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Date : 24/05/2005
Source: Department of Public Enterprises
Title: Erwin: Pebble Bed Modular Reactor Supplier Conference


Opening address by the Honourable Minister of Public Enterprises, Mr Alec Erwin, at the PBMR Supplier Conference

Programme Director
Executive Mayor, City of Tshwane Metropolitan Municipality, Mr Father Smangaliso Mkatshwa, Chairman Pebble Bed Modular Reactor (PBMR), Dr Alistair Ruiters
Senior Vice President and Chief Technology Officer, Westinghouse Electric Company, USA and PBMR Board Member, Dr Regis Matzie Vice-Chancellor, North West University,
Potchefstroom, Dr Theuns Eloff
Chief Executive Officer, PBMR, Mr Jaco Kriek
Chief Executive Officer, Eskom, Mr Thulani Gcabashe
Honoured Guests
Ladies and Gentlemen

Introduction

I would like to begin by welcoming our visitors to South Africa. Let me assure you that the weather is always like this even during our winter – although in all honesty it can be a bit different in Cape Town. The holding of a supplier conference on the Pebble Bed Modular Reactor (PBMR) is a milestone in the development of this crucial technology.

There maybe some among you who are a little surprised that a country of South Africa’s size is undertaking a project that is of global significance. I am sure that by the end of this Conference you will have come to know the unusual history of this project’s location in South Africa, but even more important, you will have come to understand that South Africa is in an exceptionally strong position to be able to undertake this project.

It is interesting to remember that the real work on the PBMR started in 1994 so in a sense it is one of the fruits of our new democracy. What is in no doubt is that the successful completion of the project will make a great contribution to the building of our economy and the future prosperity of our democracy.

So in having the privilege of opening this Conference I hope that we will use it as an ideal opportunity to reflect back on our achievements over the past 11 years, to network, interact with local and overseas suppliers and chart a way forward. Two of my colleagues, the Ministers of Trade and Industry and Minerals and Energy, will also address you on key aspects of the project. Our Deputy President will join us tomorrow night. She has played a key role in the sustaining of this project over the last six years and we are honoured that she will find the time to address you and be able to interact with us. I believe the support of government for the project is very evident as lining up this number of Ministers for one occasion is not easy.

One of South Africa’s economic and industrial strengths is the quantity and efficiency of its electricity supplies. However, like all economies in the world today we face challenges. Almost 90 percent of South Africa’s electricity is generated in coal-fired power stations. Koeberg, a large nuclear station, which is near Cape Town, provides about five percent of capacity. A further five percent is provided by hydro-electric and pumped storage schemes. In South Africa, there are few, if any, new economic hydro sites that could be developed to deliver significant amounts of power. The country’s natural gas resources at this stage would seem to be too limited to qualify as a viable option for power generation.

With sustained economic growth over the last decade we now face key challenges. Firstly, we are reaching the limits of our capacity and are now commencing a major new build programme. Secondly, we have to diversify our energy sources. We are planning a major construction programme to generate some 20000 mw over the next 20 years that will address these two challenges. The first phase of this programme – the rehabilitation of three mothballed stations has already commenced. Bidders for two gas-fired stations have also just been qualified. The introduction of the PBMR could not have come at a more economically opportune time. Its positive attributes from an environmental point of view and its potential link with hydrogen production add immensely to the attractiveness of this technology.

A key component of the future energy system that we had to consider was nuclear energy – as a major producer of uranium it would have been surprising if South Africa did not investigate this option. In addition South Africa did have scientific capacity in this field. Government in conjunction with Eskom, the Industrial Development Corporation and British Nuclear Fuels have applied very considerable resources to investigating the pebble bed technology as part of its Integrated Electricity Planning process. The investigation, which included technical performance evaluation and economic merits of the project, has strongly supported the PBMR technology as a component of the future electricity supply in South Africa. The pre-feasibility studies conducted showed considerable technical and commercial merit for the PBMR as future base load energy in South Africa.

