Nuclear Intelligence Weekly — Vol. 13, No. 46 (November 15, 2019)

Energy Intelligence

<u>NUCLEAR INTELLIGENCE WEEKLY</u>

Vol. 13, No. 46 www.energyintel.com November 15, 2019

UPP: $24.96/lb U3O8

Market Points

On the back of considerable market activity the average price submitted by Energy Intelligence's Uranium Price Panel surged to $24.96 per pound U3O8 toward the end of the week, up 50¢ from last week's price, and sources predicted that by the end of Friday it could settle above $25/lb. for the first time in six weeks. With the year drawing to a close, North American utilities, such as Ontario Power Generation, issued requests for quotations -- business as usual. But with political risks to the market at least temporarily subsiding, there was considerable spot activity as well, with estimates of 2 million-3 million lbs. U3O8 transacted over the past week alone.

The markets for conversion services, UF6, enrichment and enriched uranium product (EUP) continue to be active as well. "We're not in the heyday of 2009-10," said one EUP supplier, "but we're certainly above where we have been in the market."

Contents

NRA Set to Approve Onagawa-2 3
Panel Weighs NRC's Seabrook Judgment 4
Report Highlights Waste Planning Gulfs 5
Swiss Waste Fund 'Ring-Fencing' 6
Niger's Production Decline 6
Brief Roundup 8
Uranium Market Update Table 9

WEEKLY ROUNDUP

Sanmen-2 Prepares to Restart

• Sanmen-2 in Zhejiang province, owned and operated by China National Nuclear Corp., has "entered into the restart phase, with nuclear fuel already loaded into the reactor," a company secretary confirmed to investors on Nov. 14 in the online platform of the Shanghai Stock Exchange. One of China's four inaugural AP1000s commissioned last year, the Sanmen unit has been off line since the discovery of water intrusion in one of its four reactor coolant pumps (RCPs) forced a shutdown on Dec. 22, 2018, six weeks after commercial operations began on Nov. 5 (NIW Jul.19'19; NIW Jan.11'19). The unit is now expected to "come online again by the end of the year" assuming regulatory approval, following a "root cause" analysis of the problem that concluded months ago (NIW Sep.6'19; NIW Aug.9'19). China's nuclear regulator hasn't released the report of the analysis, but David Adams, CEO of RCP-supplier Curtiss-Wright, explained Oct. 31 that the fault was isolated to "a single part within a single pump and is not deemed to be a fleet-wide concern. The three remaining Sanmen-2 RCPs have been inspected, and it was determined that they do not have this problem."

• A number of antinuclear French nongovernmental organizations this week appealed to the European Commission to launch a state-aid review of the deal EDF struck with the French government in September to shutter its two oldest reactors in exchange for state compensation for all closure costs over four years and "loss of earnings" through 2041 (NIW Oct.4'19). Units 1 and 2 of the Fessenheim nuclear plant in Alsace on the German border will be shuttered permanently on Feb. 22 and Jun. 30, and the state will first pay EDF nearly €400 million ($440 million) to cover closure expenses before starting longer-term payments through 2041 for "any loss of earnings" calculated on the basis of nuclear output selling prices, "including observed market prices." Sortir du Nucleaire and other groups lambasted this deal, declaring in a Nov. 14 announcement of their appeal to Brussels that "these amounts seem in fact intended to indirectly bail out EDF, entangled in its financial difficulties due to disastrous choices." EDF declined to comment, noting its long-standing policy of not commenting on legal procedures.

• The UK, France, Germany and the EU say they are ready to consider activating the dispute mechanism in the 2015 nuclear deal that could see sanctions reimposed against Iran. Their statement followed Iran's decision to start enriching uranium to 5% at its Fordow facility, beyond the agreement's 3.67% limit (NIW Nov.8'19). Iran's move is not seen as an immediate proliferation risk. But Europe's reaction reflects the greater dangers posed by work at Fordow, which because of its underground location is difficult to destroy with conventional weapons. Iran argues that other signatories are not complying with the deal. Meanwhile, the International Atomic Energy Agency's Acting Director General Cornel Feruta told the agency's board of governors on Sep. 9 that he had pressed senior Iranian officials in Tehran the previous Sunday "to respond promptly to Agency questions related to the completeness of Iran's safeguards declarations." Tensions between the agency and Tehran have escalated over two alleged safeguards violations by Iran (NIW Nov.8'19).

NUCLEAR FUEL MARKET

Buyers Proliferate as Market Heats Up

The nuclear fuel market saw considerable activity this week with traders busier than usual as utilities continued to jump back into the market, partly for end-of-year purchases. By Thursday, Nov. 14, the average price submitted by Energy Intelligence's Uranium Price Panel had surged to $24.96 per pound U3O8, up 50¢ from a week beforehand, and sources predicted that by the end of Friday it could settle above $25/lb. for the first time in six weeks.

"We used to moan about the fact that utilities aren't getting back into the market, but this year utilities are really getting back in a significant way," one trader told Energy Intelligence. Some of this is just business as usual. This week Ontario Power Generation released a request for quotations (RFQ) on 2.2 million lbs. U3O8 over 2021-26, with the option for an additional 200,000 lbs. U3O8 in each of 2027 and 2028, and pricing requested to be 50% market-based and 50% fixed. Bids are due Jan. 15. That's almost identical to an RFQ issued exactly a year ago by the Canadian utility, which has a history of very regular annual RFQs (NIW Nov.16'18). "When push comes to shove, utilities will have to buy fuel no matter what the political context is," said the trader.

