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Cablegate: Brazil: Update On Brazil's Ambitious Civil Nuclear Energy

VZCZCXRO3718
RR RUEHRG
DE RUEHBR #1354/01 2841953
ZNR UUUUU ZZH
R 101953Z OCT 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 2648
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 6744
RUEHSO/AMCONSUL SAO PAULO 2906
RUEHRG/AMCONSUL RECIFE 8580
RUEHUNV/USMISSION UNVIE VIENNA 0124
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 03 BRASILIA 001354

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ENRG TRGY KNNP IAEA BR
SUBJECT: BRAZIL: UPDATE ON BRAZIL'S AMBITIOUS CIVIL NUCLEAR ENERGY
PROGRAM

1. (U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR
INTERNET DISTRIBUTION.

2. (SBU) SUMMARY. The Government of Brazil (GOB) has ambitious
plans for Brazil's nuclear renaissance. It intends to complete
construction of its third nuclear power plant (Angra 3) located near
Rio de Janeiro and to construct an additional four to eight reactors
by 2014 in order to keep up with domestic demand. Deputy Minister
of Mines and Energy Marcio Zimmermann said that Brazil wants
American involvement in building the new plants. There is an active
discussion about additional reactors coming on line after 2014. In
addition, the GOB is seeking to establish the capability and
capacity to produce nuclear fuel for domestic consumption. The GOB
is also considering the creation of a separate state-entity to
monitor and regulate nuclear energy. Further, the GOB is already
grappling with the issue of the disposition of nuclear waste, which
will become more severe with additional reactors. END SUMMARY.

BUILDING MORE REACTORS

3. (SBU) Brazil currently has two nuclear power plants, Angra 1 and
Angra 2, located at Angra dos Reis in the State of Rio de Janeiro.
These two reactors generate a combined 1,900 megawatts of power and
contribute to three percent of Brazil's energy. Angra 3, which will
be co-located with the two existing reactors, will add 1,200
megawatts. State-owned Eletronuclear, which is a subsidiary of
Eletrobras, currently operates Angra 1 and Angra 2 and will be
responsible for Angra 3 as well. Financing of Angra 3 is estimated
at USD 1.8 billion, and the GOB is still seeking a strategic partner
to assist in financing the reactor. On July 23, Environment
Minister Carlos Minc placed conditions on granting the licenses for
the construction of Angra 3 through the Brazilian Institute of
Environment and Renewable Natural Resources (IBAMA). According to
Dr. Laercio Vinhas, Director of the Radiation Protection and Nuclear
Safety Directorate of the Brazilian National Nuclear Energy
Commission (CNEN), CNEN is confident that Minc's conditions will not
interfere with the construction of Angra 3. The preliminary IBAMA
license number 279 imposed 60 conditions for the construction of
Angra 3, with the most salient being the disposition of nuclear
waste. At the end of September, IBAMA finally gave permission to
start construction. CNEN, which licenses and oversees the operation
of reactors, had given permission for construction of Angra 3 years
ago at the time it approved Angra 2 in the 1990's.

4. (SBU) The GOB has announced its plans to expand the number of
nuclear reactors in Brazil by 2014. By that date, the GOB has said
publicly that it intends to expand its nuclear energy production to
make up five percent of Brazil's energy matrix. Dr. Vinhas of CNEN
believes this will require the construction of four to eight
reactors, depending on projected economic growth and energy demand.
In separate meetings with Acting Deputy Secretary of Energy Jeffrey
Kupfer and DCM Lisa Kubiske, Deputy Minister of Mines and Energy
Marcio Zimmermann said that Brazil is planning to build four to six
new plants and that Brazil wants American involvement in building
the new plants. He recalled that Westinghouse had originally been
involved in building the first Brazilian plant and that Brazil was
eager to see U.S. firms reengage. (NOTE: There already is some
bilateral commercial interaction taking place in the nuclear field.
Marcelo M. Susini Ribeiro, advisor to the director of Nuclear Fuel
Production at Brazilian Nuclear Industries (INB), the civilian
company that runs Brazil's current enrichment facility at Resende
near Rio de Janeiro, told Econoff that his Director, Samuel Fayad
Filho, travelled to Pittsburgh September 24 - 28 for meetings with
Westinghouse. END NOTE.)

5. (SBU) For the longer-term, i.e., the period after 2014, the GOB
is considering bringing on even more reactors. Minister of Mines
and Energy Edison Lobao was quoted by Brazilian newspapers as
suggesting that Brazil would build 50 or 60 nuclear reactors by
2030. This proposal was dismissed by CNEN as unfeasible and
unnecessary. Moreover, Environment Minister Minc - a staunch
anti-nuclear activist - said that Lobao was expressing only his
personal opinion and not the view of the government. Eletronuclear,
however, has submitted a study to President Luiz Inacio Lula da
Silva to urge that the large-scale expansion of Brazil's nuclear
energy infrastructure commence soon. If Eletronuclear is to meet
its target of generating six gigawatts of nuclear power by 2030, as
called for in Brazil's National Energy Plan 2030- which specifies
that 6,000 megawatts of nuclear energy be available by that date, it
believes that construction must begin right away. Thus far, four
states in the northeast have expressed interest in housing the
future power plants, including Bahia, Sergipe, Alagoas and
Pernambuco. Press reports indicate that the GOB is looking at
proposals to build six new reactors of 1,000 megawatts generating
capacity, and sites in the southeast of Brazil are being considered
for new plants. Projections indicate construction on the first two

BRASILIA 00001354 002 OF 003


northeast reactors might begin by 2019 and 2021, with the southeast
ones by 2023 and 2025. Energy Minister Lobao has stated that
Brazil would need 50,000 to 60,000 megawatts of nuclear capacity by
2050, which could explain his comment on the need for 50 to 60
nuclear power plants.

