EURATOM SUPPLY AGENCY ANNUAL REPORT 1998ec.europa.eu/euratom/ar/ar1998.pdf · 2 Euratom Supply...

EURATOM SUPPLY AGENCY

ANNUAL REPORT

1998

Euratom Supply Agency – Annual Report 1998

TABLE OF CONTENTS

Summary 1

Zusammenfassung 3

Résumé 5

CHAPTER I 7

General developments 7Supply situation 7Supply of material from the New Independent States (NIS) 10Legal developments 12Other developments 12

CHAPTER II 15

Supply of nuclear materials and enrichment services in the European Union 15Reactor needs/net requirements 15Natural uranium 16Special fissile materials 20Commission authorisations for export 20

CHAPTER III 21

Nuclear energy developments in the European Union Member States 21

CHAPTER IV 37

International Relations 37Introduction 37Bilateral Nuclear Co-operation Agreements 37Bilateral relations in the nuclear field with other countries 39Multilateral Agreements in the nuclear field 39

CHAPTER V 41

Administrative report 41Personnel 41Finance 41Advisory Committee 41

ORGANISATIONAL CHART 42

Euratom Supply Agency – Annual Report 1998 1

SUMMARY

This report for 1998 highlights the maindevelopments in the nuclear fuels marketsrelating to the supply of nuclear fuel to the EUand the Supply Agency’s activities in connectiontherewith. It also gives an overview ofdevelopments relating to the nuclear fuel cycleindustry in the EU and of the production ofelectricity from nuclear power in the MemberStates during 1998.

Total world production of natural uranium in1998 (33.600 tU) was slightly lower than in 1997(35.800 tU). However, in spite of reduced worldproduction of natural uranium, supply anddemand have been balanced over the last fewyears.

As in previous years the gap between naturaluranium production and consumption in theWestern world was closed by secondarysources of supply: draw-down of inventoriesheld by utilities, governments and nuclear fuelcompanies, re-enrichment of depleted uranium(tails) and, to a lesser extent, uranium andplutonium from reprocessing.

EU utilities continued to diversify their sources ofsupply. The number of new contracts orrenewals of existing ones remained relativelyhigh in the EU. The Supply Agency continued torecommend to EU users to maintain a portfolioof diversified long term contracts with primaryproducers.

The prospect of sales of uranium inventoriesremained one of the major issues affecting thenuclear fuels market during the year. The sale ofthe feed component of the downblendedRussian highly enriched uranium (HEU), asprovided for in an intergovernmental agreementbetween Russia and the USA did not materialisein 1998, but the negotiations appear close tofinalisation. Uncertainties about sale intentionsof the United States Enrichment Corporation(USEC) for large amounts of uranium, which had

been transferred from the United StatesDepartment of Energy (US DOE) as part of thecorporation’s privatisation, contributed to aperception of potential market oversupply and todifficulties in the HEU feed negotiations.

The method and rate of disposal of these largeinventories, particularly those accumulated formilitary purposes in the past, are importantfactors influencing the stability of the naturaluranium, conversion and enrichment markets. Inorder to balance supply and demand, majorproducers attempted to redress the situation bycutting production and delaying projects for newmines.

The New Independent States (NIS) togetherwere the largest source of supply of naturaluranium to the EU, in a buyers’ marketcharacterised by a further decrease of spotprices.

The Supply Agency average price for deliveriesof natural uranium during the reported year wasslightly lower than in 1997.

Conversion, enrichment and fabrication serviceswere regularly available, and capacity remainssufficient to meet demand. The utilisation ofMixed Oxide (MOX) continued in the EU. InFrance, four new reactors were authorized touse MOX fuel. The EU MOX fabrication industryprovided fuel also for Japan and Switzerland.

