VZCZCXRO1617
RR RUEHDU RUEHJO
DE RUEHSA #0747/01 0601239
ZNR UUUUU ZZH
R 011239Z MAR 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 8470
INFO RUEHMO/AMEMBASSY MOSCOW 0644
RUEHFR/AMEMBASSY PARIS 1013
RUEHUL/AMEMBASSY SEOUL 0195
RUEHTN/AMCONSUL CAPE TOWN 3998
RUEHDU/AMCONSUL DURBAN 8615
RUEHJO/AMCONSUL JOHANNESBURG 6288
RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 PRETORIA 000747 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
DEPARTMENT FOR ISN/NESS/CMARTIN 
DOE FOR NE/AHAN 
COMMERCE FOR DOC/ITA/USAFCS/3004 
 
E.O. 12958: N/A 
TAGS: ECON ENRG IAEA KNNP SENV SF FR
SUBJECT: FRANCE AGGRESSIVELY PROMOTES NUCLEAR ENERGY TIES 
WITH SOUTH AFRICA WHILE WESTINGHOUSE EXPANDS ITS OWN EFFORTS 
 
REF: A. PRETORIA 00500 
 
     ¶B. PRETORIA 00373 
     ¶C. PRETORIA 00317 
 
¶1. (SBU) This is an action request (see paragrah 7). 
 
¶2. (SBU) Summary.  France and South Africa seek greater 
cooperation around energy issues including increased 
electricity generation from nuclear power.  The two countries 
are expected to sign a cooperative agreement on the peaceful 
use of nuclear energy in the near future.  The French are 
aggressively pursuing an opportunity to construct South 
Africa's next nuclear reactor.  A SAG vendor selection for 
the next nuclear reactor is expected in March 2008. 
Westinghouse will compete with the French for the bid, is 
gearing up its local marketing efforts and seeks a decision 
from the U.S. Department of Commerce on its request for 
advocacy.  End Summary. 
 
------------------------------- 
The French (Nuclear) Connection 
------------------------------- 
 
¶3. (SBU) Greater cooperation between France and South Africa 
around energy issues, including increased electricity 
generation from nuclear power, was announced at a 
French-South Africa Energy Conference held in Cape Town by 
South Africa Department of Minerals and Energy (DME) Minister 
Buyelwa Sonjica and French Minister of Industry Francois Loos 
on February 20.  Both ministers cited in their opening 
remarks the long-standing French/South African cooperation in 
the nuclear sector - notably France's construction and 
operation of South Africa's sole commercial nuclear reactor 
near Koeberg in Western Cape Province.  Sonjica stated that 
South Africa expects to sign a cooperative agreement with 
France around the peaceful use of nuclear energy.  Sonjica 
also used the conference as a platform to describe South 
Africa's plans to enrich uranium (Septel).  Loos said that 
French parastatal nuclear energy company Areva hopes to win 
the bid to build a second nuclear reactor in Koeberg and 
wants to cooperate with South Africa as it develops its 
Pebble Bed Modular Reactor (PBMR) program.  (Note. South 
Africa's Department of Public Enterprises (DPE) has invested 
heavily in PBMR which uses 1980's German technology to build 
low-output, helium-cooled reactors which can be built 
remotely, transported and installed throughout the power 
grid.  End Note.)  In early February, DME requested use of a 
U.S. energy planning model and sought greater cooperation 
with the U.S. around broad energy issues (Reftel A). 
 
----------------------------- 
The Russians Are (Not) Coming 
----------------------------- 
 
¶4. (SBU) South Africa parastatal power utility Eskom is 
expected to announce the scope of plans for construction of 
one or more additional conventional nuclear reactors at its 
March 2007 board meeting.  Eskom has chosen a pressurized 
water reactor (PWR) design for construction of at least one 
reactor which narrows the field of serious competition to 
Westinghouse/Toshiba and Areva.  (Note. GE/Haitachi produce 
boiling water reactors (BWR) and are therefore out of 
contention.  End Note.)  South Korea and Russia have also 
expressed interest in bidding but are not being taken 
seriously by industry and government insiders (Septel). 
(Note. Westinghouse was purchased by Japan's Toshiba in late 
¶2006. End Note.)  A vendor selection decision by Eskom for 
the next nuclear reactor is expected as early as March 2008. 
Eskom is under pressure to build additional capacity as the 
country suffers from rolling blackouts related to electricity 
undersupply and aging infrastructure (Reftel B). 
 
------------------------ 
Where Are The Americans? 
------------------------ 
 
¶5. (SBU) Westinghouse officials met the Embassy's Economic 
and Commercial Counselors and Nuclear Energy Officer on 
February 27 to describe their planned response to Areva's 
 
PRETORIA 00000747  002 OF 002 
 
 
aggressive marketing effort to secure this contract. 
Westinghouse's AP-1000 reactor design has technical 
advantages over the Areva design including better passive 
safety features, a smaller power output more suitable to 
South Africa's limited power grid and the recent sale of four 
AP-1000 reactors to China (Reftel C).  Westinghouse is also a 
minority investor (17%) in the PBMR program giving it 
additional leverage in the reactor selection process. 
Westinghouse can also demonstrate long-term commitment to 
South Africa's nuclear program through its participation in 
PBMR.  French parastatal Areva has the advantage of French 
government support and a network of partnerships with strong 
political connections.  Economic Counselor and Nuclear Energy 
Officer met with Japanese Embassy Economic Officers February 
27 to describe Westinghouse's plans.  The Japanese officers 
were familiar with the competition but said they had not 
received any advocacy instructions from the Japanese 
government/Toshiba yet. 
 
¶6. (SBU) Meanwhile, the French have hosted a high-profile 
conference on energy cooperation pronouncing plans to work 
together in the nuclear sector.  DME nuclear chief Tseliso 
Maqubela summarized the situation when he told Nuclear Energy 
Officer February 5 that Areva and the French are "all over" 
DME and DPE, asking "Where is Westinghouse? - We need to see 
more of them."  According to Westinghouse Senior VP Regis 
Matzie, Westinghouse is in the process of hiring additional 
staff to open an office in South Africa, is purchasing a 
South African nuclear engineering firm, is pushing for a 
decision on its advocacy request with the U.S. Department of 
Commerce, and will encourage Toshiba to make a similar 
advocacy request for the Japanese government. 
 
¶7. (SBU) Action Request.  Based on the reaction of SAG 
officials to the aggressive French campaign, the USG and 
Westinghouse need to increase their efforts if Westinghouse 
is to have a serious chance at winning this competition. 
Embassy requests that the Department of Commerce respond to 
Westinghouse's advocacy request before the end of March. 
Embassy also requests that the Department of Energy respond 
to DME's request for assistance with energy planning and 
broader energy cooperation to both support Westinghouse and 
to jump start stalled U.S.-South African nuclear cooperation 
agreements. 
 
¶8. (SBU) Comment.  Local environmentalists are expected to 
criticize the anticipated Eskom board decision to expand 
nuclear generation capacity.  However, conversion to nuclear 
energy should have the favorable impact of lowering future 
CO2 emissions from additional coal-based power plants.  This 
should help mute environmentalist criticism of additional 
nuclear plant construction.  End Comment. 
BOST