrastructure for fuel to nuclear fleet

• SAFARI-2 implementation provides test-case for nuclear localisation

• NECSA sustains SA skills for nuclear build

NECSA infrastructure

investment

SIP 10

SIP 14SIP 4

Economic Opportunity – North West Province

• NECSA second largest employer of high level skills (2000 employees) to North West University in NW Province

• Large portion (approx 90%) of NECSA outputs exported from province and SA

Higher Education Infrastructure

• NECSA provides research platform to scientists and engineers from a cross-section of sectors

• NECSA sustains nuclear skills capability in SA

• NECSA works closely with a number of universities and DST

Necsa’s Achievements

Achievements Necsa Group revenue in the 2012/13 financial year amounted to R1.81 billion (including

grants, other income and investment income). NTP Radioisotopes (Pty) Ltd, the SAFARI-1 Reactor and the Necsa MTR Fuel

Department managed to maintain the Necsa Group in a strong position in the

radioisotope market. During the 2012/13 financial year the NTP Group achieved sales

of R937 million. The Necsa R&D division continues to meet and exceed innovation (17 innovation

disclosures for 2012/13) value chain outputs with the number of peer-reviewed

publications (34 for 2012/13) being doubled in the last 3 years.

45

Achievements

NTP donated a

PET-CT scanner to

the Tygerberg

hospital to assist

with oncology

diagnoses.

46

Achievements Necsa’s Radiochemistry group using NTP’s

cyclotron produced a prostrate cancer imaging agent for use in a collaborative study by Prof. Mike Sathekge of the Steve Biko Academic hospital (SBAH) and the Pretoria University.

Other on-going R&D collaboration between Necsa/NTP and SBAH includes:

– TB vs co-occurring cancer and TB diagnosis and treatment planning

– HIV-AIDS imaging and therapy– Infection imaging

47

Achievements Comprehensive feasibility studies relating to the re-establishment of nuclear fuel cycle

programmes in South Africa was completed during 2011. Excellent relationships with

most major international suppliers of fuel cycle technologies and products were

developed. Significant capital investment is required if the vision of a future local fuel

supply to the power reactor fleet is to be achieved. The Nuclear Skills Development Centre received accreditation from various SETAs and

recognition as a Decentralised Trade Test Centre for the final trade testing of

apprentices and is currently in strong demand. Necsa contributed to a range of policy making and public participation processes relating

to the energy planning, nuclear energy R&D and related topics, and maintained

participation in national and international collaborative programmes in the field of nuclear

R&D and Generation IV nuclear energy systems.

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Achievements

The Necsa Visitor Centre continues playing a significant role in improving public

understanding of nuclear science and technology.

The Necsa Group continued to demonstrate compliance to good corporate governance

by receiving unqualified audit reports from the Auditor General.

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International Collaboration

Necsa to establish the Comprehensive Test Ban Treaty Organisation

(CTBTO) Radionuclide Monitoring Station in the Western Cape.

Continued international R&D collaboration.

Establishment of NTP Europe.

Business collaboration between NTP and their Australian counterpart the

Australian Nuclear Science and Technology Organisation (ANSTO).

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NECSA’S BRIEFING TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT By: Ambassador Mochubela Seekoe,...

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