That's not to say that the context hasn't improved. While traders and brokers could have benefited from the Trump administration sanctioning nuclear suppliers from Russia and China due to their work in Iran — market inefficiencies are almost always an opportunity to make money — US utility buyers were more than relieved when the White House backed away from such a course of action last week and extended sanctions waivers for another 90 days (NIW Nov.8'19).

That helped kick off a solid 10 days of market activity, with estimates of 2 million-3 million lbs. U3O8 transacted over the past week alone. Much of this came from traders, but Cameco still seems to be picking up material, and there appears to be significant spot purchasing activity from US utilities as well. Sources pointed to one utility purchasing around a million lbs. U3O8 last week, and another — Minnesota-based Xcel Energy, which operates the single-unit Monticello plant — supposedly picking up several hundred thousand lbs. U3O8 on Nov. 14. Energy Intelligence wasn't able to confirm either transaction, but the rumors alone demonstrate the market excitement over end-user demand.

If the yellowcake market has heated up, the market for conversion and UF6 remains blisteringly hot. The price of conversion services has shot up from $13.50 per kilogram uranium to $21/kgU over the past year, and bids are coming in even higher for early next year (NIW Oct.18'19). That's in large part due to the continued outage of Honeywell's UF6 plant in Metropolis, Illinois, the absence of which has helped drain excess UF6 inventories out of the market (NIW Jun.14'19). Market sources appear ever more confident that Honeywell is unlikely to announce any restart of its Metropolis plant before late next year.

The enrichment market has also rallied over the past year, but over the past month it's flattened out a little bit as suppliers wait to hear back on a number of RFQs. The bids submitted to Swiss utility Kernkraftwerk Gosgen for some 55% of the enriched uranium product (EUP) requirements of its Gosgen plant, for delivery over five years, have a validity expiring Monday, Nov. 18, and sources expect the utility to make a decision at the last minute. And the bids collected last week by Slovenia's Nuklearna Elektrarna Krsko on its RFQ for five EUP reloads (or up to 3 million lbs. U3O8 equivalent) for delivery from 2022-28 have a validity expiring in January, when that utility might make a decision. Meanwhile off-market discussions for EUP supply to FirstEnergy continue, and sources expect Mexico's Federal Electricity Commission (CFE) to issue a formal RFQ early next year for EUP reloads from 2022-25. In July CFE collected non-binding "budgetary bids" to price out what these reloads might cost so that it could go through a budgeting process with the government (NIW Aug.2'19).

"We're not in the heyday of 2009-10," said one EUP supplier, "but we're certainly above where we have been in the market." ■
Phil Chaffee, London
pchaffee@energyintel.com

JAPAN

NRA Set to Approve Onagawa-2 as Other Restart Applications Stall

Amid a slew of stalled reactor restart applications, Japan's Nuclear Regulation Authority (NRA) this week had good news for Tohoku Electric Power Co.'s long-stalled application to operate its Onagawa-2 boiling water reactor (BWR) in Miyagi prefecture. "I will have a decision for you within two or three weeks," NRA Chairman Toyoshi Fuketa told reporters after a scheduled meeting of the NRA's five commissioners Nov. 13.

If approved by the NRA next month, Tohoku Electric's draft application would be subject to a month of public comment and require final ratification by the five NRA commissioners for compliance with the stricter post-Fukushima safety standards. NRA approval would make Onagawa-2 the 16th unit so judged although only nine reactors — all pressurized water reactors (PWRs) — have been able to overcome legal and other hurdles to actually operate, according to the NRA. Assuming no glitches in the agency's final screening process and securing consent from the prefecture and local host governments, as well as completing required safety upgrades, the reactor could start up as soon as early fiscal year 2021, which begins Apr. 1, 2021. It would be the first BWR to achieve that status since Japanese reactors began shutting down for routine refueling outages after Fukushima and then ran into major roadblocks as their operators sought restart permissions.

Fuketa said the review process for Onagawa-2 had been "relatively smooth" compared to that for two advanced boiling water reactors (ABWRs) at the giant Kashiwazaki Kariwa plant in Niigata prefecture operated by Tokyo Electric Power (Holding) Co., but he cautioned that it would be "difficult" to speculate over whether Onagawa-2 would be able to restart before the two ABWRs at Kashiwazaki Kariwa, which received approval from the NRA in late 2017 (NIW Oct.6'17).

Even assuming local approvals, Onagawa-2, whose restart application was submitted in December 2013, is not expected to power up until after 2020 because of ongoing safety improvements that the utility expects to complete in fiscal year 2020. During a late March 2019 news conference, Tohoku Electric President Hiroya Harada stated that construction costs for "common installations necessary to ensure the safety of the entire power plant," such as a more robust seawall, would cost 340 billion yen ($3.1 billion).