In 2004, Government signalled its intention by allocating funds to the PBMR project. The funding enables the PBMR to secure strategic contracts for the development of key components such as the turbine machinery (being developed by Mitsubishi Heavy Industries from Japan) and a Helium Test Facility (HTF) at Pelindaba. Government wants to produce between 4 000 MW to 5 000 MW of power from pebble bed reactors in South Africa. This equates to between 20 and 30 PBMR reactors of 165 MW each. The project is now factored into our future energy planning from about 2010 onwards. We firmly believe that the PBMR will place the country at the forefront of energy technology.

The Minister of Trade and Industry will deal more fully with Government’s overall approach to the implementation of the project and its impact on industrialisation in South Africa, which we see to be very positive. South Africa is a modern, cost competitive economy capable of advanced manufacturing activity. This will provide a favourable economic environment for the realisation of the pilot plant and the subsequent industrialisation of the PBMR.

The project is now at a full-scale engineering design phase. This means that the demand for technical disciplines such as civil, mechanical, electrical, construction, chemical, instrumentation and control, mining and computer technology is growing and providing a host of opportunities for investment and training. In March 2005, PBMR (Pty) Ltd and the Chinese developers of pebble bed technology, Chinergy Co of Beijing, signed a Memorandum of Understanding. The objective of the MoU was to pursue potential benefits, which could be realised through co-operation for the High Temperature Reactor (HTR) demonstration projects in China and South Africa.

Benefits of the co-operation agreement can be summarised as follows:

* Promotion of technology transfer with key international suppliers
* Establishment of joint ventures between local and overseas companies
* Creating new trading partners
* Accessing Foreign Direct Investment and * Critical skills development.

We are moving rapidly toward the construction of a pilot plant at Koeberg. If this is successful then we will factor the PBMR into the new generation capacity for South Africa. The energy model that we are constructing facilitates the introduction of the PBMR in a manner that impacts positively on all aspects – the emergence of the new capacity, the sustainability and security of the system and the competitiveness of electricity prices.

The model rests on the use of Eskom as the anchor for the system whilst allowing IPP into the system. There is little doubt that such progress in industrialising the PBMR will mean that we can commercialise it on an international scale. As indicated before we will have also achieved an environmentally sound diversification of our energy sources and will be able to develop in the realm of the hydrogen economy of the future.

The African continent is currently engaged in a renewal process through the establishment of the New Partnership for Africa’s Development (NEPAD) and the African Union (AU). The over-arching objective of the renewal process is to overcome poverty, underdevelopment and political instability.

The development of the African continent is imminent and offers major opportunities. However, energy sources are currently underdeveloped. The PBMR has three advantages. These advantages are very important to the developing economies in the world and therefore very important for African development.

The first is that its modular form is very appropriate for economies that now have very high cost energy but where the economy cannot finance very large generation plants. The introduction of the modules will strengthen electricity generation, allow for industrialisation and as growth occurs so the financial resources for larger generation plants will be acquired. Very large plants maybe attractive for the developed economies and for the giant economies but for Africa as it develops they are not an attractive option. South Africa’s well-developed grid and the introduction of the PBMR into this grid will provide Africa with an abundance of expertise in developing their own grids based on a combination of smaller and larger generation plants. The second attraction is that the PBMR technology offers a nuclear generation source that is inherently safe. This deals with one of the historic concerns around nuclear energy.

Thirdly, the PBMR will reduce dangerous emissions. In addition the waste issue is very manageable. Nuclear wastes exist in small, highly manageable amounts that can be stored without harm to people or the environment.

Conclusion

In South Africa we are on the road to development and a prosperous future. I believe that the PBMR supplier conference provides an occasion for many industrial enterprises to join us in this journey. I hope that you are able to shape broad strategic views about what we want to achieve collectively, create a dialogue, share experiences, debate issues, enter into intensive discussions and learn from each other. I wish you all the best and will now let the real work of the Conference commence.

Thank you.

Issued by: Department of Public Enterprises
24 August 2005

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