The role that nuclear energy can play in theavoidance of CO2 emissions was highlightedagain in the 4th Conference of the Parties onclimatic change held in Buenos Aires inNovember 1998, following on from the KyotoConference of 1997. In the EU, the 34% shareof nuclear energy of total electricity generationavoids the emission of some 700 million tonnesof CO2 each year.

2 Euratom Supply Agency - Annual Report 1998

In May 1998, the Council of Ministers approveda mandate for the negotiation of a nuclear co-operation agreement with Japan. During 1998,discussions with Russian authorities continuedon various aspects of nuclear co-operation,including trade. In December 1998, theEuropean Commission proposed to the Councilthe negotiation with Ukraine of a global nuclearco-operation agreement.


ZUSAMMENFASSUNG

Dieser Bericht für 1998 hebt die wichtigstenEntwicklungen auf den Kernbrennstoffmärkten,soweit sie sich auf die Versorgung derEuropäischen Union mit Kernbrennstoffbeziehen, sowie die im Zusammenhang damitstehenden Aktivitäten der Versorgungsagenturhervor. Er gibt des weiteren einen Überblicküber Entwicklungen in der Industrie desKernbrennstoffkreislaufs in der EU und über dieElekrizitätserzeugung aus Kernenergie in denMitgliedsstaaten im Jahre 1998.

Die Welt-Gesamtproduktion von Natururan imJahre 1998 (33.600 T U) war etwas niedriger alsim Jahre 1997 (35.800 T U). Trotz diesemRückgang in der Natururanförderung weltweitwaren Angebot und Nachfrage in den letztenJahren ausgeglichen.

Wie in den Vorjahren wurde die Differenzzwischen Naururanförderung und Verbrauch inder westlichen Welt durch sekundäreVersorgungsquellen gedeckt : Rückführung derLagerbestände bei den EVUs, denUnternehmen des Brennstoffkreislaufs und denRegierungen, Wiederanreicherungabgereicherten Materials (Tails) und, wenigerbedeutsam, Uran und Plutonium aus derWiederaufarbeitung.

Die Versorgungsunternehmen der EU sorgtenweiterhin für eine Streuung ihrerVersorgungsquellen. Neue Verträge bzw.Verlängerungen bestehender Verträge bliebenzahlenmässig auf relativ hohem Niveau. DieVersorgungsagentur hat den Verbrauchern inder EU weiterhin empfohlen, ihreVersorgungsstrategien auf diversifiziertelangfristige Verträge mit Produzenten zustützen.

Die Aussicht auf den Verkauf vorhandenerUranlagerbestände blieb einer der wichtigstenFaktoren, die den Kernbrennstoffmarkt über dasJahr hin beeinflusst haben. Der Verkauf der in

dem aus russischem HEU gewonnenen LEUenthaltenen Natururankomponenteentsprechend einem Regierungsabkommenzwischen Russland und den USA wurde zwarim Jahre 1998 nicht realisiert, doch scheinen dieVerhandlungen einem Abschluss näher zukommen. Ungewissheiten hinsichtlich derVerkaufsabsichten der United States EnrichmentCorporation (USEC) für umfangreicheUranbestände, die ihr im Rahmen derPrivatisierung vom US Department of Energy(US-DOE) überlassen worden waren, trugen zuder Auffassung bei, dass auf dem Marktmöglicherweise eine Überversorgung herrsche,und führten zu Schwierigkeiten bei denVerhandlungen über die HEU-Natururankomponente.

Die Art und Weise und das Tempo, mit demdiese grossen Bestände, insbesondere die inder Vergangenheit für militärische Zweckeangelegten Bestände auf den Markt gebrachtwerden, haben bedeutenden Einfluss auf dieStabilität der Märkte für Natururan, Konversionund Anreicherung . Um Angebot und Nachfrageauszugleichen, haben sich wichtigeProduzenten darum bemüht, die Lage durchProduktionseinschränkungen und zeitlicheVerschiebung neuer Bergbauprojekte in denGriff zu bekommen.

