Interview: Antunez Explains Argentina's Current Newbuild Plans

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Earlier this year Nucleoelectrica Argentina (Na-Sa) President Jose Luis Antunez returned to the job he had left in 2015 when Argentina was on the verge of locking in China National Nuclear Corp. (CNNC) to support two newbuild reactor projects: a Candu pressurized heavy water reactor (PHWR) "national project" and a Chinese-origin Hualong-One, which would be Argentina's first light-water reactor. From 2015-19 then-President Mauricio Macri's market-focused neoliberal government focused solely on a CNNC-supplied Hualong-One at Atucha-3, and it was negotiating an engineering, procurement and construction (EPC) contract for the project when Macri lost to Alberto Fernandez, Argentina's current president. In a recent interview with Energy Intelligence's Phil Chaffee, Antunez explained why the Candu PHWR is back on the table, and what comes next in Argentina's newbuild sector. An edited and shortened version of that interview is below.

Q: When we last spoke in 2015, the plan for Argentina's newbuilds was that you were going to bring in CNNC, but Atucha-3 would be the Candu project and it would be followed by a Hualong-One at another location. Now that you're back at Na-Sa the plan is again to go forward with two newbuilds, but this time with the Hualong-One at Atucha-3 to be followed by a PHWR newbuild. What's the logic of the new scheme?

A: You are right. And you have to add to that, that China was going to finance both projects, which was the key. So what happened? In the interim period, the national project was canceled.

But not canceled by the consortium CNNC-Na-Sa. It was canceled by Na-Sa, by order of the executive. And it was also ordered that CNNC should continue by themselves with an enriched uranium project--which was going to be the fifth [reactor] — under an EPC contract. And Na-Sa was issued a new strategic plan in 2018 that determined that the mission of Na-Sa was going to be only the owner and operator of the nuclear power plants of Argentina, and completely abandon the role of architect-engineer.

It's hard for me to say this. Everything invested in the national [PHWR] project was such a massive loss by Na-Sa. And they requested from CNNC a proposal for completing the project under an EPC contract. It speaks very well of the ownership of CNNC that they accepted the decision of Argentina. Naturally the financing for the national project was canceled because the project was canceled. So it went out of the pipeline of strategic projects between China and Argentina, which was the origin of the possibility of doing it. In a nutshell, what we found when we arrived [back at Na-Sa] was that the national project was canceled, the heavy-water plant — which is the key to the natural uranium [PHWR] projects of Argentina, was stopped in 2017, and never produced again; it is still today in that condition.

They presented the proposal for an EPC contract, which started a long and protracted negotiations which were not completed at the time of the change of governments. Consequently the situation was I arrived to Na-Sa without any project. Then we reformulated our nuclear plan of 2014, considering that the situation of Argentina in 2020 was not what it was in 2015. You are aware of all the financial strains of Argentina. The external debt, not to mention the Covid-19. It never rains, but pours.

So the thing that we formulated during 2020, with a group of specialists — everybody from outside CNEA [National Atomic Energy Commission] and Na-Sa, to an independent think tank — first of all acknowledges that returning to the 2014 plan would be nice, but not possible. But we want to preserve the sovereign autonomy of the Argentine nuclear sector, which is centered on the natural uranium heavy-water fuel cycle. We also want to fulfill the compromise with China, for the Hualong reactor.

Now this is what we want to [do], in addition to that we want to extend the life of Atucha-1. Atucha-1 has 47 years of operation, and is still solidly producing 30% more than the design power of 1969. Quite an achievement.

The secretary of energy was interested in this possibility and then came to see if I wanted to lead the group, following that plan: Complete the contract negotiations with CNNC, together with the negotiations between the Atomic Energy Commission and the China Nuclear Energy Industry Corp. [Cneic, a CNNC subsidiary] — Argentina produces the fuel for three reactors, so it's absolutely capable [of doing so for a Hualong-One] with the adequate transfer of technology for fuel fabrication.

Q: And you're talking about just fuel fabrication, or also enrichment within Argentina?

A: I'm talking about fuel fabrication. Uranium enrichment is another story, and it's not included in this. Argentina is working on that [uranium enrichment] and has achieved it at the laboratory level. It's a long, long way until we can produce tons of enriched uranium. But fabricating the fuel is quite an achievement in terms of local content.

Q: So you'll start with the Hualong-One ...

A: And why do it [the Hualong-One newbuild] first? Because it's the only project for which we have financing.

Our plan is to recover the national project under the same name. But coming back to one of your first questions, not with the same order. Our fourth NPP [nuclear power plant] will be the Hualong-One, the national project will be our fifth NPP.

