NO TECHNICAL BARRIERS TO ADDITIONAL PROTOCOL, BRAZIL'S

UNCLAS SECTION 01 OF 03 RIO DE JANEIRO 000295 SIPDIS STATE FOR WHA/BSC, ISN/NESS E.O. 12958: N/A TAGS: PREL PARM ENRG EIND EMIN AR BR SUBJECT: NO TECHNICAL BARRIERS TO ADDITIONAL PROTOCOL, BRAZIL'S NUCLEAR REGULATOR AND STATE-OWNED COMPANIES SAY ¶1. Summary. U.S. Ambassador to the United Nations in Vienna, Greg Schulte, visited Rio de Janeiro, Brazil on October 17 as part of his trip to the region, including Brasilia, Santiago and Buenos Aires (SEPTELS),for consultations on non-proliferation issues. In meetings with Brazil's nuclear regulatory authority and representatives from Brazil's state-owned nuclear industry, Amb. Schulte learned about Brazil's plans to expand nuclear power production and confirmed that there appear to be no major technical barriers to implementing the Additional Protocol if Brazil were to sign on. The decision, Rio-based interlocutors said, is largely a political one that they are already capable of implementing quickly if called upon to do so. End Summary. BRAZIL TO EXPAND NUCLEAR ENERGY PRODUCTION ¶2. Brazil currently has one nuclear power facility in Angra dos Reis, outside of Rio de Janeiro. The Angra plant has two nuclear reactors which generate approximately 1900 megawatts of electric energy, comprising slightly less than 3 percent of national electricity supply. President of Brazil's National Nuclear Energy Commission (CNEN) Odair Dias Goncalves confirmed to Amb. Schulte that the Government of Brazil (GoB) has approved plans to build four additional nuclear power plants. Depending on economic conditions and the global financial crisis, the government may consider an additional 2-4 plants, Goncalves said. He did not foresee any difficulty in meeting the capacity needs for a potential total of 8 new plants. ¶3. The first new plant, expected to come online by 2014, will be the re-started construction of a third reactor (Angra 3) at the existing Angra facility. Angra 1 is a Westinghouse (U.S.) plant and Angra 2 is a Siemens (German) plant. Amb. Schulte advocated generally for U.S. companies as Brazil plans its new plants. Pedro Figeuiredo, Director of Brazil's state-owned nuclear utility Eletronuclear, described the company's relationship with Westinghouse as "a brotherly love-hate relationship," mentioning a long-standing litigation/arbitration dispute with Westinghouse over the replacement of steam valves in Angra 1. Figueiredo also noted that a Westinghouse representative had visited Eletrobras just a few days earlier to lobby for new plant opportunities. ¶4. Figueiredo confirmed that the GoB has already decided to build at least two of the new plants in the northeast and possibly two plants in Brazil's southeast region. The process to identify plant sites is set to begin in 2009. The decisions will be based on technical considerations, he said, largely influenced by geological, environmental and safety data. Unless deciding between several similarly qualified sites, Figueiredo told Amb. Schulte that he did not expect political influence to come into play though many governors from Brazil's northeast states are already lobbying to attract the nuclear plants projects to their states. ¶5. From a uranium mining and enrichment perspective, Brazil is also expanding activities to keep up with expected demand from the planned plants. Brazil is planning to double its uranium mining production by 2012 in order to have sufficient supply for possibly eight new plants, said Alfredo Trajan Filho, President of Industrias Nucleares do Brasil (INB),Brazil's state-owned uranium mining and enrichment company. He told Amb. Schulte that, if the GoB decides to build fewer plants, Brazil may have excess uranium for export. INB currently operates the Resende Nuclear Fuel Factory outside of Rio de Janeiro, the country's only commercial fuel fabrication plant. INB is planning to build another facility with the goal of reaching 100 percent conversion self sufficiency by 2014, Trajan said. Right now, the Resende facility has enrichment capacity for Angra 1 & 2 (operating),Angra 3 (under construction),plus one more plant. When Amb. Schulte asked if Brazil has plans to export enriched uranium, Trajan said that INB's mission is first and foremost to meet domestic demand; beyond that is a political decision. NEW REGULATORY AGENCY, STATE OWNED COMPANIES ¶6. CNEN currently plays the joint role of nuclear regulator and promoter. The GoB has decided to create a separate regulatory agency, CNEN President Odair Dias Goncalves confirmed to Amb. Schulte. CNEN's regulatory personnel, numbering around 400, will be transferred to the new agency which will report directly to the Ministry of Science and Technology. CNEN will maintain the rest of its 2,300 staff, and will continue to oversee the state-owned companies which handle uranium mining and enrichment, nuclear power, and heavy equipment for the nuclear sector. Additionally, Brazil plans to create two additional state-owned companies under CNEN which