Die Neuen Unabhängigen Staaten (NUS) warenzusammengenommen für die EU die wichtigsteVersorgungsquelle für Natururan auf einemKäufermarkt, der von einem weiteren Rückgangder Spot-Preise gekennzeichnet war.

Der von der Versorgungsagentur errechneteDurchschnittspreis für Natururan lag imBerichtsjahr geringfügig unter dem Preis für1997.


Konversion, Anreicherung undBrennelementfabrikation waren regelmässigverfügbar ; die Kapazitäten bleiben ausreichend,um die Nachfrage zu decken. Der Einsatz vonMixed Oxide (MOX) in der EU ging weiter. InFrankreich wurde für vier weitere Kernkraftwerkedie Genehmigung zum Einsatz von MOX-Brennelementen erteilt. Die MOX-Fabrikanten inder EU versorgten auch Japan und die Schweizmit Brennelementen.

Die Rolle, die die Kernenergie bei derVermeidung von CO2-Emissionen spielen kann,wurde bei der 4. Konferenz der Vertragsparteiendes Rahmenübereinkommens überKlimaänderungen, die in der Nachfolge derKonferenz von Kioto von 1997 im November1998 in Buenos Aires stattfand, erneutunterstrichen. In der EU wird dank des Anteilsder Kernenergie an der Gesant-Elektrizitätserzeugnung in Höhe von 34% jedesJahr der Ausstoss von 700 Millionen TonnenCO2 vermieden.

Im Mai 1998 billigte der Ministerrat ein Mandatfür Verhandlungen über ein nuklearesKooperationsabkommen mit Japan. Währenddes Jahres wurden die Gespräche mit denrussischen Stellen über verschiedene Aspekteder nuklearen Zusammenarbeit,Handelsprobleme eingeschlossen,weitergeführt. Im Dezember 1998 schlug dieEuropäische Kommission dem RatVerhandlungen mit der Ukraine über einglobales nukleares Kooperationsabkommen vor.


RESUME

Ce rapport pour 1998 souligne les principalesévolutions des marchés des combustiblesnucléaires en relation avec l’approvisionnementde l’Union européenne, ainsi que les activités del’Agence d’approvisionnement en la matière. Ilfournit aussi un panorama des développementsrelatifs à l’industrie du cycle du combustiblenucléaire dans l’Union européenne ainsi que dela production d’électricité d’origine nucléairedans les Etats membres.

En 1998, la production mondiale d’uraniumnaturel (33.600 tonnes d’U) a été légèrementinférieure à celle de 1997 (35.800 tonnes d’U).Cependant, et malgré cette réduction de laproduction mondiale d’uranium naturel,l’approvisionnement et la demande ont étééquilibrés durant ces dernières années.

Comme lors des années précédentes, ladifférence entre production et consommationd’uranium naturel au sein du monde occidental aété comblée via des sources secondaires :réduction des stocks détenus par lesélectriciens, les industriels du combustiblenucléaire et les gouvernements,réenrichissement d’uranium appauvri (rejets) et,dans une moindre mesure, retraitementd’uranium et de plutonium.

Les producteurs d’électricité de l’Unioneuropéenne ont continué de diversifier leurssources d’approvisionnement. Le nombre denouveaux contrats ou les renouvellements decontrats existants est resté relativement élevéau sein de l’Union européenne. L’Agenced’approvisionnement a continué derecommander aux utilisateurs européens unportefeuille diversifié de contrats à long termeavec des producteurs primaires.

La perspective de ventes de stocks d’uranium aconstitué le point essentiel affectant le marchédes combustibles nucléaires durant l’année. Lavente de la composante d’alimentation de la

dilution de l’uranium hautement enrichi (UHE)russe, tel que prévu dans un accord inter-gouvernemental entre la Russie et les USA nes’est pas matérialisée en 1998, mais lesnégociations semblent être sur le point d’êtrefinalisées. Les incertitudes quant aux intentionsde vente par l’United States EnrichmentCorporation (USEC) de fortes quantitésd’uranium ayant fait l’objet de transfert du UnitedStates Department of Energy (US-DOE) en tantque part dans la privatisation de la compagnie,ont contribué au sentiment de possible pléthoredu marché et aux difficultés lors de négociationssur la matière d’alimentation pour l’UHE.