Moreover, Tohoku Electric also needs to secure approval from Miyagi prefecture as well as Onagawa Township and Ishinomaki City. This project may be complicated both by a new legal challenge and by the LDP's loss of outright control over the Miyagi Prefectural Assembly last month (NIW Nov.1'19). On Nov. 12, 17 citizens in Ishinomaki City, which is within the 30 kilometer radius of "Urgent Protection Planning Zone" around Onagawa, filed a petition for a temporary injunction against the unit's restart on grounds that the evacuation plans formulated by Miyagi prefecture and Ishinomaki City would not be effective in the event of a severe accident. The Mainichi Shimbun reported that the suit is the first example in Japan of a legal attempt to block a nuclear plant restart by challenging the adequacy of local government evacuation plans.

Objections Over Evacuation Plan

According to local media reports, Ishinomaki City's plan, drafted in 2017 based on principles formulated at the prefectural level, would attempt to evacuate over 140,000 citizens to 27 other municipalities in the prefecture. The petition relates the chaos that erupted in the wake of the Fukushima Daiichi disaster, notably the congestion in roads stricken by both the tsunami and earthquake, and the difficulties in verifying who had or had not been evacuated, especially in the case of hospitalized senior citizens. The petitioners argue that agreement by Ishinomaki City to the restart would "compel citizens to attempt dangerous and difficult evacuation" in the event of an accident, and that the "desktop plan" would "violate the responsibility" of local governments to their citizens.

At their Nov. 13 meeting, the NRA commissioners also discussed progress on reviews of three types of applications. In all, the NRA has been reviewing applications for 27 units at 16 power plants for conformity with post-Fukushima safety rules. These include the nine operating PWRs at five power plants and six units at four plants approved for restart but still not operating. In the case of operating plants, the NRA is still reviewing measures that have to be taken in order for the plants to remain in compliance with their restart approvals. For example, these operating reactors are part of a group of 18 units at 11 plants under review for the "severe accident measures" which must be completed within five years of restart (NIW Apr.26'19). In the case of Kyushu Electric Power Co.'s Sendai plant, two units are slated to be shut down for up to a year beginning in March and May 2021 to complete such installations (NIW Oct.18'19). And the agency is reviewing plans at 16 reactors (10 power plants), both operating and nonoperating, for the installation of three back-up power systems in the form of permanent on-site DC generators.

Compared to the NRA's previous semiannual review in May, the most notable mark of progress with regard to a restart application was the resolution of four major concerns which had troubled Tohoku Electric's application for Onagawa-2 (NIW May31'19). These included the stability of the bedrock underneath the facility, the potential for liquefaction from underground water, the need to re-evaluate structural design to protect from tornado damage, and measures being adopted to prevent possible incursion by tsunami into the plant.

Most other problems noted in the May 2019 review remain unresolved. For example, the Nov. 13 document notes that five major concerns, including volcanic and tsunami risks, still surround the application of Hokkaido Electric to restart its Tomari-3 PWR (NIW Nov.8'19). However, the overview said priority was being placed on seismic risk. An NRA field survey was slated for Nov. 15 to confirm whether the "F-1" fault running underneath Tomari-3 is "active," meaning it has shifted during the previous 120,000 years.

The NRA has also asked for additional surveys and data on coastal faults for Hokuriku Electric's application to restart its 1,206 megawatt Shika-2 ABWR and expressed impatience with the quality of new data submitted by Japan Atomic Power Co. regarding its 1,160 megawatt Tsuraga-2 PWR (NIW May31'19). ■

Dennis Engbarth, Taipei City

SAFETY

Panel Weighs NRC Judgments on Seabrook

A three-judge regulatory oversight panel in the US is currently considering a unique question: was the US Nuclear Regulatory Commission (NRC) qualified to judge the safety implications of utility NextEra Energy's plan for monitoring progressive and irreversible concrete degradation at its Seabrook reactor when it signed off on the plan and agreed to extend the plant's lifetime to 2050? By law, the NRC is the final arbiter on questions of reactor safety, but an intervenor group, C-10, argues that in the case of Seabrook the agency lacked in-house expertise to adequately judge the monitoring plan because it "had never seen" the specific form of concrete degradation in question, lacked any standards for it, and failed to recruit experienced external expertise.

The question of competency occupied a good portion of debate this autumn in front of a three-member Atomic Safety & Licensing Board (ASLB), an independent oversight panel tasked with adjudicating complex or contested issues before the agency. Ultimately at issue in this case is whether NextEra can through its monitoring plan prevent harm to the public from a form of concrete degradation known as alkali-silica reaction (ASR) that has caused cracking in key safety structures at the 1,246 megawatt plant in southern New Hampshire. "The biggest concern posed by ASR at Seabrook is this: if severe enough, ASR may weaken concrete safety structures to the point that they crack during an earthquake and release radiation into the environment," Diane Curran, representing C-10, told the board during a four-day hearing that started Sep. 24, and for which a transcript was released this week. "This would not be a freak earthquake," she continued, but one "that can be expected on the New Hampshire seacoast and which Seabrook was designed to withstand."

Curran said that "the NRC lacks sufficient grounds to approve NextEra's license amendment request" and that even though the decision was made, "you have the authority to review this license amendment request and reverse it and send it back to NextEra for further work." The amendment, which includes the long-term monitoring plan, was issued in March only a day before the NRC approved the 20-year license extension (NIW Mar.15'19). But the issue was so contentious that the NRC initially delayed these approvals (NIW Feb.8'19; NIW Feb.15'19).

