Sustainable Nuclear Development

The global desire to improve the standard of living of all people has resulted in drastically increased consumption of water, food, mineral and energy resources as well as the rapid expansion of manufacturing capabilities.

PBMR is committed to sustainable development as a strategic priority and implements a management framework aimed at ensuring that the necessary policies, governance structures, reporting systems and standards are in place to manage the Company accordingly. We are committed to playing a leading role to address the environmental and social challenges facing our country and the world through the development of our energy generation and fuel technology. We believe sustainable development makes good business sense.

Although this annual report contains PBMR’s sustainability performance information in an integrated manner, the Company is aware of the Global Reporting Initiative (GRI) guidelines, as well as the recently released G3 guidelines. These guidelines have not been fully adopted yet. It is envisaged that the sustainable development of PBMR will follow the G3 guidelines in the 2009 annual report.

The World Commission on Environment and Development (Brundtland Commission) referred to the global environmental, development and energy challenges as “the interlocking crises” (WCED 1987). The interconnectedness of the environment and human society is emphasised throughout the Brundtland Commission report, and it is central to the concept of sustainable development. Twenty-one years after the Brundtland Commission report was published, its findings are more pertinent than ever.

PBMR recognises that sustainable development, as defined by the report, is not an option; it is a necessity for the future of our planet. In striving to achieve this balance, technology and engineering issues are pivotal. Our choices about product technology, our choices about process technologies, levels of investments in research and development, the rates of diffusion of our technologies, and our licensing and compliance with safety and other regulations affecting our products and technologies are critical for the future of our Company, our country and the world.

We are convinced that our scientific and engineering progress towards delivering a safe standardised, modular nuclear reactor using fuel pebbles, will be essential for the national and international welfare, as it brings benefits to the economy, the environment and society. Safe nuclear power represents an indispensable resource, opening up new options for energy supply, use and distribution.

We are convinced that the PBMR is economically viable and advantageous; it offers environmentally clean energy development; and it is socially beneficial and safe.

In this section we would like to report on issues that are material to our business and that are important to our stakeholders.

Economic

The PBMR is currently the front-runner in the development of a safe, modular nuclear reactor and its pebble fuel. The intention is to develop the PBMR for the local and export market. The greatest economic benefits to be derived from the PBMR will emanate from its industrial applications, once the technology is demonstrated. The envisaged applications are for electricity generation, process heat and, later, for the production of hydrogen.

An international bank has prepared a comprehensive investment model for the PBMR. A review of the economics and market potential of the PBMR confirmed that it would be competitive in its niche markets and that it would gain a global market share. The updated business case shows the PBMR offers investors (including the government) good returns. In addition, the use of the reactors for electricity generation and process heat supply will bring additional returns in the form of environmental and social benefits (see below).

Developing cutting-edge nuclear technology is expensive. The proven global success of the leading nuclear energy companies from the USA, France, Russia and Japan has been achieved through the constant financial support of their respective governments. This support has created vibrant localised nuclear industries in each of these countries, which have become important economic drivers in the respective economies, both in the domestic and export markets. The economic viability of the PBMR is likewise dependent on government funding, at least during the initial stages of development to the demonstration phase.

The capital cost of nuclear plants is significantly higher than fossil ones, due to safety requirements and the use of specialised materials and sophisticated quality control procedures. However, once the plant is running, the cost variables are considerably less. Power generation costs for nuclear plants usually include the cost of spent fuel management, plant decommissioning and final waste disposal, while conventional power plants view them as external costs.

The envisaged main applications of the PBMR are in electricity generation and process heat application, while hydrogen production is envisaged in the long term.

In its electricity-generation configuration, the PBMR has the potential to provide sufficient and clean baseload and load following electricity for the demands of the South African economy, and, when exported, for the economies of the clients. The growing demand for energy, the depletion of fossil fuels and the detrimental impact of greenhouse gases on the future of man and the planet, have refocused the world’s attention on nuclear energy as an important component of the future global energy mix. Generation IV nuclear reactors (like the PBMR) offer technology that addresses the prevalent concerns regarding reactors. Global electricity demand is forecast to increase from a current level of almost 4 000 GW to more than 7 000 GW by 2040. This is an 8% increase over the forecast of October 2006, which shows how rapidly the demand is increasing. Nuclear power is expected to constitute 18% of the total electricity supply by 2030. To satisfy this demand and to replace nuclear power plants that are at the end of their useful life, will require the installation of a substantial amount of new nuclear capacity between now and 2030.

PBMR expects to share in the supply of this growing market.