La méthode, et le taux d’écoulement de cesstocks élevés, et spécialement les stocksaccumulés pour des besoins militaires dans lepassé, constituent un facteur importantinfluençant les marchés de l’uranium naturel, dela conversion et de l’enrichissement. En vued’équilibrer l’approvisionnement et la demande,ces principaux producteurs ont essayé deredresser la situation en coupant la productionet en reportant les projets de nouvelles mines.

Les Etats nouvellement indépendants (ENI),dans leur ensemble, ont constitué la plusimportante source d’uranium naturel pourl’Union européenne dans un marché caractérisépar une baisse supplémentaire des prix dumarché ponctuel.

Le prix moyen de l’Agence pour les livraisonsd’uranium naturel au cours de l’année deréférence est resté légèrement plus bas qu’en1997.

Les services de conversion, d’enrichissement etde fabrication ont été régulièrement disponibleset leur capacité reste suffisante pour répondre àla demande. L’utilisation des MOX s’estpoursuivie dans l’Union européenne. En France,quatre nouveaux réacteurs ont reçul’autorisation d’utiliser du combustible MOX.


L’industrie européenne de fabrication de MOX a,par ailleurs, fourni du combustible au Japon et àla Confédération helvétique.

Le rôle que l’énergie nucléaire peut jouer pouréviter les émissions de CO2 a été de nouveausouligné lors de la 4ème Conférence sur leschangements climatiques qui s’est tenue àBuenos Aires en novembre 1998 à la suite de laConférence de Kyoto de 1997. Dans l’Unioneuropéenne, les 34% que représente lenucléaire dans la production d’électricité évitel’émission de quelque 700 millions de tonnes deCO2 par an.

En mai 1998, le Conseil des Ministres aapprouvé les termes d’un mandat denégociation en vue d’un accord de coopérationavec le Japon. Toujours en 1998, lesdiscussions se sont poursuivies avec lesautorités russes sur différents aspects de lacoopération nucléaire, commerce compris. Endécembre 1998, la Commission européenne aproposé au Conseil la négociation d’un accordde coopération nucléaire global avec l’Ukraine.


CHAPTER I

GENERAL DEVELOPMENTS

SUPPLY SITUATION

NATURAL URANIUM

Supply of natural uranium to the EU utilitiescontinued in a regular manner. As in previousyears the EU utilities continued to cover most oftheir natural uranium requirements through longterm contracts with producers. Deliveries under‘Spot’ contracts represented only 6% of the totalsupply. Russia and Niger were the largestsuppliers.

Surprisingly, in what was generally perceived asa low activity market, the number of newcontracts (or renewal of existing ones), as wellas the quantities concerned, remained relativelyhigh for the EU. 13 multiannual contracts for 8200 tU were concluded by the Agency in 1998.In addition 2 600 tU were contracted underamendments to existing multiannual contracts.The utilities maintained their policy of long termrelationships with primary producers andcontinued to diversify their sources of supply.

Although the spot market represents a relativelysmall proportion of the transactions of uraniumworld-wide, the spot prices continued to be themajor indicators affecting the prices of the muchlarger long-term market. The spot pricespublished in the trade press for “non-NIS”production dropped from some US$12/lbU308(uranium ore concentrates) to US$ 9 during theyear. The spot price for “NIS” material droppedfrom about US$ 9.5 to US$ 8.5. As the gapbetween these prices diminished, it became lesssignificant commercially.

