Cablegate: Asme Nuclear Standards Workshop Supports Westinghouse Bid

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SUBJECT: ASME NUCLEAR STANDARDS WORKSHOP SUPPORTS WESTINGHOUSE BID

REF: Pretoria 440

1. (SBU) SUMMARY: U.S. Embassy Pretoria supported the American
Society of Mechanical Engineers (ASME) Nuclear Codes and Standards
Workshop October 7-9 in Johannesburg, which successfully promoted
Westinghouse's bid for significant new nuclear build in South
Africa. State power utility Eskom and the SAG have postponed a
decision on new nuclear build given technical, financial, and
political challenges. Eskom says the decision will still be made in
2008, but further delay until after April/May 2009 elections is
possible. END SUMMARY.

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ASME Nuclear Standards Gig
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2. (SBU) The ASME (American Society of Mechanical Engineers)
Nuclear Codes and Standards workshop took place in Johannesburg
October 7-9. The official purpose of the workshop was to explain
and promote ASME standards as a means for potential South African
nuclear industry suppliers to join the global supply chain. The
workshop was over-subscribed with over 400 delegates attending, with
little reduction in attendance over the two days of meetings. The
third day was a field trip to Columbus Stainless Steel (septel).
Many areas of the mission contributed to making this a successful
event, thereby realizing the original vision promoted by the
Commercial Service of South Africa (CCSA). The Commercial and
Economic Counselors and much of their staff attended most of the
workshop.

3. (SBU) The ASME workshop was hosted by the South African
Industrial Development Corporation. The Nuclear Industry
Association of South Africa (NIASA) was involved in the planning and
many of the delegates came from its ranks. The co-lead sponsors
were Westinghouse and Areva of France, representing the two bidders
on new nuclear build in South Africa for state power utility Eskom.
Westinghouse's bidding partner and local construction firm Murray &
Roberts, Pebble Bed Modular Reactor (PBMR), Steinmuller, and
TUVRheinland were also sponsors. ASME Vice President Bryan Erler,
Nuclear Regulatory Commission Office of New Reactors Director of
Engineering Michael Mayfield, and Nuclear Energy Corporation of
South Africa (NECSA) General Manager Van Zyl de Villiers were among
the opening speakers at the workshop, stressing the opportunities
presented by the renewed global interest in nuclear power. Eskom
sent a significant number of participants who asked many questions
during the sessions.

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Westinghouse Advocacy
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4. (SBU) The unofficial purpose of the workshop was to support
Westinghouse's bid as a global supplier committed to localization in
South Africa and the ASME standard in its global supply chain,
although ASME was technically neutral on the bidding competition.
Areva uses its own standard, RCC-M, although it will have to use
ASME if it is successful in winning new nuclear build in the U.S.
In principle, South Africa could utilize ASME with either supplier.
The locally developed PBMR utilizes ASME and Westinghouse is a
shareholder in PBMR. Westinghouse and ASME were both very pleased
with the event and thanked the mission for its support. Areva had a
Qwith the event and thanked the mission for its support. Areva had a
lower key presence, but at the last moment filled one speaker slot
and made a makeshift booth. Areva's local CEO and his assistant,
who failed to pre-register, were in the audience wearing a hastily
written name-tag.

5. (SBU) ASME representatives visiting South Africa for the event
held a number of side meetings with various South African officials,
including the nuclear project decision makers at Eskom. In a
two-hour meeting at Eskom headquarters, ASME officials argued that
Eskom could and should utilize ASME standards as a universal and
impartial reference for their engineering decisions. The ASME
officials also invited Eskom officials to join ASME
standards-setting decision-making fora and other nuclear related
committees. Over the course of the two-hour meeting, ASME convinced
Eskom that ASME could be a useful partner as South Africa's nuclear
roll-out is planned and implemented.

PRETORIA 00002401 002 OF 002

6. (SBU) ASME officials also visited the Nuclear Energy Corporation
of South Africa's (NECSA) Nuclear Training Center north of Pretoria.
At this location, ASME had an opportunity to review South Africa's
premier training facility for nuclear power. ASME and NECSA then
initiated a discussion on the possible use of ASME training
materials and protocols to assist South Africa in its training and
human capital development. NECSA seemed particularly interested in
using ASME training materials associated with welding, pipefitting,
instrumentation and other generic skills. If ASME and NECSA were to
reach agreement on training facilitation, U.S. manufacturers would
benefit from greater local familiarity with U.S. standards,
equipment and procedures in the nuclear field.

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Eskom's Decision Delayed
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7. (SBU) Eskom's decision on a preferred bidder for an initial
tranche of 3,000 MW and a full fleet of 20,000 MW was delayed from
April to September 2008. Industry sources indicate that Eskom has
since requested a further delay in the decision to at least the end
of the year and Eskom officials continue to publicly state that a
decision will occur this year. Eskom had already faced challenges
in financing its massive new build program to begin to alleviate
energy supply shortfalls. Now, political change in South Africa and
global turmoil in financial markets have heightened the challenge of
obtaining the necessary financing and choosing the supplier. South
Africa's interim government will remain in place until elections
expected in April/May 2009. Some observers expect that it would be
difficult for the interim government to make such an important
decision. The local Westinghouse representative assigns slight
probability for a decision before the end of this year and notes
that slippage to early 2009 could generate further slippage to after
the April/May elections.

8. (SBU) COMMENT: Embassy wishes to acknowledge the Commercial
Counselor's year-long effort to make the ASME event happen. The
ASME workshop highlighted the importance of using ASME standards for
South Africa's budding nuclear industry. This demonstrated to Eskom
and the SAG the value of awarding the contract to Westinghouse,
rather than Areva which uses its own in-house standard.

LALIME

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