Elaborating on the question of NRC expertise, C-10's expert witness, Victor Saouma, a leading authority on ASR, told the panel that the agency could have hired ASR experts at the Oak Ridge and Idaho National Laboratories, but instead hired other engineers, who while credible, lacked specific experience with ASR. "It is clear that the NRC did not avail itself of good quality reviewer[s]." Saouma himself worked for the NRC under contract from 2010-14 as a member of a panel studying "expanded proactive materials degradation." He is working pro bono for C-10.

C-10, based in Newburyport, Massachusetts, just over the border from Seabrook, has been following the ASR problem at the plant since it was discovered in 2009. In September, however, it was mainly Curran and Saouma who faced off against a phalanx of witnesses and lawyers for both the NRC and NextEra. Much of the testimony in the 996-page transcript concerned technical arguments about the effects of ASR on concrete over time, but both the judges and witnesses also delved into arguments over who was genuinely qualified to opine on the matter. However, no one disputed C-10's contention that the Seabrook case is a first for the NRC and that the NRC lacks both standards and in-house expertise on the condition.

Defending NextEra's monitoring plan, outside attorney Ryan Lighty told the ASLB panel that "NextEra's approach is the culmination of nearly a decade of work involving world-class experts in the analysis of nuclear structures involving reviews by multiple nuclear engineering firms and numerous licensed professional engineers, the expenditure of extensive company resources to ensure that NextEra fully addressed all public health and safety aspects of the ASR phenomena."

Quizzing 'Expertise'

But at least one panel member wasn't fully satisfied with that argument. Judge Sekazi Mtingwa asked NextEra's ASR expert, Oguzhan Bayrak, whether he was familiar with the ASR problem that surfaced at the Gentilly-2 reactor in Quebec, Canada, and whether he was "knowledgeable about the ASR and its impact at nuclear reactors around the world." After Bayrak said he was, the judge turned to NRC staff to ask about the qualification of "experts" they had sought out to review NextEra's monitoring plan.

The NRC relied on experts from a number of well-known nuclear-related organizations, including the NRC's Advisory Committee on Reactor Safeguards (ACRS), an independent advisory body on reactor safety issues, Brookhaven National Laboratory and the Electric Power Research Institute (Epri). But NRC staff member Angela Buford conceded that none of the ACRS experts were "specifically familiar" with ASR, while a second NRC staffer, Bryce Lehman, said that reviewers at Brookhaven focused on NextEra's "analysis methodology" which "wasn't specific to the ASR expertise." One ASR expert recognized by both sides, Yann LePape, was involved in an Epri review, although the nature of that review and how much time he spent on it are unclear.

Besides digressions into resume qualifications, the battle appeared to boil down to arguments over testing methodologies, with Bayrak squaring off against Saouma. Bayrak ran a large-scale test program for NextEra at the Ferguson Structural Engineering Laboratory at the University of Texas at Austin, Texas, which he heads. Saouma argued that the program was not sufficiently reliable to support its stated purpose of confirming regulatory compliance for the next 30 years. As a result, Saouma contends that "NextEra relies exclusively on monitoring to determine whether past expansions have reached a threshold, and has not conducted reasonable tests to anticipate future expansion and damage," according to a C-10 overview of its case.

NextEra's Lighty argued that "Saouma's unproven method of trying to predict structural behavior is vastly different than NextEra's method of actually measuring the behavior of the structures and monitoring them against defined acceptance criteria."

Saouma countered later in the hearing that NextEra was "looking at the expansion progress through a distorted rear-view mirror. We keep on hearing about the box," he said, referring to a theoretical limit beyond which ASR would render the reactor unsafe. "We keep on hearing that we are supposedly far from the edges of that box and that it will take decades to reach the edges." However, "we don't have here the technology to determine what would be crossing the edges based on the NextEra approach. It is not scientifically valid." ■

Stephanie Cooke, Washington
scooke@energyintel.com

ANALYSIS

The Effects of Nuclear Waste Planning Uncertainty

A major new report on global nuclear waste stockpiles released this week highlights the many knock-on problems created by the uncertainty of when and how the material will be disposed. With no operating spent nuclear fuel (SNF) repository anywhere, and with only one under construction, the report finds national nuclear planners struggling to plan for and finance such repositories, and flailing to securely store nuclear waste in the meantime. Researchers also argue that there is a paucity of research into the risks surrounding nuclear waste and its disposal.

"No country in the world has a deep geological repository [DGR] for spent nuclear fuel in operation," and with most such repositories decades away or more "the risks are increasingly shifting to interim storage facilities, which are running out of capacity," warns the World Nuclear Waste Report 2019, released on Monday, Nov. 11. Moreover, as the costs of both interim and permanent storage of SNF escalate, "no country has both estimated costs precisely and closed the gap between secured funds and cost estimates." The report adds that "there is a lack of comprehensive, quantitative and qualitative information on risks associated with nuclear waste," with "meta-analyses on the health impacts of nuclear waste" notable "for their virtual absence."

