R 241200Z DEC 08
FM AMEMBASSY BUENOS AIRES
TO SECSTATE WASHDC 2769
INFO MERCOSUR COLLECTIVE
DEPT OF COMMERCE WASHINGTON DC
USMISSION GENEVA
USMISSION UNVIE VIENNA
USMISSION USUN NEW YORK

UNCLAS BUENOS AIRES 001745 
 
 
SENSITIVE 
 
DEPARTMENT FOR T - MARC HUMPHREY 
COMMERCE FOR SARAH LOPP 
 
E.O. 12958: N/A 
TAGS: ENRG TRGY BEXP BTIO AR
SUBJECT: ARGENTINA: OVERVIEW OF CIVIL NUCLEAR PROGRAM 
 
REF: STATE 127468 
 
¶1. (U) This message is sensitive but unclassified, and not 
for Internet distribution. 
 
¶2. (SBU) Summary:  Argentina has had a nuclear program for 
nearly sixty years and currently draws on two power reactors 
to supply approximately nine percent of its total electricity 
generation.  The country is engaged in ongoing nuclear 
research and development, and is a member of the Nuclear 
Suppliers Group as a provider of nuclear material and 
services in the international market.  Argentina is currently 
expanding its nuclear power program by completing the 
construction of a third nuclear power plant, developing plans 
for a fourth, and signing several international nuclear power 
cooperation agreements.  It is also signatory to the Nuclear 
Nonproliferation Treaty, has a well-developed nuclear 
regulatory capability, and dedicated state entities for the 
administration and oversight of both its domestic and foreign 
nuclear programs and projects.  Although Argentina has a 
well-trained nuclear work force, a generation gap has 
lessened its organic ability to staff large-scale start-up 
projects without outside assistance.  Its cadre of nuclear 
experts has been able to sustain a high quality of research 
and development, but has not enabled it to conduct 
large-scale start-up operations without substantial 
involvement by foreign firms.  A personnel shortage, coupled 
with ambitious expansion plans, opens the door to the 
possibility of increased trade in the fabrication of nuclear 
components and subsystems, and in the longer term, of 
treatment or management of nuclear waste.  End Summary. 
 
-------------------------------------- 
Plans for expansion of nuclear program 
-------------------------------------- 
 
¶3. (SBU) Argentina has two pressurized heavy water nuclear 
power plants in operation, one under construction, three 
critical assemblies, three research and isotope production 
reactors, 25 major radioactive facilities, and more than 
1,500 facilities for medical, industrial, research, or 
training purposes which use radioactive material or sources. 
The two functioning nuclear power plants, Atucha I and 
Embalse, supply the country with approximately nine percent 
of its power needs.  The third power plant, Atucha II, is 
currently under construction after 23 years in mothball 
status. Initial planning is underway for a fourth power 
reactor.  The Government of Argentina (GOA) plans to increase 
its nuclear consumption from 9 percent to 15 percent of total 
power consumption to meet a perceived growing internal demand 
and address rising global prices for fossil fuels. 
 
¶4. (SBU) Plans for Argentina's nuclear program are based on 
four principal objectives: the completion of the Atucha II 
power reactor, life cycle extensions for the Atucha I and 
Embalse power reactors, the completion of a locally designed 
small-scale grid power reactor (the CAREM), and the 
construction of a fourth power reactor.  Argentina is 
motivated to expand its nuclear capability to ease domestic 
dependence on imported fuel, to keep energy prices low, and 
to build on its reputation as a provider of nuclear materials 
and services in the international marketplace. 
 
¶5. (SBU) All of Argentina's nuclear reactors, both for power 
and for research, use low-enriched uranium (LEU), and 
Argentina has been an innovator in the use of LEU for both 
power and research reactors.  Argentina has established the 
capability to enrich uranium at a mock-up enrichment facility 
at Pilicaneyeu, but has chosen not to conduct actual 
enrichment operations.  We believe Argentina established the 
capability in order to be "grandfathered" into any future 
resolutions limiting uranium enrichment to those with an 
existing capability. 
 
