Tony Stott, Eskom senior manager for nuclear stakeholder management:

 — The contract was signed by Eskom’s Chief Executive (Mr. B A Dames) and TENEX’s General Director (Mr. A Grigoriev) in Russia during the visit of the South African President, Mr Zuma, to Russia

Tony Stott, Eskom senior manager for nuclear stakeholder management:

Today, 5 August 2010, Eskom Holdings Limited (Eskom) and Joint Stock Company “Techsnapexport” (TENEX) signed a contract for the supply of low enriched uranium, known as Enriched Uranium Product (EUP) or as Low Enriched Uranium (LEU) to Eskom. The contract covers the supply of a portion of Eskom’s Koeberg Nuclear Power Plant (NPP) enriched uranium requirement for the period from 2011 to 2017. For its operation Koeberg requires nuclear fuel elements fabricated with low enriched uranium. The enrichment level is less than 5%.

The negotiations for this contract were recently completed. The contract was signed by Eskom’s Chief Executive (Mr. B A Dames) and TENEX’s General Director (Mr. A Grigoriev) in Russia during the visit of the South African President, Mr Zuma, to Russia. The signing ceremony took place in the Kremlin in Moscow on 5 August 2010.

TENEX has previously supplied part of the low enriched uranium required for Eskom’s Koeberg NPP. The first contract between TENEX and ESKOM for enriched uranium was signed in August 1995 and the second in October 2004. The contract signed today is thus the third contract between TENEX and Eskom.

The main reasons why Eskom entered into this contract with TENEX can be summarised as follows:

• Eskom’s nuclear fuel procurement strategy includes the diversification of suppliers. At present there are four main suppliers of uranium enrichment services in the world. Previously Eskom had contracts with all four of these suppliers. Following the signature of the above mentioned contract with TENEX, Eskom currently has contracts with three of these suppliers for low enriched uranium for the Koeberg NPP.
• Russia is the largest supplier of low enriched uranium and associated services in the world.
• The low enriched uranium and associated services supplied from Russia through TENEX are of high quality.
• The contract conditions, including flexibilities and commercial conditions, are favourable for South Africa, and will contribute to the low primary energy cost of the Koeberg NPP.

Eskom’s existing enriched uranium product supply contracts signed 5 or 6 years ago are coming to an end – hence the timing for this new contract, which will provide less than 50% of the low enriched uranium requirements of the Koeberg NPP.

Enriched uranium so supplied to Eskom is delivered to international nuclear fuel fabricators. At present Eskom has fuel fabrication contracts for the Koeberg NPP with two international suppliers of nuclear fuel fabrication services. The enriched uranium from TENEX can be supplied to either of the two fuel fabricators. Once the enriched uranium is fabricated into the nuclear fuel elements, they (the nuclear fuel elements) are imported into South Africa.

Although South Africa produces natural uranium, no local capacity to produce the enriched uranium or to fabricate nuclear fuel elements exists in South Africa. Hence the need to enter into contracts with international suppliers.

All nuclear fuel contracts, including this contract between Eskom and Tenex, are subject to the approval of the South African Government in terms of the requirements of the Nuclear Energy Act. This is to ensure compliance with South Africa’s international obligations with respect to the Nuclear Non-Proliferation Treaty, the Comprehensive Safeguard Agreements with the International Atomic Energy Agency and international Bilateral Agreements.