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Oct 29, 2007

SA acquisition aligned to US nuclear giant's 'localisation' effort

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The acquisition of South Africa's IST Nuclear (ISTN) by international nuclear-technology group Westinghouse Electric Company should be consummated later this week, materially increasing the domestic footprint of the US company.

No monetary value has been disclosed for the transaction, but regional VP for South Africa Dr Rita Bowser tells Engineering News exclusively that the purchase is aligned to an aspiration to position the company for the likely pipeline of work that could emerge in South Africa.

Indeed, State power utility Eskom has a stated ambition of installing 20 000 MW of nuclear power as part of a bigger 40 000-MW expansion programme over the next two decades.

Bowser confirms that the name ISTN will be changed to Westinghouse Electric Company South Africa, adding that the move is in line with a desire and willingness by Westinghouse to respond to the South African government's stated objective of seeking to build local nuclear-industry capacity around Eskom's multibillion rand nuclear build programme.

She even hinted to a willingness to support a possible rekindling of a domestic nuclear-fuel programme, which has been mooted as a possibility in light of the renewed interest in uranium mining in the country, itself spurred by a renaissance in nuclear energy in many countries, including South Africa.

Bowser herself was previously head of business planning and strategy for Westinghouse's European Fuel Business, based in the UK and sat on the board of Enusa, a Spanish based nuclear fuel corporation built as a response to the Spanish government's desire to produce nuclear fuel for itself and for other utilities in Europe.

WESTINGHOUSE, AREVA SEEN AS KEY RIVALS FOR SA WORK

But the immediate priority for Bowser was to position the company for the opportunities potentially arising out of Eskom.

It has been widely reported that State power utility Eskom has identified Areva, of France, together with Westinghouse, as the two most likely vendors to build South Africa's first new nuclear power station in more than 20 years.

The initial plant, which could be built at one of five possible sites along South Africa's coastline, is likely to have an upfront capital cost of more than R100-billion, but Eskom is keen to pursue it as a baseload alternative to coal, particularly given the growing pressure on it to reduce its carbon-dioxide emissions.

The State-owned power utility has stated that an investment decision should be made before the end of its current financial year in March, and that a letter of intent might be signed with a preferred bidder sometime in 2008.

The nuclear plant would have a capacity of between 3 200 MW and 3 300 MW, depending on the technology chosen and it has been noted previously that Areva's predecessor was involved in the building the country's only current nuclear power plant, situated at Koeberg, near Cape Town.

BULLISH ON PBMR


But the purchase of ISTN by Westinghouse is an indication of that company's growing interest in South Africa's nuclear programme, both conventional and the Pebble Bed Modular Reactor (PBMR).

ISTN is already a leading provider of services and systems for the PBMR, in which Westinghouse, together with the Industrial Development Corporation, Eskom and the South African government, has taken direct equity.

Bowser, who relocated to South Africa from the UK four months ago to lead the Centurion-based unit, tells Engineering News that the acquisition will immediately increase Westinghouse's domestic employee base by 118 people.

She also indicates that, while the new company will remain focused on its PBMR work, there will also be opportunities to begin interrogating opportunities related to Eskom's plans for a conventional nuclear plant.

'LOCALISATION PART OF OUR BUSINESS MODEL'

A big focus area will be on exploring "localisation" and manufacturing opportunities, which is likely to be embedded as part of any upcoming Eskom tender.

"Fortunately for us, localisation is part of our business model wherever we operate," Bowser, who has spent most of her career either at Westinghouse-linked companies or at US utilities, stresses.

She notes similar programmes in China, Korea and Spain, where local manufacturers have actively participated in domestic build programmes, and have been integrated into the larger Westinghouse supply chain.

"I have spent much of my time since relocating to South Africa visiting manufacturing facilities, and feel that many local factories could fit into our plans. Some, however, would need some assistance to become accredited as nuclear suppliers. To do so, local companies must be accredited under the American Society of Mechanical Engineers III code, a process that is both time-consuming and costly."

She is also optimistic about prospects for the PBMR and South African industry's participation within the programme, noting that it is hoped that a demonstration unit will be built on the Koeberg site in 2010/11.

Westinghouse has long been a proponent of the PBMR, and the acquisition of ISTN will allow the company to become even more involved as PBMR moves toward commercialisation.

"Equally important, we intend to expand ISTN's scope to include working with Westinghouse in servicing existing light water reactors in South Africa and elsewhere," Bowser adds, noting that alongside PBMR, South Africa is a promising market for Westinghouse's AP1000 pressure water reactor.

She indicates that Westinghouse will strongly promote the system in South Africa, which she describes as "a hundred times safer" than the first-generation pressurised water reactor built by Westinghouse in 1957 in Shippingport, in the US.

She argues that another key advantage for Eskom is its modular make-up and the fact that units ramp-up at a relatively modest 1 100-MW each, which can make the step-change easier to manage than larger unit sizes. Further, the modular design enables localisation at various levels from fasteners to pumps to larger systems.

"We are very interested in the South African market and believe that our localisation offering is attractive and we expect 2008 to be a key year for some of Eskom's nuclear decisions," Bowser concludes.


Edited by: Terence Creamer
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