The 148-page report draws global conclusions but focuses on Europe, where over 60,000 tons of SNF are currently in storage (excluding Russia and Slovakia). As of 2016 some 81% of Europe's SNF was in spent fuel pools, creating "a growing and particularly high risk" considering the availability of dry storage options and potential for building hardened facilities designed to hold such fuel for up to a century or more. SNF storage capacity in Finland, for instance, has reached 93% saturation, while in Sweden the region's one centralized wet storage facility not affiliated with a reprocessing plant is 80% full. Stockpiling "is constantly increasing, while the implementation schedules for repositories are regularly being postponed into the future."

This is equally true beyond Europe, although in the US a move toward dry storage, albeit at reactor sites, is further advanced. Only days after the report's release three Democratic US senators reintroduced legislation that would among other things mandate the transfer of SNF owned by US nuclear licensees to dry storage after it's been in cooling pools for seven years. "Addressing the safe storage of spent nuclear fuel is critical for the communities around our nuclear plants," New York Senator Kirsten Gillibrand, who is cosponsoring the bill alongside Vermont's Sen. Bernie Sanders and Sen. Edward Markey of Massachusetts, said in a Nov. 13 statement. "This legislation will ensure that each nuclear plant has a plan in place to responsibly transfer spent fuel from spent fuel pools into dry cask storage and maintain critical safety, security, and emergency planning requirements until that transfer is complete."

In the US that Democratic push to mandate dry storage for SNF could conceivably be boosted by industry plans to develop two separate centralized interim dry storage facilities, although those plans require legislation that has been stuck in the stalemate over the controversial proposed DGR at Yucca Mountain in Nevada (NIW Jun.7'19). No similar shift is underway in Europe. France, which accounts for 25% of the EU's SNF but which considers it a resource for further processing rather than waste, has in recent years focused on building a major new centralized SNF pool for mixed-oxide assemblies while the option of "dry cask storage for spent fuel has been abandoned," according to this week's report (NIW May17'19; NIW Apr.22'19).

Raising Consciousness

The report, which includes contributions by 10 subject experts, is attempting to raise consciousness on the issue, and was backed by organizations including the European Green party and the Heinrich-Boll-Foundation. It was lead-edited by energy analyst Arne Jungjohann, and experts included Allison Macfarlane, former chair of the US Nuclear Regulatory Commission, Manon Besnard and Yves Marignac from Wise-Paris, and Mycle Schneider, coordinator of the annual World Nuclear Industry Status Report (NIW Sep.27'19).

A year ago Macfarlane participated in the Reset of America's Nuclear Waste Management that similarly drew on expertise from across the globe to make recommendations on best practices in dealing with SNF, particularly how to effectively implement a "polluter-pays" principle (NIW Dec.14'18). The new report argues that while governments across the world claim to apply this principle, most "enforce it only on decommissioning" of nuclear facilities and "do not enforce the polluter-pays-principle for the disposal costs of nuclear waste." That's because government's "fail to properly estimate the costs for decommissioning, storage, and disposal of nuclear waste," in part by basing cost estimates on "outdated data." Countries such as France, Germany and the US, are reliant on "studies from the 1970s and 1980s" — and applying "overly optimistic discount rates" for how quickly decommissioning and waste management funds will grow.

In Europe those discount rates range from 1.5% in Spain to 5.5% in Germany, says the report, and escalation of the underlying cost estimate (similarly projected far out into the future) is similarly varied. Nuclear decommissioning and waste management expenses in France "are expected to grow with the general inflation rate, while in Germany a 'nuclear-specific inflation rate' of 1.97% is calculated on top of the inflation rate. Applying only the general inflation rate could eventually lead to an underestimation of the costs and hence the amount of the funds."

The report argues that thanks to "great interdependencies" between nuclear decommissioning, storage, and disposal, "an integrated, external, segregated, and restricted ('ring-fenced') fund seems to be the most suitable approach to finance the future costs for these processes." That builds on the European Commission's October 2006 recommendation that "transparent management with appropriate external supervision of such financial resources is of paramount importance," but the report finds that only three countries have managed to establish such a funding system: Sweden, Switzerland and the UK (the last only for the operating fleet) (NIW May17'19). This month Switzerland demonstrated how such a system might look, as the government mandated that operators need to nearly double their annual contributions to the fund (p6). ■

Phil Chaffee, London
pchaffee@energintel.com

URANIUM

The Impact of Niger's Production Decline

The West African state of Niger is facing a sharp reduction in economic activity in two years, with the pending closure of one of the two uranium mines operated by France's Orano since the 1970s at Akouta and Arlit in the north. Orano, formerly New Areva, confirmed in May that its Cominak operation at Akouta would be closing but said at the time that there was no specific date for operations ending (NIW May17'19).

However, a senior uranium industry source told Energy Intelligence that Akouta will close on Mar. 31, 2021, and an independent mining consultant separately said that Niger has applied for World Bank/African Development Bank compensatory funding to help manage the closure process and pro-

SWITZERLAND

'Ring-Fencing' Waste and Decommissioning Funds Hits Home

The Swiss government's recent decision to nearly double the amount that Swiss nuclear operators must contribute annually to nuclear decommissioning and waste funds elicited howls of protest from the operators, but due to the fact these funds are "external and restricted" the operators have little recourse but to swallow the decision. That's largely because Switzerland has strengthened what a new report describes as "ring-fencing" such funds as a means of protecting them from operators' commercial interests.

