WESTINGHOUSE ACQUIRES LOCAL NUCLEAR SUPPLIER

UNCLAS SECTION 01 OF 02 PRETORIA 003839 SIPDIS SIPDIS SENSITVE STATE PLEASE PASS USAID STATE PLEASE PASS USGS DEPT FOR AF/S, ISN, EEB/ESC AND CBA DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER E.O. 12958: N/A TAGS: ENRG BEXP TRGY SENV KNNP EINV SF SUBJECT: WESTINGHOUSE ACQUIRES LOCAL NUCLEAR SUPPLIER REF: A) Pretoria 3747 B) Pretoria 3078 C) Pretoria 3012 PRETORIA 00003839 001.4 OF 002 Not for internet distribution ¶1. (SBU) SUMMARY: Westinghouse expects to close its long-awaited acquisition of South Africa's IST Nuclear (ISTN) to augment its domestic footprint and to position itself for supplying an initial 3,200 MW of new nuclear power plants to state electricity company Eskom, as well as additional plants over the longer-term. The acquisition shows Westinghouse's commitment to localization and building South Africa's local nuclear- industry capacity. The acquisition also reinforces its support for the Pebble Bed Modular Reactor (PBMR). End Summary. -------------- Nuclear New Build - Neck in Neck -------------- ¶2. (SBU) Westinghouse and Areva of France have been identified by Eskom and the SAG as the two likely vendors to build two-three new nuclear power plants totaling about 3,200 MW. Eskom has stated that an investment decision should be made by March 2008. The SAG intends to install 20,000 MW of nuclear power as part of an ambitious 40,000 MW expansion program over the next twenty years (reftels). -------------- Domestic Footprint Augments Localization -------------- ¶3. (SBU) Westinghouse Regional VP for South Africa Rita Bowser stated that the acquisition of South Africa's ISTN should be consummated by November 2, speaking in an interview with local Engineering News. In the article, Bowser said the purchase is aligned to the aspiration to position the company for the likely pipeline of work in South Africa. She said Westinghouse aimed to respond to the SAG's stated objective of seeking to build local nuclear industry capacity. Bowser emphasized that the ISTN acquisition showed Westinghouse's commitment to localization. In addition, she said Westinghouse intended to expand ISTN's scope to include work in servicing existing light water reactors in South Africa and elsewhere. The name ISTN will change to Westinghouse Electric Company South Africa and Westinghouse's domestic employee base will be 118 people. -------------- Support for PBMR -------------- ¶4. (SBU) According to the article, the purchase of ISTN by Westinghouse is also an indication of the company's growing interest in, not just South Africa's conventional nuclear reactors, but also its Pebble Bed Modular Reactor (PBMR). ISTN is already a leading provider of services and systems for the PBMR, in which Westinghouse, together with the Industrial Development Corporation, Eskom, and the SAG, holds equity. Speaking to the a recent Idaho National Laboratory delegation, ISTN official Andrew Rossouw enthusiastically described the history and potential of PBMR, including his company's role as key supplier of testing facilities and equipment (Reftel A). ¶5. (SBU) COMMENT: The acquisition of ISTN demonstrates QWestinghouse's strength in localization. Westinghouse also competes well on price, safety, modular design, and training. Embassy is working closely with Westinghouse PRETORIA 00003839 002.4 OF 002 on how best to support its bid. The Economic Counselor will participate in some Westinghouse-sponsored events at the Corporate Council on Africa meetings November 15-16. BOST