VZCZCXRO1651
RR RUEHRG
DE RUEHRI #0295/01 2961517
ZNR UUUUU ZZH
R 221517Z OCT 08
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4676
INFO RUEHBR/AMEMBASSY BRASILIA 1006
RUEHSO/AMCONSUL SAO PAULO 5198
RUEHRG/AMCONSUL RECIFE 3468
RUEHBU/AMEMBASSY BUENOS AIRES 0540
RUEHSG/AMEMBASSY SANTIAGO 0179
RUEHUNV/USMISSION UNVIE VIENNA 0015
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
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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
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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