At least three global companies are actively investigating the market potential of the PBMR in process heat applications. Local interest is providing insight into the coal-to-liquid (CTL) and gas-to-liquid (GTL) processes. The first phase of a feasibility study has indicated potential market opportunities for the PBMR, which have been pursued to identify potential partners and end-users, as well as to initiate interaction with regulators regarding the possible applications. Specific applications were identified, a preliminary economic assessment of each opportunity was completed and the specific applications were prioritised for project development effort.

The conclusion: PBMR technology is well positioned to exploit the opportunities presented by the global process heat market.

The intermediate reactor outlet temperature (ROT) of 750 degrees Celsius required for process steam and cogeneration has been proven by the operating experience of the German pebble bed reactors (AVR and THTR). The inherent safety of the design and technology will allow the PBMR reactors to be situated close to processing plants. When considering CO2 credits, the PBMR process heat applications should even be competitive with natural gas.

There is a good match between the temperature and thermal power produced by the PBMR and the requirements of the targeted process heat applications. A worldwide study of the opportunities is currently being conducted with special focus on countries with large market potential. The market size for the following applications will be identified:

• Oil sands and oil shale production.
  
• Enhanced oil recovery.
  
• Petrochemical production.
• Synfuel production.
  
• District heating energy systems.
  
• Desalination.
  
• Chemical production.
  
• Transportation hydrogen production.

• providing steam and cogeneration for CTL plant;
  
• utilities and oil sands recovery;
  
• driving a steam methane reforming (SMR) system;
  
• driving a water-splitting process that could provide major improvements for CTL fuel applications; and
  
• desalination of sea water.

Another potential application could supply steam and electricity to chemical process complexes which have a process steam requirement and an internal electricity-generation need. PMBR offers a CO2-free steam and cogeneration alternative.

The PBMR will be the first nuclear technology able to be deployed across a comprehensive spectrum of the energy market. It will be capable of competing head-on with increasingly expensive fossil fuels, while offering a safe, clean, environmentally friendly, affordable and secure modular source of energy at a significantly reduced risk of long-term cost volatility.

The economic viability of the PBMR and its concomitant positive impact on the South African economy hinges on the successful completion of the licensing, engineering, construction and commissioning of one or more first-of-fleet demonstrators, for both power-generation and process heat applications.

To harness technologies like the PBMR to boost the economy, effective national and multilateral economic policies and management strategies are needed that have sustainability as their primary objective. The most important first step is to build an indigenous technological capacity, which includes trained experts who can understand and take advantage of existing technological knowledge. This is part of the PBMR localisation programme. PBMR localisation or competitive supplier development initiatives aim to:

• establish a sustainable, internationally competitive local nuclear industry;
  
• become a supplier of nuclear components and services to the local and international nuclear market;
  
• assist in the development of an advanced manufacturing infrastructure;
  
• promote the associated research and development in order to remain internationally competitive and to meet the required international standards;
  
• maximise skills development, job creation and black economic empowerment (BEE) through the nuclear industry;
  
• supply high-value goods and services to the local and international markets; and
  
• promote technology transfer, joint ventures, new trading partners and foreign investment.

Where other reactor-producing countries already have established and sustainable nuclear support industries, South Africa has to develop its emerging local nuclear industry as quickly as possible to be globally competitive. To encourage the participation of the private sector, markets need to be open and IP must be protected.

To enable the local manufacturing of some components of the DPP, local companies will need to be accredited in accordance with ASME III standards and codes. Discussions are under way with various stakeholders to ensure that the certification of the companies is done within the required timescales. Five South African companies are in the process of achieving ASME III accreditation to be able to manufacture DPP components.

NIASA was officially established as a Section 21 Company on 6 November 2007 to represent the nuclear industry in South Africa and to support, promote and champion the collective interests of its members.

PBMR is a sponsor member of NIASA and provides the Secretariat function for NIASA. NIASA has established three subcommittees:

• Manufacturing.
  
• Education.
  
• Communication.
  
• NIASA should play a significant role in developing the fledgling industry to maturity.

Environment

Mr John Ritch, director-general of the World Nuclear Association, says that the world needs a 20-fold expansion in nuclear energy in order to prevent dangerous climate change. He believes nuclear power is the only way to fuel fast-developing nations without major increases in greenhouse gases (GHGs). Although nuclear fission does produce some greenhouse gases, notably during fuel production, emissions are currently far less than those from burning fossil fuels. High-temperature reactors like the PBMR emit even less GHGs than conventional nuclear plants per MW generated.

The highly energy-intensive South African economy based mainly on coal, makes the country one of the highest emitters of GHGs in Africa, and it stands above the Organisation for Economic Cooperation and Development (OECD) region average in energy sector emissions. South Africa was ranked as the world’s 14th highest carbon dioxide emitter from fuel combustion in 2000, and was the 19th most carbon-intensive economy (IEA 2002). South African per capita emissions are higher than those of many European countries, and more than three-and-a-half times the average for developing countries.

