VZCZCXRO1651
RR RUEHRG
DE RUEHRI #0295/01 2961517
ZNR UUUUU ZZH
R 221517Z OCT 08
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4676
INFO RUEHBR/AMEMBASSY BRASILIA 1006
RUEHSO/AMCONSUL SAO PAULO 5198
RUEHRG/AMCONSUL RECIFE 3468
RUEHBU/AMEMBASSY BUENOS AIRES 0540
RUEHSG/AMEMBASSY SANTIAGO 0179
RUEHUNV/USMISSION UNVIE VIENNA 0015

UNCLAS SECTION 01 OF 03 RIO DE JANEIRO 000295 
 
SIPDIS 
 
STATE FOR WHA/BSC, ISN/NESS 
 
E.O. 12958: N/A 
TAGS: PREL PARM ENRG EIND EMIN AR BR
SUBJECT: NO TECHNICAL BARRIERS TO ADDITIONAL PROTOCOL, BRAZIL'S 
NUCLEAR REGULATOR AND STATE-OWNED COMPANIES SAY 
 
¶1.  Summary.  U.S. Ambassador to the United Nations in Vienna, Greg 
Schulte, visited Rio de Janeiro, Brazil on October 17 as part of his 
trip to the region, including Brasilia, Santiago and Buenos Aires 
(SEPTELS), for consultations on non-proliferation issues.  In 
meetings with Brazil's nuclear regulatory authority and 
representatives from Brazil's state-owned nuclear industry, Amb. 
Schulte learned about Brazil's plans to expand nuclear power 
production and confirmed that there appear to be no major technical 
barriers to implementing the Additional Protocol if Brazil were to 
sign on.  The decision, Rio-based interlocutors said, is largely a 
political one that they are already capable of implementing quickly 
if called upon to do so.  End Summary. 
 
BRAZIL TO EXPAND NUCLEAR ENERGY PRODUCTION 
 
¶2.  Brazil currently has one nuclear power facility in Angra dos 
Reis, outside of Rio de Janeiro.  The Angra plant has two nuclear 
reactors which generate approximately 1900 megawatts of electric 
energy, comprising slightly less than 3 percent of national 
electricity supply.  President of Brazil's National Nuclear Energy 
Commission (CNEN) Odair Dias Goncalves confirmed to Amb. Schulte 
that the Government of Brazil (GoB) has approved plans to build four 
additional nuclear power plants.  Depending on economic conditions 
and the global financial crisis, the government may consider an 
additional 2-4 plants, Goncalves said.  He did not foresee any 
difficulty in meeting the capacity needs for a potential total of 8 
new plants. 
 
¶3.  The first new plant, expected to come online by 2014, will be 
the re-started construction of a third reactor (Angra 3) at the 
existing Angra facility.  Angra 1 is a Westinghouse (U.S.) plant and 
Angra 2 is a Siemens (German) plant.  Amb. Schulte advocated 
generally for U.S. companies as Brazil plans its new plants.  Pedro 
Figeuiredo, Director of Brazil's state-owned nuclear utility 
Eletronuclear, described the company's relationship with 
Westinghouse as "a brotherly love-hate relationship," mentioning a 
long-standing litigation/arbitration dispute with Westinghouse over 
the replacement of steam valves in Angra 1.  Figueiredo also noted 
that a Westinghouse representative had visited Eletrobras just a few 
days earlier to lobby for new plant opportunities. 
 
¶4.  Figueiredo confirmed that the GoB has already decided to build 
at least two of the new plants in the northeast and possibly two 
plants in Brazil's southeast region.  The process to identify plant 
sites is set to begin in 2009.  The decisions will be based on 
technical considerations, he said, largely influenced by geological, 
environmental and safety data.  Unless deciding between several 
similarly qualified sites, Figueiredo told Amb. Schulte that he did 
not expect political influence to come into play though many 
governors from Brazil's northeast states are already lobbying to 
attract the nuclear plants projects to their states. 
 
¶5.  From a uranium mining and enrichment perspective, Brazil is also 
expanding activities to keep up with expected demand from the 
planned plants.  Brazil is planning to double its uranium mining 
production by 2012 in order to have sufficient supply for possibly 
eight new plants, said Alfredo Trajan Filho, President of Industrias 
Nucleares do Brasil (INB), Brazil's state-owned uranium mining and 
enrichment company.  He told Amb. Schulte that, if the GoB decides 
to build fewer plants, Brazil may have excess uranium for export. 
INB currently operates the Resende Nuclear Fuel Factory outside of 
Rio de Janeiro, the country's only commercial fuel fabrication 
plant.  INB is planning to build another facility with the goal of 
reaching 100 percent conversion self sufficiency by 2014, Trajan 
said.  Right now, the Resende facility has enrichment capacity for 
Angra 1 & 2 (operating), Angra 3 (under construction), plus one more 
plant.  When Amb. Schulte asked if Brazil has plans to export 
enriched uranium, Trajan said that INB's mission is first and 
foremost to meet domestic demand; beyond that is a political 
decision. 
 