¶6. (SBU) Although Argentina has ample natural uranium, it is 
not currently engaged in mining operations.  Areas where 
mining previously occurred are not active, and there is 
significant local resistance to uranium mining by 
environmental groups.  Given market prices, the GOA considers 
it cost-effective to purchase uranium on the world market for 
domestic processing and use.  Its principal source of 
concentrated uranium oxide ("yellow cake") is Kazakhstan. 
 
------------------------------------ 
Key Nuclear Decision-Making entities 
------------------------------------ 
 
¶7. (SBU) Nuclear decision-making falls within two distinct 
GOA ministries.  For foreign policy issues, the Ministry of 
Foreign Affairs (MFA) is the lead agency.  The MFA advises on 
the GOA's nuclear relationship with the international 
community, membership in international control regimes, 
non-proliferation issues, and import/export control issues. 
The Directorate for International Security and Nuclear 
Affairs (DIGAN) is the MFA office responsible for advising 
the Office of the Presidency and executing GOA policy. 
Ambassador Elsa Kelly is the DIGAN Director, but is scheduled 
to retire in February 2009.  As of December 2008, the GOA had 
not yet named her successor. 
 
¶8. (SBU) For the development of nuclear power within 
Argentina, the Ministry of Federal Planning, Public 
Investment and Services is the lead Agency.  The current 
Minister of Planning is Julio De Vido, a close confidant and 
advisor to ex-President Nestor Kirchner and current President 
Cristina Fernandez de Kirchner (CFK).  De Vido has named 
Roberto Baratta as his point man on nuclear issues. 
 
¶9. (SBU) For technical issues, the National Commission on 
Atomic Energy (CNEA, in its Spanish acronym) is the lead 
agency to administer the GOA's nuclear plans and programs. 
CNEA falls under Minister of Planning De Vido.  In mid-2008, 
following a public corruption scandal involving misuse of 
public funds by the then-CNEA President, De Vido selected 
Norma Boero as the new President of CNEA.  Boero is a CNEA 
careerist and a fuel specialist with significant technical 
experience.  Boero has dedicated much of the early part of 
her tenure to improving accountability within CNEA. 
 
¶10. (SBU) The Nuclear Regulatory Authority (ARN) is 
responsible for establishing and enforcing all regulatory 
functions related to nuclear activity in Argentina.  This 
includes radiological protection issues, nuclear safety and 
security, and the licensing of all nuclear facilities, sales, 
purchases, and other nuclear matters requiring special 
approvals, in accordance with Argentine law and international 
agreements to which Argentina is signatory. 
 
¶11. (SBU) Argentine law gives ARN the ability to conduct 
routine or unscheduled inspections of any facility involved 
in the use of radioactive material.  This includes the 
environmental monitoring of mining sites.  ARN employs 
approximately 190 staff members, with an additional 100 
contractors.  According to ARN figures, 90 percent of those 
positions related directly to technical tasks.  The President 
of ARN is Dr. Raul Racana, a career nuclear expert with a 
strong technical background.  ARN is an executive agency 
which reports to the Office of the Presidency, which extended 
Racana's tenure as President of the organization in 2007.  As 
an executive agency, ARN is an independent oversight entity 
outside the realm of nuclear decision-making.  However, as 
one of Argentina's principal nuclear entities, ARN wields 
considerable bureaucratic influence over domestic nuclear 
issues. 
 
------------------------------------------ 
Domestic Companies in Civil Nuclear Sector 
------------------------------------------ 
 
¶12. (U) There are a limited number of companies within 
Argentina involved in the nuclear industry.  However, they 
run the gamut of nuclear products and services.  Their 
activities include uranium research, the construction of fuel 
and control elements, reactor and plant design and 
construction, and facility administration.  Should Argentina 
resume domestic uranium mining, their activities would expand 
to include mining activities.  The principal companies are 
the following: 
 
- Applied Research (INVAP by its Spanish acronym) is a 
high-tech company owned by Argentina's Rio Negro Province, 
but functioning as a private company without public subsidy. 
INVAP provides nuclear design and fabrication services to 
Argentina and other countries.  Because of its unique 
capabilities, INVAP is a principal private contractor to CNEA 
and is currently involved in the resurrection of the Atucha 
II nuclear facility.  Although INVAP's General Manager/CEO, 
Dr. Hector Otheguy runs INVAP on a day-to-day basis, four of 
the members of its Board of Directors are CNEA officials, and 
two are appointed by Rio Negro Province.  As of late 2007, 
Otheguy or other senior INVAP officials routinely accompanied 
the Argentine President, or senior GOA officials, on state 
 
visits and official delegations. 
 