• high thermal efficiency;
  
• enhanced safety which allows it to be sited close to industries;
  
• better fuel utilisation;
  
• improved waste disposal; and
  
• enhanced proliferation resistance.

• Annular core geometry with large surface area.
  
• Large negative temperature coefficient throughout core life.
  
• Single-phase inert coolant with no reactivity effects.
  
• High reactor heat capacity with very long response/ transient times and continued structural integrity.
  
• Large fuel temperature margins with high melt temperature.
  
• Online refuelling (pebble) with very low excess reactivity.
  
• Coated particle fuel as the principal fission product barrier.
  
• Passive decay heat removal via convection, conduction and radiation.

• Particle fuel is self-encapsulating, ie the fission products are contained inside the particle coatings.
  

• The very stable ceramic fuel form provides long-term stability in a waste repository.
  
• The low-decay heat power density allows air-cooling immediately after discharge from the reactor.
  
• It is easily amenable to consolidation by removal of the graphite matrix.
  
• The high fuel burn-up means less waste per volume of heavy metal contained.
  
• Decontamination of the structural graphite is possible to reduce this volumetric disposal burden.

The principal barrier to fission product release in HTR fuel is the triple-coated isotropic (TRISO) coating on the fuel particles. This barrier is effective both while the fuel is operating in the reactor and when it is in the repository. The ceramic graphite is very resistant to degradation in a dry or a wet environment and therefore can maintain its isolating character for millions of years. The low volumetric power density and high melting temperature of HTR fuel means that it does not melt as a result of fission product heat-up when stored in air-cooled spent fuel tanks after discharge from the reactor. HTR fuel can also be consolidated by removal of the matrix graphite, allowing an order of magnitude volume reduction. Finally, the large amount of structural and/or fuel matrix graphite can be decontaminated, ie C14 removed, by microbes.

Conventional coal-fired energy generation uses large quantities of water in the cooling process. This poses major environmental problems in South Africa, where more than 90% of the available fresh water resources are already utilised. The PBMR does not require as much water for cooling as conventional power stations do, because it uses helium as a coolant and transfer medium. Not only does this reduce the impact of power generation on the available water resources, but the use of PBMR process heat could actually produce fresh water through desalination.

South Africa’s mineral extraction industry is hugely energy-dependent, as illustrated during the recent energy shortages. As indicated above, the PBMR technology would allow power generation close to the mines and manufacturing industries, which would provide considerable saving on transmission costs and losses. Process heat applications would also allow current feedstock to be turned into products, which would lessen the GHGs significantly.

The use of PBMRs to generate electricity and to provide process heat in South Africa and in other selected markets will not solve the global environmental dilemma. However, the use of this technology alongside conventional nuclear options and renewable sources of energy will arrest the additional environmental degradation and harmful emissions caused by fossil fuel powered plants.

Social

PBMR’s internal training initiatives are focused on providing each employee with the best knowledge and skills to perform at a world-class level. The Company also aims to provide employees with the necessary opportunities for self-development and growth. Succession management and mentoring are promoted through the PBMR’s senior management level development initiatives.

PBMR has developed an Accelerated Development Programme for high-potential/high-performing employees in technical skills categories linked to business requirements. This initiative is closely linked to the Employment Equity Plan and strategies. It started in January 2008. This programme will mainly focus on critical technical positions within the business and create the mechanism to build capacity from within PBMR’s business in critical areas.

PBMR has been registered with the Energy Skills Education Training Authority (SETA) for the past five years, and has submitted its workplace skills plan to the SETA every year, as required.

Induction and orientation training is conducted on a regular basis. Safety culture and safety training form an integral part of PBMR’s training and development initiatives. Formal training includes leadership development, natural work teams and project management within PBMR. The focus in 2007 has been on the training of PBMR employees on the Company’s procedures and processes to ensure that employees have the required understanding of PBMR’s business processes.

PBMR has developed an Engineering Council of South Africa (ECSA) Mentorship Programme, which is now integrated into its normal training, and is equipped with additional information regarding the importance of continued professional development. Team-building sessions have been scheduled as a way of introducing mentor and mentee teams to each other through fun activities.

PBMR supports the development of personal development plans linked to individual performance compacts for employees who require development. PBMR has embarked upon a national capacity-building initiative to establish, implement and maintain the necessary strategies, systems and processes required for the proactive and focused development of PBMR’s core and support competencies. The aim of this initiative is to ensure the sustainability of capacity within PBMR and the nuclear industry in order to be internationally competitive.

