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Nuclear Monitor Issue: 

On February 8, South African Public Enterprises Minister Barbara Hogan has announced that the Pebble Bed Modular Reactor (PBMR) consortium will be no longer funded from 2013. In a phone call with Bloomberg she said the project has not attracted a long-term investor or customers and South Africa can no longer fund the PBMR. A decision on the future of the technology will be made in August, she said in a statement.

Laka Foundation - It is not yet clear what this budgetary falloff precisely means for the future of the PBMR in South Africa. However, it will be clear that there is not much left of the original ambitious nuclear energy program of South Africa to expand its nuclear production capacity from 1,800 megawatts now to 20,000 MW by 2025. This plan was considered as one of the strategically most important battlefields of the nuclear industries - one of the leading developing countries that many others should follow. The major blow to this plan came when the government declared that it was canceling its plans to build new generation pressurized water reactors (PWR) in December 2008, due to the escalating financial crisis starting from September 2008.

Thwarting the public funding to the PBMR has been welcomed by environmental groups. The South African director of the WWF climate change program said that for a long time the nuclear industry has received more state support than the renewable energy industry. He hopes that this cut in funding signals a policy commitment to investing in renewables.

The Pebble Bed Modular Reactor (PBMR) is a small type of a high-temperature gas-cooled reactor. It was expected in 1998 that work on construction of a PBMR Demonstration Power Plant at Koeberg would begin in 1999 and be complete before 2003 to allow commercial orders soon after. Eskom projected that the market could be about 30 units per year, about 20 of which would be exported. When the project was started in 1999 by the state-run power utility Eskom Holdings Ltd. and South Africa’s Industrial Development Corp. - owning together 85% of the PBMR (Pty) Ltd. - it was intended to build 24 PBMRs, each generating 110 MW(e). In March 2007, a PBMR (Pty) Ltd spokesman admitted that construction on the demonstration plant could not start before late 2008 or early 2009. And this turns out to be a highly optimistic estimate, again. In September 2009 experts expected that canceling the PWR program will delay the planned commercialization of the PBMR by up to four years to 2020. In the same month, on September 11 (2009), addressing the World Nuclear Association Annual Symposium in London, UK, Jaco Kriek, CEO of the PBMR company, said that South Africa’s PBMR Demonstration Power Plant (DPP) project has been indefinitely postponed due to financing constraints. He said the PBMR company has had to adopt a new business model “to reduce the funding obligations on the South African government.” Now, the company says it will reorganize and fire as many as 75 percent of its 800-strong workforce.

According to Uranium Intelligence Weekly (quoted in Nuclear Monitor 681) the projected costs of the 165MW(e) PBMR Demonstration Power Plant and the building of the pilot fuel plant at Pelindaba has recently doubled to some US$3 billion. These figures include the building of the fuel plant to manufacture the pebbles, as well as the building of demonstration plant, but do not cover the reactor's operations, decommissioning, waste disposal or insurance costs. Other sources (Bloomberg) mention that South Africa has spent US$970m. on the PBMR over the past eleven years. According to the anti-nuclear Pelindaba Working Group, the PBMR has already cost taxpayers over R16 bn (US$1.5 bn).

For the upcoming fiscal period, some US$470,000 (R3.6m.) has been set aside by the South African government, followed by US$490,000 (R3.8m.) for fiscal year 2011/12 and US$520,000 (R4.0m.) for 2012/13.

Earlier, on February 9, the PBMR company announced that Algeria had shown “a keen interest” in South Africa's pebble bed technology, and that a “high-level delegation” from Algeria had visited the country to “pursue the involvement in the field of nuclear, including showing a keen interest in the country's PBMR technology”. According to CEO Jaco Kriek, Algeria’s interest in PBMR technology “opens a real opportunity for two African countries to co-operate on nuclear.” South Africa has a long relationship with Algeria on co-operation in the field of nuclear energy and research. Kriek said that he would therefore very much welcome Algerian Atomic Energy Commission’s involvement in the PBMR Company.

So, despite the very precarious position of his company the CEO keeps on dreaming in finding partners to complete (or at least continue)  the PBMR project..

Sources: Bloomberg, 18 February 2010: “S. Africa Halts Funding to Pebble Bed Nuclear Project”/ Engineering News (S-Africa), 17 February 2010: “State scales back PBMR spending, to end allocations by 2013” / Nuclear Monitor 681, 18 December 2008: “ESKOM cancels PWRs: Major blow to nuclear expansion” / Business News, 9 February 2010: “Algeria eyes pebble-bed” / Independent Online, 18 February 2010: “PBMR company 'running out of money' “

Contact: Pelindaba Working Group, pelindabanonukes@gmailcom

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