will focus on nuclear and radioactive waste management as well RIO DE JAN 00000295 002 OF 003 as radio-pharmacy. Privatization of nuclear energy is not being considered, Goncalves said. Private companies will be brought in as partners, but control will remain with the government since it sees the need to mature the industry first. ¶7. As part of Brazil's long term strategy for waste storage, CNEN will launch a new company to handle waste management and plans to begin construction of a medium- and low-level waste reprocessing facility in 2014. They are beginning to test a process now, and expect to have all the data collected by 2013 and a pilot plant operational by 2018. Their idea is to have an above-ground repository by 2026. GNEP, INTERNATIONAL FUEL BANK, AND REGIONAL ENRICHMENT ¶8. Amb. Schulte noted that the U.S. is looking at advanced reprocessing also and expressed hope that Brazil will move from its observer status in the Global Nuclear Energy Partnership (GNEP) to full member status. To be successful, said Schulte, it needs to be a global concept to change the fuel cycle so that there is less waste. CNEN responded that Brazil, not just the Foreign Ministry but all of the nuclear community, is generally happy with most aspects of the GNEP but wants to take some time to see how some of the commercial issues develop. ¶9. Amb. Schulte raised the IAEA's idea of an international fuel bank and said that the USG supports a few simple steps. The market provides a good supply but the idea's goal is to back up the market. He noted that Russia has already provided two reactor loads of low enriched uranium to the IAEA and that partners are close to raising US$150 million to finance purchasing. CNEN expressed doubts about the effectiveness of such a fuel bank and said that there are industrial and technical issues that need to be addressed, such as in what form it would be stored. CNEN officials noted that nuclear energy is having a renaissance and, as a result, there could be a global crunch for enrichment services. For example, Urenco recently had problems guaranteeing supply for Brazil's contract. Amb. Schulte argued that the idea of the international fuel bank is not meant for commercial supply and demand problems, but more as political reassurance to dissuade countries from racing to pursue enrichment capability. ¶10. Amb. Schulte asked about the idea floated by Brazil President Lula and Argentina President Kirchner for an enrichment joint venture, saying that the multilateral and regional approach to enrichment is an attractive idea. CNEN and INB officials said that studies were underway to see if it would be possible for Brazil and Argentina to work together on enrichment. But INB cited technical challenges such as the fact that Argentina uses gaseous diffusion and Brazil uses centrifuge enrichment technology. CNEN President Goncalves noted that this idea originated at the political level and that, for the foreseeable future, it appears that Brazil can supply the small amount of enrichment that Argentina requires. CNEN does not foresee any other country in the region building nuclear power plants, including Chile, for the next ten years. ADDITIONAL PROTOCOL A POLITICAL, NOT TECHNICAL, CHALLENGE ¶11. On the Additional Protocol (AP),CNEN President Goncalves said that signing was a political issue rather than a technical one. CNEN has already completed a study and does not foresee any major obstacles to implementing the agreement, he said. However, he noted that Brazil has some minor concerns which it needs time to explore, such as the potential economic effects, definition of parameters and implications for university research and development. INB President Tragan agreed, saying that INB has not identified any major technical barriers to implementing the AP. He said it would not be hard to achieve from a technical perspective, a few minor hurdles but no major impediment. Trajan noted that Brazil is already subject to IAEA safeguards under its NPT obligations, and pointed out to Amb. Schulte that Brazil is the only country with military installations subject to inspection. ¶12. Antonio Abel de Oliveira, Secretary of the Rio-based Brazil-Argentina Commission for the Accounting and Control of Nuclear Materials (ABACC),also told Amb. Schulte that his agency did not foresee any major technological barriers to Brazil and Argentina signing the AP. Oliveira explained that ABACC is the bi-national agency created by the governments of Brazil and Argentina to verify the peaceful use of nuclear materials in those countries. ABACC performs inspections, many times alongside IAEA inspectors. Though ABACC's charter does not currently take into consideration the AP, Oliveira noted that the debate in Brazil appeared to be gaining momentum and that his agency had been asked RIO DE JAN 00000295 003 OF 003 to participate in internal government discussions on the AP within recent years. ¶13. This message was cleared/coordinated with Embassy Brasilia and USUN Vienna. MARTINEZ