• five PhD students. Three are studying at local universities and two abroad;
  
• eight master’s degree students at North-West University, Mafikeng campus, studying for a Master’s degree in Applied Radiation Science and Technology (MARST);
  
• two master’s degree students at Carbon Laboratory at the University of Pretoria. The focus is on waste minimisation;
  
• one scholarship at the North-West University for a student to complete a master’s degree in Nuclear Engineering;
  
• seventeen PBMR employees who are registered at the Potchefstroom campus of the North-West University, on a part-time basis, to complete selected modules and complete master’s degrees in Nuclear Engineering.

PBMR sponsors bursaries for students who study at universities and are participating in PBMR-related R&D projects linked to the PBMR Technology Plan. The various areas of technology development and PBMR’s co-working universities and organisations are reflected on Technology Development.

Two PBMR employees are currently undertaking PhD studies, one at the University of Pretoria (on Waste Management), and the other at Penn State University in the USA (on Reactor Physics), with R&D students involved in other research projects at the University of Stellenbosch and the Nelson Mandela Metropolitan and North-West universities.

PBMR contracted an international expect from the Pennsylvania State University for a four-week period during July/August 2007 to run a series of lectures for employees. The main aim of the visit was to build capacity in the areas of uncertainty treatment, kinetics and dynamics and to work together with PBMR employees on projects in the area of core neutronics and thermal hydraulics.

PBMR sponsored two employees, Mss Mosidi Makgae and Pia Meintjies, to attend the World Nuclear University’s (WNU) third Annual Summer Institute, from 14 July 2007 to 24 August 2007, in Daejoen, Korea. It was designed to develop and inspire future international leaders in the realm of nuclear science and technology.

Ms Mosidi Makgae, a chemist (PhD) from the Fuel Division, and Ms Pia Meintjies, a civil engineer (BEng) from the Plant Engineering and Fuel Operations Division, both successfully attended the programme.

The MARST, which is a project managed by the CARST at North-West University (Mafikeng campus), is supported by PBMR and has successfully resulted in a number of graduate students from this programme being appointed at PBMR. Every year PBMR supports four first-year and four second-year students through this programme. On successful completion, students graduate with a MARST.

PBMR has also been actively involved in the revision of this curriculum and course content and has assisted in the preparation of the business plan for the establishment of a laboratory at the Centre of Applied Radiation Science and Technology. Construction work on these laboratories has now started.

Apart from developing and growing its employees, PBMR supports South Africa’s capacity-building programmes. The purpose of the national capacity-building initiative within PBMR is to establish, implement and maintain strategies, systems and processes required for the proactive and focused development of PBMR’s core and support competencies. The aim is to ensure the sustainability of capacity within PBMR and the nuclear industry, in order to be internationally competitive.

PBMR is supportive of both the AsgiSA and Joint initiative on priority skills acquisition (Jipsa) initiatives and is working with other state-owned enterprises (SOEs) to identify skills requirements in the priority skills categories from within these organisations, as well as the skills requirements from the contractors during the build phase of the DPP and fuel plant.

These initiatives will allow for the provision of the necessary skills planning at a macro level. PBMR has already initiated a skills pipeline to meet these targets. We are also working very closely with the DPE to establish an Employment Skills Development Agency to facilitate the training of people in these priority skills categories.

To fully understand the skills requirements for the industry, input was obtained from the major stakeholders that currently operate in the industry, namely Necsa, PBMR, Eskom and the NNR. Although the current focus is on bridging short-term skills gaps through identified and agreed skills programmes (for the purpose of this business plan), it is envisaged that future training leading to full qualifications will be incorporated into programmes to address the issues surrounding longer-term capacity building. A total of € 1,5 million has been raised and training of all the member organisations is currently taking place. South African Nuclear Human Asset Research Programme (SANHARP) represents a significant development for South Africa in the field of nuclear science and technology.

Corporate social responsibility

PBMR views corporate social responsibility (CSR) as a commitment to contribute to the economic, environmental and social sustainability of communities. This is done through the ongoing engagement of stakeholders, the active participation of communities impacted by company activities and the public reporting of company policies and performance in the economic, environmental and social arenas.

During the 2007 financial year, PBMR reached out to the communities near Pelindaba, where the fuel pebble research and development project is under way. The PBMR schools outreach programme enlightened learners about the advantages and disadvantages of various energy sources, the Pebble Bed Modular Reactor project, and the benefits of the PBMR to the country. Mathematics and physical science teachers were introduced to the PBMR and associated technologies, before the team visited the individual schools. School principals were also involved in a programme designed to foster more interest in disciplines that could benefit technology development.

PBMR also introduced a grade 10 to 12 schools competition in Atteridgeville to develop interest in sciences, engineering and technology. Mathematics and physical science textbooks have been donated to the schools.

PBMR supports the South African Institute of Mechanical Engineers (SAIME) technology olympiads initiative. This initiative forms part of PBMR’s National Capacity Building Plan and encourages young people to study engineering sciences, especially mechanical engineering.