IMPROVING NUCLEAR REGULATION AND OVERSIGHT

6 (SBU) The Ministry of Mines and Energy has announced its
intention to break up the national monopoly on the construction and
operation of nuclear reactors to lower the costs involved. The
nuclear monopoly is written in Brazil's constitution, but an
amendment delivered to the Chamber of Deputies in September 2008
would allow private companies to work with nuclear generation. The
Ministry of Science and Technology, however, does not support the
change, citing concerns over the strategic nature of nuclear power.

7. (SBU) Dr. Vinhas of CNEN said that later this month (October
2008), a committee of 11 ministries will meet to discuss the
creation of a separate nuclear regulatory agency. The creation this
ministerial group, called the Committee for the Development of
Brazil's Nuclear Program, is coordinated through the President's
Office (Planalto) and will respond to the perceived increased demand
for regulation of an expanding nuclear energy program. Currently,
CNEN both regulates and plays a role in managing the two nuclear
reactors and other small-scale nuclear activities. Dr. Vinhas
commented that this arrangement might have worked satisfactorily
with a small nuclear program, but with Brazil's ambitious expansion
plans, a separate regulatory body makes more sense now. Of note,
the GOB has more than doubled CNEN's budget between 2003 and 2008,
from Reals 70 million to Reals 150 million (about USD 70 million).

BRAZIL-ARGENTINA NUCLEAR COOPERATION

8. (SBU) In March 2008 Brazil and Argentina announced the formation of
a bilateral Nuclear Energy Commission (COBEN), and stated their
intention to create a joint state company (EBEN) that will develop
compact nuclear reactors and enrich uranium. While Brazil is
willing to work with Argentina and possibly other countries on
nuclear energy, it appears that the GOB remains unwilling to share
technology for uranium enrichment that it has developed. Dr. Vinhas
of CNEN says that the Brazilian and Argentine technologies don't
match well; Brazil pursues light water technology and Argentina is
similar to the Canadian approach and uses heavy water. In addition,
press reports indicate that the Brazilian Navy is adamantly opposed
to technology transfer to Argentina through this joint endeavor.
Further, Brazilian Nuclear Industries (INB), the civilian company
that runs Brazil's current enrichment facility at Rezende, near Rio
de Janeiro, does not have access to the Navy's enrichment
technology, which has been developed at the Navy's research center
at Aramar, located at Ipero. Aramar's principal project today is
the construction of a nuclear powered submarine.

NUCLEAR FUEL AND ENRICHMENT

9. (SBU) Brazil has the world's sixth largest reserve of uranium.
Its actual uranium reserves could be much higher as only 30 percent
of its territory has been prospected. Based on the present
calculated reserve of 500,000 tons, Brazil would have enough uranium
for 250 years of operation of six reactors. Nonetheless, Brazil
currently goes through foreign companies, such as Urenco, to obtain
fuel-grade uranium for its nuclear facilities. Dr. Vinhas of CNEN
reports that the GOB plans to install in Aramar a plant to transform
yellow cake into UF gas. This is presently done for Brazil in
Canada, and the enrichment is done in Europe through Urenco. The
GOB wants to obtain self-sufficiency in the production of fissile
fuel for all of Brazil's nuclear reactors by 2014. Dr. Vinhas
states that Brazil has no current plans to export surplus enriched
fuel, and will instead keep its surplus as a strategic reserve.

NUCLEAR WASTE

10. (SBU) Environment Minister Minc initially stated that he would
not grant an operational license for Angra 3 unless a proper
disposal method for nuclear waste was under construction. However,
condition 2.18 of license 279 from IBAMA had different wording,
indicating that it was necessary for Eletronuclear to present a
proposal and initiate execution of the approved project for the
final disposition of nuclear waste before the initiation of
operation of Angra 3. There has been some confusion over the
differences between the terms execution and construction as used in
the license. The GOB plans to begin the nuclear waste disposal
project in 2014, and construction will begin in 2019, with
conclusion in 2026. It is still unclear what the nuclear waste
solution will be. CNEN has stated that Brazil's nuclear program
does not have the financial means or any reason to reprocess nuclear

BRASILIA 00001354 003 OF 003


fuel today, and that it lacks technology to separate plutonium for
weaponry. Dr Vinhas said that highly radioactive nuclear waste will
continue to be stored in the interior pools of each plant in Angra,
where it will remain for 10 years for cooling. An external pool
will be build by 2022, when the internal reserves of Angra 1 and
Angra 2 will be full. CNEN believes the pool to be the best
solution, and that pools are usable for the life of the reactor, or
circa 60 years. As Angra 3 will begin operation in 2015, CNEN
foresees disposal becoming an issue only in 2075.

COMMENT

11. (SBU) After years of inactivity, the GOB is seeking to
reactivate old projects and launch new ones in the civilian nuclear
energy field. Construction of the country's third reactor (Angra 3)
should begin shortly, and now the GOB is looking at other aspects,
such as producing its own fuel from its rich supplies of uranium.
At the same time, the government is trying to put its regulatory
house in order with a new oversight agency separated from
management. Talk of cooperation with Argentina has not progressed
far and obstacles lie in its way. GOB looks well-placed to expand
its civilian nuclear energy sector if it can overcome some
significant hurdles, with financing at the top of the list. In the
past Brazil has struggled to take major infrastructure ideas from
the drawing board and bring them to fruition. The GOB's current
nuclear energy plans offer opportunities for both expanded
government cooperation on the regulatory and management front, as
well as business opportunities for private sector.

SOBEL

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