This week's World Nuclear Waste Report 2019 points to Switzerland, Sweden and the UK (in the case of its currently operating reactors) as three key countries in Europe with funding that's "external, segregated, and restricted ('ring-fenced')" as well as integrated — meaning the scope of the fund includes both decommissioning and waste management. Switzerland has actually set up separate funds for the two activities, but the funds are controlled by the Decommissioning Fund for Nuclear Facilities and Waste Disposal Fund for Nuclear Power Plants (Stenfo), which is overseen by the Federal Department of the Environment, Transport, Energy and Communications. The Federal Council then has the final say over decisions related to the funds.

In a Nov. 6 meeting the Federal Council approved a revision to how much nuclear operators must contribute to the funds under its so-called Ordinance on the Decommissioning and Waste Disposal Funds for Nuclear Facilities (SEFV). That decision almost doubles the total that must be collected each year from reactor operators, from 96 million Swiss francs ($97 million) to 183.7 million ($185 million). This was in part related to last year's upward revision of 1.1 billion Swiss francs, to 24.6 billion Swiss francs, of the estimated total needed by the Stenfo for future back-end activities: 3.8 billion Swiss francs for decommissioning the Swiss nuclear fleet, and 20.8 billion for nuclear waste management (NIW May18'18).

The vast amount of capital needs for those activities are decades away, and at the end of 2018 the Stenfo boasted 7.5 billion Swiss francs, or 30% of what is currently projected must ultimately be spent. To grow the fund the government is counting on the annual contributions from operators mandated by the SEFV, in addition to fund investment returns. But due to "the current and expected future situation in the financial markets," in its meeting last week the Federal Council slashed the projected annual returns of the funds from 2% to 1.6%, which in turn caused the government to up the annual contributions from operators.

Switzerland's nuclear operators were unanimous in lambasting the change. "Axpo considers it inappropriate to reduce the real yield of the funds," the owner and operator of the twin-unit Beznau plant in northeastern Switzerland thundered in a Nov. 6 statement. "It ties up unnecessarily substantial additional funds, which will be lacking for investments in the planned restructuring of the Swiss energy supply." Muhleberg owner and operator BKW claimed that the new mandate "may have an impact on investments for planned hydroelectric plants, such as the Trift power plant and the raising of the Grimselsee dam." And Leibstadt owner and operator KKL, itself owned by Axpo, Alpiq and other Swiss energy firms, noted that it "reserves the right to take legal action together with the other operators of the nuclear power plants."

All the operators argued that there was no logic in the decision to revise the notional yield of the Stenfo funds so dramatically. "Since their establishment, the average returns for both funds have been well above 2% (decommissioning fund: 3.78%, disposal fund: 2.94% as at end 2018)," argued BKW. "Both funds have performed well since then, together finishing 2018 at about CHF 150 million [Swiss francs] above target."

The Federal Council hasn't directly answered these complaints; in its announcement it merely said that it is "essential that the contributors must pay for the entire decommissioning and disposal costs." And barring a legal challenge in the courts, the council's decision is unlikely to be reversed. As part of its announcement the government changed the composition of Stenfo's Administrative Commission and Investment and Expenses Committee: two-thirds of the seats on both will now be held by independent members in order to "reduce the influence of the owners." ■

Phil Chaffee, London
pchaffee@energyintel.com

mote alternative economic activities. Currently, uranium mining contributes some 60%-70% of Niger's exports by value, but its share has been on the slide during the past five years as Orano reduced output at both mines in response to the weak global market, as well as indefinitely postponing development of the large Imouraren mine until a sustained recovery in the uranium price.

Niger produced 2,911 tons of uranium (tU) in 2018 (globally, it was the fifth-largest producer after Kazakhstan, Canada, Australia and Namibia) according to World Nuclear Association figures, down from 4,116 tU in 2015, a 29% decrease (NIW Sep.13'19). Orano's 2018 annual report showed that the Akouta underground mine operated by Compagnie Miniere d'Akouta (Cominak) produced 1,128 tU (compared to annual 1,400 tU capacity), while the Arlit open pit mine operated by Societe des Mines de l'Aire produced 1,783 tU as against its 2,200 tU capacity. Cominak's shareholders are the mine's operator Orano with 34%, Niger's state mining company Sopamin with 31%, Japan's OURD 25% and Spain's Enusa Industrias Avanzadas with 10%; Cominak's two shareholders are Orano, with 63%, and Sopamin, with 37%.

Ore from both mines is processed on site and the resulting concentrate trucked 1,600 kilometers to Parakou in Benin, then railed 400 km to Cotonou port from where most is exported for conversion at Orano's Comurhex facility in Narbonne, France. Imouraren (67% owned by Orano and 33% by the Nigerien government), where production start-up work was suspended in 2014, contains ore reserves of 214,000 tU as of end-2018. In contrast, Akouta has only 1,500 tU of remaining reserves, and Arlit, which is not yet scheduled for closure, 10,300 tU.