- Nucleo-Electrica Argentina (NA-S.A) is the private company 
which manages Argentina's two current power reactors (Atucha 
I and Embalse) and will run Atucha II when it reaches 
criticality. 
 
- CONUAR S.A is a private company which constructs fuel 
elements and control rods for use in Argentine nuclear 
reactors.  Grupo Perez Companc is a 67 percent share holder 
in CONUAR S.A., with CNEA owning the remaining 33 percent. 
In addition to its production of fuel elements and other 
components for Argentine nuclear reactors, CONUAR S.A. is a 
nuclear services provider for Argentina's research reactors. 
In addition to other Argentine companies and state entities, 
CONUAR S.A. does business with public and private sector 
entities in Belgium, the United Kingdom, the European Union, 
Romania, Canada, and Brazil. 
 
- DIOXITEK is a parastatal company owned 99 percent by CNEA 
and one percent by the Province of Mendoza.  DIOXITEK 
produces uranium oxide and cobalt 60 for conversion into fuel 
for nuclear reactors.  Currently, DIOXITEK obtains "yellow 
cake" from outside Argentina for domestic conversion to low 
enriched uranium for use in the country's reactors. 
 
- ENSI S.E. (Neuquen Business for Engineering Services, State 
Enterprise, in English) is another parastatal company, owned 
by CNEA and the government of Neuquen Province.  ENSI S.E. 
administers the heavy water plant in Arroyito, Neuquen. 
Arroyito produces heavy water for use in Argentine reactors. 
As of November 2008, it was not exporting heavy water, all of 
which the GOA needed for its expanding program of additional 
reactors for power generation. 
 
------------------------ 
Local Manufacturing Base 
------------------------ 
 
¶13. (SBU) Argentina has a domestic ability to meet many of 
its current needs in the nuclear field.  However, its 
expansion plans will likely stretch domestic resources to 
their maximum.  The companies mentioned above are currently 
fully committed to the Atucha II restart, especially in the 
production of fuel elements.  CONUAR has significantly 
increased its operations to produce fuel rods and fuel rod 
assemblies for the facility and INVAP is involved as a 
contractor in the fabrication of specialized welding 
machines, and in other aspects of the project.  Some outside 
participation is likely, as Argentina submits other aspects 
of Atucha II to an open competitive bid process.  Plans to 
construct a fourth power reactor, unlikely before 2012, will 
also open up opportunities for sales of U.S-origin components 
and sub-systems. 
 
-------------------------- 
Nuclear Trained Work Force 
-------------------------- 
 
¶14. (SBU)  Argentina has a well-trained but aging nuclear 
work force which has experienced a significant generation 
gap.  Argentina embarked aggressively on its nuclear program 
in the 1950s, resulting in a cadre of skilled physicists, 
engineers, and chemists.  Many of this generation have been 
lost to attrition, and many of the subsequent generation left 
Argentina during difficult economic times to seek more 
profitable employment in Europe or the United States. 
Although Argentina has the academic capacity to produce 
skilled technicians, it has not been wholly successful in 
retaining them. 
 
¶15. (SBU) A further problem is the lack of project management 
capability within public sector nuclear entities.  Until 
recently, Argentina had not embarked on any major nuclear 
projects in many years.  The relative lack of activity was 
detrimental to the country's ability to manage a project from 
start to finish.  This has caused the GOA to rely on private 
sector contractors with experience in reactor start-ups. 
INVAP, which sold start-up research reactors and major 
sub-systems to both Egypt, Australia, Peru and Algeria, has 
provided know-how to the Atucha II project. 
 