We want to preserve not only the technology, but we also want to preserve the supply chain — the local manufacturers of products and components — which came to its peak during the process of extending the life of Embalse [PHWR], a project that we started in 2007. All internal components that were replaced in Embalse were produced in Argentina. And the replacement steam generators were almost completely produced in Argentina. So we assume for a new Candu we can do that also. We have created a Candu technology center in Embalse, and we have many extremely capable regarding the Candu, as the consequence of the life extension of Embalse.

This is independent from where the new Candu would be located. Certainly it will not be located at Embalse. There are other locations being studied, but we don't have the intent to select the location. What we'll do is start with the conceptual engineering, which is independent of the location, and the supply chain engineering necessary for acquiring the components that will be fabricated in Argentina. We will proceed with the engineering and we will then be ready for allocating the first orders for the national product by the end of 2022. We will allocate all our modest financial resources to the production of local components.

So 100% of the national project will be concentrated on reactivating the Argentine nuclear industry. Now you could say that this way it's going to take you longer. That is right. But it's much better than starting the complete project without having secured financial resources. That is much more of a challenge: then you would have half-constructed components and a half-constructed job site. Not recommended. So when the situation in Argentina improves, after having launched the Hualong project, we are optimistic that either with local or external financing we will be able to finance the national project.

Q: You talk about international financing for this national project, this Candu project. Is there a role for CNNC and Chinese institutions, or potentially for (Candu supplier) SNC-Lavalin and Canadian financial institutions, or both?

A: We have not asked. Because first we must launch the [the Hualong-One] project which is almost contractually complete and financially secured, and not intermix those discussions with the national project again.

Q: I want to ask about Atucha-3, and the deal with the Chinese for that project. Two years ago the previous government seemed to have come very close to a financing deal and an EPC contract for a Hualong-One at Atucha-3. It sounds like not a lot has changed since then in terms of the actual mechanics of the deal. Is that right?

A: The process of negotiating a contract was incomplete. We have tried to make as much use as possible of all the work that has been done since we started in 2015, and we started immediately working again with CNNC, in a virtual way. We have the advantage that since 2014 CNNC has permanent delegation in Buenos Aires. And it's our assumption of completing this by the month of November. [As of publication both sides were still negotiating this contract.]

Q: Completing the contractual talks by then?

A: All the aspects of the contract with exception of two things that are part of the contract. The negotiation between Atomic Energy Commission and Cneic for the transfer of technology just started, and will take some time. And the other thing that will not be complete is the financial aspect.

Regarding the financial aspect, we expect that it will take some four months of negotiations to complete. We expect that the CNEA and their counterpart in China will finish the technology transfer agreement around the same time.

Having said that, we have an enormous task ahead of us: to fulfill all the conditions of the 2014 China-Argentina agreement. We have to gather all the documentation demonstrating the feasibility and the reasonability of the price, because it will be contracted as a direct award as a consequence of the treaty. It has not been subjected to a public tender.

So the accumulation of all of these things that are pending, financing and transfer of technology, plus the condition of proving the reasonability [of the price], all of that requires approval by the government.

In order to win time for the project, we are already preparing the site, with Na-Sa resources, for a Hualong-One. We started demolishing the temporary construction works of Atucha-2, 40-something years after the first shop there, which I did. So many memories during this project.

Q: Returning quickly to the finance talks. Four months after November, you're hoping to conclude them. What is the actual financing structure?

A: It's a country-to-country loan.

Q: 100%?

A: For 85% of the amount. The remaining 15%, as it was determined in 2015, by Argentina.

Q: And you're still negotiating the details? The payback terms, the interest rate ...

A: Yes. I will not be specific, but it's what you call in finance terms a concessional loan. Eons away from a commercial loan.

Q: And are you able to say the price tag for the reactor? How much are we talking?

A: Next interview.

Q: On the fuel side, presumably there's a cost to building a Hualong-One fuel fabrication line in Argentina. In addition, you're also talking about restarting the heavy-water plant in Argentina. These are also big projects.

A: Restarting the heavy-water plant, that's completely outside the Chinese deal.

Q: Of course. But what about the fuel plant? Will Chinese financing be involved?

A: It has not been negotiated. It could very well be included in the financial package.

Q: One final question: If you are an Argentina supply chain company, you're hearing about these big, exciting projects: another Candu reactor, Atucha-1 refurbishment, restarting heavy water. But do you really want to put energy toward any of this, if the next government can come back and swing the doors shut again? What do you tell these supply chain companies?

A: My answer is I have no safe antidote for that. I believe it will not happen, but I don't know the vaccine against it.

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