Madaouela and Dasa

Orano's mines employ close to 1,500 workers, not including subcontractors; to provide replacement capacity and offset the loss in jobs, which risks undermining Niger's social cohesion, the government is facilitating the development of two new mines by Canadian-based junior firms GoviEx Uranium and Global Atomic Corp. at Madaouela and Dasa respectively. Madaouela is located in northern Niger's Tim Mersoi Basin just south of Orano's mines, and was granted the Madaouela 1 mining permit in 2016, containing the Miriam and Madaouela South North East (MSNE) deposits, among a number of Madaouela area deposits suitable for open pit and underground mining. Total NI 43-101 compliant resources are 139 million lbs. U3O8, of which 31.4 million lbs., are measured (grading 0.12% U3O8) and 79.4 million lbs. are indicated (0.14% U3O8).

GoviEx, headed by executive chair Govind Friedland, with Daniel Major, a qualified mining engineer, as CEO, is on track to complete a definitive feasibility study (DFS) in the second half of 2020 for an initial 21-year mining life. Development and fund raising is scheduled for 2020-21, with production start-up (of the Miriam open pit mine) slated for 2022. Miriam has a 0.97% U3O8 reserve grade for 27.6 million lbs. of measured and indicated contained uranium resources. A senior GoviEx source told Energy Intelligence that the firm is prioritizing Miriam as technically more straightforward than an underground operation and therefore more attractive to investors. It aims to shave 10% off current capital and operating costs via the DFS, with some six to nine months' work remaining, the source added. Pre-production capital expenditure is currently estimated at $359 million, with operating expenditure at $24.50/lb. and all-in, life-of-mine (opex and capex) at $36.40/lb.

A major step forward was a July 2019 "definitive agreement" with the government on commercial terms for joint development of Madaouela, and the laying of the first project stone on Jul. 23. The mining permit has been transferred to a new local firm, Compagnie Miniere Madaouela, in which the state received an initial 10% free carried interest in line with Niger's 2006 mining code, with provision for an additional 10% working interest for $14.5 million. Of that, $7.9 million would be in the form of an "acquisition payment" while the remaining $6.6 million would constitute settlement of a tax dispute between GoviEx and the government (NIW Apr.12'19). In September also, the government formally approved expansion of the mining permit area to incorporate 24 million lbs. in measured and indicated resources associated with Miriam and MSNE, while confirming the environmental and social impact assessment certificate covers both Miriam and MSNE. This was welcomed by Friedland as a "significant milestone."

Global Atomic is going in a different direction; it changed its focus this year to developing a low-volume, high-grade and high-margin underground mine, a senior company executive told Energy Intelligence. Completion of a preliminary feasibility study (PFS) for Dasa is due in mid-2020, with mine permitting expected by the year's end, a full feasibility study in 2021 and funding/mine development start-up in 2022. The government is being "very helpful" and in fact pushing the company to accelerate Dasa's development, the executive added, and once the permit is obtained it would be a short path to developing a mine. Dasa, is located on the Adrar Emoles permits between Arlit and Agadez, and a July 2019 upgrade expanded the resource to 78 million lbs. contained uranium (indicated) grading 4,483 parts per million (0.45%) U3O8, and 70 million lbs. (inferred) grading 3,783 ppm (0.38%) U3O8 at a 1,200 ppm cutoff.

A 2018 preliminary economic assessment envisaged life of mine production of 7 million lbs. per year with a $350 million capex, but current thinking is reducing volume to potentially 2 million-3 million lbs./yr focused on the 40 million-50 million lbs. of Dasa flank zone high-grade material — 5,500 ppm (0.55%) U3O8. The firm holds ongoing discussions with Orano under a 2017 memorandum of understanding on coordination of logistics for Dasa, and has access to metallurgical and assay laboratories in France. The trucking of uranium concentrate to one of both of Orano's tank leach plants in Arlit is under active consideration, although the option of an on-site plant will form part of the PFS also. ■

Roger Murray, London

BRIEFS

CANADA
The refurbishment of Darlington-2 remains on budget, and the projected costs and 10-year schedule for overhauling all four units at the Ontario nuclear power plant remains on track, according to a Nov. 12 statement by Ontario Power Generation, or OPG (NIW Jun.15'18). Some 90% of the work on Unit 2 is completed and by late October 960 feeder tubes and 40 of 58 major plant systems had been declared available for service. The team is now preparing for fuel loading. OPG worked with BWXT Nuclear Energy Canada over five years to develop a plan for loading 6,240 bundles into the core "in the correct location and sequence"—a process that involves inserting shield plugs, closure plugs and inserting the fuel bundles. Unit 2 is slated to be back on line in the second quarter of 2020. Meanwhile, 94% of the engineering design for the Unit 3 overhaul is completed, and planning and preparation for refurbishing Units 1 and 4, based on operating experience and lessons learned from the Unit 2 project, is ongoing. "Overall, the Darlington Refurbishment Project remains on budget and on schedule for completion in 2026," the statement said.