¶16. (SBU) Argentina is slowly addressing the effects of the 
generation gap through the continued training of highly 
qualified technicians and scientists.  Improved economic 
conditions in Argentina since 2003, relative to the economic 
 
collapse of 2001, improved the GOA's ability to retain their 
best students for the domestic nuclear work force.  A 
possible downturn in the Argentine economy in 2009 could, 
however, complicate efforts to retain members of the younger 
generation of nuclear experts. 
 
------------------------------- 
Opportunities for U.S. Industry 
------------------------------- 
 
¶17. (SBU) U.S.-based company Westinghouse is heavily 
committed in Argentina, as are several smaller U.S. firms 
which serve as subcontractors to Argentine entities.  U.S. 
firms produce zirconium rods for use in fuel bundles, and 
there is significant interaction between Argentine companies 
and the U.S. university and National Lab systems.  One 
developing technology between INVAP and Westinghouse is the 
use of LEU Molybdenum targets for cancer treatment. 
 
¶18. (SBU) In addition to the ongoing commerce with U.S. 
companies, there is room for expansion of trade into the 
field of waste processing and storage.  Argentine nuclear 
officials involved in the "back-end" of the nuclear fuel 
cycle have made candid comments that Argentina needs to 
pursue a long-term solution to its increasing stores of spent 
fuel rods and other forms of nuclear waste.  U.S. companies 
specializing in long-term storage of spent fuel may find the 
GOA receptive to business discussions.  The ongoing Atucha II 
project, and plans for the construction of a fourth reactor, 
may also provide an opening to U.S. firms with experience in 
the construction of LEU reactors and subsystems. 
------------------- 
Foreign Competitors 
------------------- 
 
¶19. (SBU) The Canadian firm Atomic Energy of Canada, LTD. 
(AECL) has significant business dealings in the Argentine 
nuclear sector, having built the Embalse nuclear power plant 
in the 1970-80s and signed a Memorandum of Understanding for 
its refurbishment in 2006. AECL also signed an MO to restart 
the Atucha II project, and to begin exploratory work on a 
possible fourth power reactor.  The German firm Siemens 
constructed the Atucha I reactor in the 1960s, and was the 
contractor for Atucha II before the project went into 
mothballs in the mid-1980s.  Siemens has a tangential role in 
current nuclear operations, likely limited to assisting 
Atucha II project by identifying technicians who formerly 
participated in its construction. 
 
¶20. (SBU) Argentina signed a nuclear cooperation agreement 
with Russia in December 2008, but the details of the 
agreement are still unclear.  Argentina also signed a broad 
nuclear agreement with Brazil in 2007.  The agreement with 
Brazil established the "Binational Enrichment Company" 
(COBEN), but little concrete progress seems to have occurred 
following the initial announcement.  One issue which has 
since stalled was a desire of the GOB to build a 
nuclear-powered submarine with assistance from the Argentine 
nuclear community.  In December 2008, Argentina and the 
Republic of South Africa signed an agreement to share 
technology on the peaceful use of nuclear energy.  The 
concrete results of that agreement are still unclear.  Recent 
history demonstrates the GOA's eagerness to sign broad 
international cooperation agreements, which result in little 
actual business activity or technology transfer. 
 
------------------------ 
Political Considerations 
------------------------ 
 
¶21. (SBU) Argentina is signatory to the Treaty of Tlatalelco, 
the Nuclear Nonproliferation Treaty, and other bilateral and 
multilateral nonproliferation agreements.  Decisions to enter 
into agreements with nuclear supplier states are subject to 
the requirements of Argentina's nonproliferation commitments, 
which the GOA takes seriously.  Argentina prefers to conduct 
its nuclear activities under the rubric of the International 
Atomic Energy Agency (IAEA).  It has ratified the Vienna 
Convention on Civil Liability for Nuclear Damage and the 
Convention on Supplementary Compensation for Nuclear Damage 
(CSC).  Argentina and Brazil have successfully addressed old 
tensions over respective nuclear programs through the 
Brazilian-Argentina Agency for Accounting and Control of 
Nuclear Materials (ABACC), in which the IAEA also 
participates.  ABACC facilitates a robust joint inspection 
regime of civilian nuclear facilities between the two 
 
countries. 
WAYNE 
 
 
NNNN