The South African Nuclear Energy Corporation (Necsa) has achieved a turnaround of more than R100-million in just one financial year, from a deficit of R75-million at the start of the 2012/13 financial year to a surplus of R29-million at the end of the period. As a result, a planned programme of retrenchments has been cancelled.
“We looked at efficiencies in running our business and cutting costs to release funds for operations. This was achieved through a combination of austerity measures and the freezing of vacancies,” explains Necsa CEO Phumzile Tshelane (who took up his position on September 1 last year). “By January, it was clear we wouldn’t need retrenchments. There was money in the company, sufficient for operations and to pay our people. We looked at the shape and size of Necsa. A much more streamlined structure will be adopted, with effect from September 1 – instead of eight divisions, there will be five, with two led by divisional executives and three by group executives.”
These five executives will oversee the following divisions – corporate services, finance and business development, nuclear compliance and services, operations, and research and development. “It is expected that the savings which have been made will continue to be made, especially with the intro- duction of the new structure,” he says. The previous structure had the following divisions: finance and information management, human resources, nuclear compliance, nuclear technology industrialisation, marketing and communication, research and development, strategy and performance and technical services.
Under the new structure, operations has control of the Safari-1 research reactor, laboratories, the nuclear fuel testing facility (called the Material Test Reactor) as well as the Nuclear Liability Management and Liquid Effluent Management Services units. Research and development incorporates three units – research, process and product development and the Nuclear Technologies in Medicine and the Biosciences Initiative (acronymed to Ntembi). The units within nuclear com- pliance and services are safety and licensing, nuclear safeguards, security services, the forensics laboratory, properties and utilities, maintenance and engineering services.
“The new structure affects the executive management of the Necsa group – it does not affect our subsidiary companies,” he states. These subsidiary companies and other Necsa business activities are now categorised as Pelindaba Enterprises. They are NTP Radioisotopes, Pelchem, Pelindaba Manufacturing, Pelindaba Engineering Services, Necsa Skills Development Centre and Pelindaba Consulting Services. Of these, NTP and Pelchem are classified as sub- sidiary companies.
“NTP is doing reasonably well: it is the backbone of Necsa’s revenues at the moment,” reports Tshelane. “It has revenues of just under R1-billion. We’re trying to push them above R1-billion. NTP supplies more than 60 countries with molybdenum-99 (Mo-99) and other radioisotopes. But Mo-99 is their main product. They have a presence in Europe and the Middle East, and we’re working on penetrating South East Asia. They also have a small market in South America.”
Pelchem is a highly specialised chemicals company, producing fluorine-based chemicals. This is a spin-off expertise, derived from the use of fluorine in the enrichment of uranium. The company currently exports to more than 20 countries in the Americas (Argentina, Brazil, Canada and the US), Asia (China, India, Japan, Singapore, South Korea and Taiwan), Europe (Austria, Finland, France, Germany, Ireland, Rumania, Switzerland, Turkey and the UK), the Middle East (Dubai and Saudi Arabia), as well as Australia, Botswana and Namibia.
“Pelchem is in a lossmaking situation at the moment, probably because it’s undercapitalised,” he avers. “Because they supply to the manufacturing sector, they’re exposed to strong competition as well as to the economic downturn. The competition is especially fierce from China: Chinese companies are providing a lot of product at uncompetitive prices. We’ve complained a lot to Chinese industry associations – formal international complaint procedures take too long to be of any benefit.”
Properly capitalising Pelchem is a top priority for Necsa, as the current undercapitalisation makes it difficult to achieve economies of scale. Between now and September next year Necsa will be strongly focused on develop-ing investment opportunities at Pelchem. “One option is to increase Pelchem’s production base – we’ve asked the National Treasury to inject cash,” says Tshelane. “We’re also looking at other innovative solutions to get money into Pelchem.”