CZECH REPUBLIC
The Czech government announced this week that it would proceed with building a new nuclear power reactor at the Dukovany plant, with a view to starting construction in 2029 and receiving first power in 2036. The announcement by Prime Minister Andrej Babis followed intensive deliberations this year by a special committee for investing in new nuclear capacity. Babis said that the current plan is to hold a tender in 2021 and select a vendor by the end of 2022 — two years ahead of the previous tentative schedule (NIW Jul.19'19). He pointed out that the decision is directly linked to current climate concerns in Europe, arguing that nuclear energy is the only low-carbon option that can guarantee the country's energy security. In the words of Minister for Industry and Trade Karel Havlicek, "The energy clock is ticking. There is no time to waste — we have to build new resources." The minister said the government would launch the process "in full" by preparing legislation, negotiating with EU authorities, and signing a contract with state-controlled CEZ, operator of the country's existing nuclear reactors and the proposed project company for the newbuild (NIW Aug.3'18).

IEA
The Paris-based International Energy Agency (IEA), which advocated for nuclear in a report earlier this year, warns in its latest annual World Energy Outlook that a decline in nuclear power will cost consumers more (NIW May31'19). It draws attention to "the gap between the ever-higher amounts of greenhouse gas emissions being produced and the insufficiency of stated policies to curb those emissions in line with international climate targets." While achieving a clean energy transition "with less nuclear power is possible" it "would also be very likely to cost more: offsetting less nuclear power with more renewables would raise overall power investment needs by some $1.6 trillion over the period to 2040, resulting in 5% higher electricity bills for consumers in advanced economies," the report states. As in past years, the IEA bases its forecasts for the period through 2040 on three scenarios: the Current Policies Scenario; the Stated Policies Scenario (SPS), reflecting announced polices and policy initiatives; and the Sustainable Development Scenario (SDS). Under the SPS, total electricity generation increases from 26,607 TWh in 2018 to 41,373 TWh in 2040, with nuclear's contribution dropping from 10% to 8%. Under the SDS, nuclear's contribution modestly rises to 11% with the bulk of acceleration in low-carbon technologies coming from renewables.

JAPAN
Hiroshi Kajiyama, the newly appointed head of Japan's Ministry of Energy, Trade and Industry, affirmed that the conservative Liberal Democratic Party will continue to support its "nuclear fuel cycle" policy, according to local media reports. His support was voiced during a Nov. 11 meeting with Shingo Mimura, governor of Aomori prefecture, which hosts Japan's major back-end fuel cycle facilities. Last month Prime Minister Shinzo Abe selected Kajiyama to replace Kazuhide Sugawara, considered a "nuclear zero" advocate, and who resigned under suspicion of violating election laws (NIW Oct.25'19). In contrast, Kajiyama began his career in 1979 by serving a decade with the Power Reactor and Nuclear Fuel Development Corp., now the Japan Atomic Energy Agency. Kajiyama's affirmation of support for the Japan Nuclear Fuel's long-delayed Rokkasho nuclear fuel reprocessing plant was combined with a promise to Mimura not to turn Aomori into a "final disposal site" for spent nuclear fuel (NIW Jul.6'18). But Rokkasho's operation depends on approval by the Nuclear Regulation Authority (NIW Jun.7'19). The regulator indicated on Nov. 13 that it wanted additional data and more field surveys to evaluate whether the Detoseihu fault adjacent to the plant is active.

SLOVAKIA
Slovakian police have accused two people and one legal entity of mismanagement and fraud in connection with the much-maligned project to complete two new VVER-440 reactors at the Mochovce plant. The accusations came after a police raid of the plant this week, the second this year, in what appears to be a concerted crackdown on rampant fraud connected to the project. The two individuals arrested this week were suppliers who overcharged the project "1,000%" for their services, inflicting damage worth €100,000 ($110,000), police said in a statement. Investigators suggested that more accusations could follow as they probe everything "from the smallest suspicions to the most extensive." The criminal case is more evidence of how disastrous the Mochovce project has become for Slovakia, having started in 2009 and suffered numerous postponements, the most recent of which took place in April this year (NIW Jun.8'18). Original costs have subsequently doubled, according to various reports, and the latest information indicates that Unit 3, which has undergone pre-start-up tests this year, will start in 2020 and Unit 4 in 2021 (NIW Aug.24'18). Mochovce is operated by Slovenske Elektrarne, which is one-third controlled by Italy's Enel Group.

UNITED STATES
A portion of construction activity on Vogtle-3, the first of two AP1000s being built in Georgia, is roughly two months behind, according to testimony Nov. 12 before the state's Public Service Commission (PSC). Delays have occurred in piping, electrical and mechanical work, Aaron Abramovitz, of the Southern Nuclear Operating Co., which is managing the project, told the PSC during a hearing on the latest Vogtle Construction Monitoring Report, covering project spending during two reporting periods (the 20th and 21st) between Jul. 1, 2018, and Jun. 30, 2019. Even so, the company has "high confidence" the project will remain on track for commissioning in November 2021 and 2022, according to Southern Co. President and CEO Stephen Kuczynski, who told the commissioners that key tests — cold hydro and hot functional — will take place on Vogtle-3 as scheduled next spring and summer, respectively, with fuel loading scheduled for next November. Georgia Power received $30.1 million related to Westinghouse bankruptcy claims, of which $25.8 million are for payments exceeding actual cost and $4.3 million for payments "considered improper or subject to ongoing reconciliation," according to prefiled testimony by majority project owner and Southern subsidiary Georgia Power. ■