NEW REGULATORY AGENCY, STATE OWNED COMPANIES 
 
¶6.  CNEN currently plays the joint role of nuclear regulator and 
promoter.  The GoB has decided to create a separate regulatory 
agency, CNEN President Odair Dias Goncalves confirmed to Amb. 
Schulte.  CNEN's regulatory personnel, numbering around 400, will be 
transferred to the new agency which will report directly to the 
Ministry of Science and Technology.  CNEN will maintain the rest of 
its 2,300 staff, and will continue to oversee the state-owned 
companies which handle uranium mining and enrichment, nuclear power, 
and heavy equipment for the nuclear sector.  Additionally, Brazil 
plans to create two additional state-owned companies under CNEN 
which will focus on nuclear and radioactive waste management as well 
 
RIO DE JAN 00000295  002 OF 003 
 
 
as radio-pharmacy.   Privatization of nuclear energy is not being 
considered, Goncalves said.  Private companies will be brought in as 
partners, but control will remain with the government since it sees 
the need to mature the industry first. 
 
¶7.  As part of Brazil's long term strategy for waste storage, CNEN 
will launch a new company to handle waste management and plans to 
begin construction of a medium- and low-level waste reprocessing 
facility in 2014.  They are beginning to test a process now, and 
expect to have all the data collected by 2013 and a pilot plant 
operational by 2018.  Their idea is to have an above-ground 
repository by 2026. 
 
GNEP, INTERNATIONAL FUEL BANK, AND REGIONAL ENRICHMENT 
 
¶8.  Amb. Schulte noted that the U.S. is looking at advanced 
reprocessing also and expressed hope that Brazil will move from its 
observer status in the Global Nuclear Energy Partnership (GNEP) to 
full member status.  To be successful, said Schulte, it needs to be 
a global concept to change the fuel cycle so that there is less 
waste.  CNEN responded that Brazil, not just the Foreign Ministry 
but all of the nuclear community, is generally happy with most 
aspects of the GNEP but wants to take some time to see how some of 
the commercial issues develop. 
 
¶9.  Amb. Schulte raised the IAEA's idea of an international fuel 
bank and said that the USG supports a few simple steps.  The market 
provides a good supply but the idea's goal is to back up the market. 
 He noted that Russia has already provided two reactor loads of low 
enriched uranium to the IAEA and that partners are close to raising 
US$150 million to finance purchasing.  CNEN expressed doubts about 
the effectiveness of such a fuel bank and said that there are 
industrial and technical issues that need to be addressed, such as 
in what form it would be stored.  CNEN officials noted that nuclear 
energy is having a renaissance and, as a result, there could be a 
global crunch for enrichment services.  For example, Urenco recently 
had problems guaranteeing supply for Brazil's contract.  Amb. 
Schulte argued that the idea of the international fuel bank is not 
meant for commercial supply and demand problems, but more as 
political reassurance to dissuade countries from racing to pursue 
enrichment capability. 
 
¶10.  Amb. Schulte asked about the idea floated by Brazil President 
Lula and Argentina President Kirchner for an enrichment joint 
venture, saying that the multilateral and regional approach to 
enrichment is an attractive idea.  CNEN and INB officials said that 
studies were underway to see if it would be possible for Brazil and 
Argentina to work together on enrichment.  But INB cited technical 
challenges such as the fact that Argentina uses gaseous diffusion 
and Brazil uses centrifuge enrichment technology.  CNEN President 
Goncalves noted that this idea originated at the political level and 
that, for the foreseeable future, it appears that Brazil can supply 
the small amount of enrichment that Argentina requires.  CNEN does 
not foresee any other country in the region building nuclear power 
plants, including Chile, for the next ten years. 
 
ADDITIONAL PROTOCOL A POLITICAL, NOT TECHNICAL, CHALLENGE 
 
¶11.  On the Additional Protocol (AP), CNEN President Goncalves said 
that signing was a political issue rather than a technical one. 
CNEN has already completed a study and does not foresee any major 
obstacles to implementing the agreement, he said.  However, he noted 
that Brazil has some minor concerns which it needs time to explore, 
such as the potential economic effects, definition of parameters and 
implications for university research and development.  INB President 
Tragan agreed, saying that INB has not identified any major 
technical barriers to implementing the AP.  He said it would not be 
hard to achieve from a technical perspective, a few minor hurdles 
but no major impediment.  Trajan noted that Brazil is already 
subject to IAEA safeguards under its NPT obligations, and pointed 
out to Amb. Schulte that Brazil is the  only country with military 
installations subject to inspection. 
 
¶12.  Antonio Abel de Oliveira, Secretary of the Rio-based 
Brazil-Argentina Commission for the Accounting and Control of 
Nuclear Materials (ABACC), also told Amb. Schulte that his agency 
did not foresee any major technological barriers to Brazil and 
Argentina signing the AP.  Oliveira explained that ABACC is the 
bi-national agency created by the governments of Brazil and 
Argentina to verify the peaceful use of nuclear materials in those 
countries.  ABACC performs inspections, many times alongside IAEA 
inspectors.  Though ABACC's charter does not currently take into 
consideration the AP, Oliveira noted that the debate in Brazil 
appeared to be gaining momentum and that his agency had been asked 
 
RIO DE JAN 00000295  003 OF 003 
 
 
to participate in internal government discussions on the AP within 
recent years. 
 
¶13.  This message was cleared/coordinated with Embassy Brasilia and 
USUN Vienna. 
 
MARTINEZ