Total world production of natural uranium wasapproximately 33 600 tU in 1998, compared with35 800 tU in 1997. This reduction wasessentially attributable to a decrease in WesternWorld production to 27 000 tU, from 29 000 tU in1997, while production in the rest of the world

(China, NIS, Central and Eastern Europe)remained in the order of 6 600 tU. EU productiondecreased further from 1050 tU in 1997 to 800tU in 1998; this trend will continue, as ENUSAannounced the closure of its mine in Spainwithin the next two years, and uranium mining inFrance is expected to be terminated in the nearto medium future.

A number of producers of natural uraniumincluding Cameco, Cogéma, Energy Resourcesof Australia, Rio Tinto and several US producersannounced in 1998 cutbacks in actual andplanned production due to weak marketconditions (low price and reduced demand).However, Western Mining (Australia) isreportedly about to complete the expansion ofthe Olympic Dam mine, which will increasesignificantly Australia’s uranium and copperproduction from 2000 onwards. Following theresolution of environmental questions, ERAintends to continue construction andenvironmental work at the Jabiluka mine.

In spite of the continued large gap betweenworld consumption and production, there hasbeen no shortage of natural uranium, indeed thecompetition amongst sellers and the downwardpressure on prices during the year indicated thereverse. Studies by the Supply Agency and theUranium Institute1 indicate that, in spite ofreduced world production of natural uranium,supply and demand have been balanced overthe last few years by the large exports from theNew Independent States (NIS) countries (seebelow) and a limited use of inventories by theutilities.

Just before the privatisation of United StatesEnrichment Corporation (USEC), the United

1 The Uranium Institute Market Report “The

Global Nuclear Fuel Market – Supply andDemand 1998-2020”.


States Department of Energy, (US DOE)announced the transfer of 25 000 to 35 000 tUas natural uranium to the new company, which itindicated would be sold on the market before2005, with sales starting by the year 2000. Thisrepresents a large and unexpected new sourceof material, which risks jeopardising marketstability and the high enriched uranium (HEU)feed negotiations between Russia and thewestern companies.

The announcement was firmly criticised byRussia, the US Senate and by marketobservers. Because of the potential adverseeffects on the EU’s long term security of supply,the Commission and the Supply Agency alsomade strong representations to the USauthorities. The Commission requested the USto use its efforts to avoid any action which couldendanger market stability and the viability of theHEU deal between Russia and the USA and therelated feed negotiations in particular. TheAgency will monitor closely the effects of salesof USEC’s or any other large inventories for anypotential adverse effects on stability or long termsecurity of supply to the EU market. If theintroduction of such inventories on the EUmarket were to take place to the detriment of theEU’s security of supply, the Agency would takeappropriate corrective measures. The basis forsuch an intervention was clearly confirmed bythe Court of First Instance in the KLE case (seepage 12)

With regard to its own stockpile, the US DOEagreed not to make any sales for 10 years. Inaddition the US was prepared to provide $ 325million for US DOE to purchase the 1997 and1998 feed deliveries under the HEU deal oncondition that Russia would enter into a contractwith western companies for the acquisition of thepost 1998 feed deliveries.

The Agency views with some concern that alarge proportion of the market will be suppliedover the coming years from secondary sources,mostly from reduction of military stockpiles.Although this reduction is welcome from a

disarmament point of view, care will be neededin placing this material on world markets so as toavoid jeopardising future primary production inthe long-term. In the Agency’s view, there is adanger that if large supplies from stocks areallowed to flow on to the market too quickly andwithout relation to demand, prices are likely tobe forced down to an extent which makes thecontinuation of some existing mines and theopening of new deposits uneconomic.

It is evident that should supplies from secondarysources suddenly be reduced or stopped forpolitical or other reasons, supply disruptionsmight occur. The Agency continues torecommend to EU users to maintain a portfolioof diversified, long term contracts on mutuallyequitable terms with primary producers. TheAgency further recommends that utilities’inventories, in particular those of naturaluranium, should also be considered in terms oflong term security of supply and not be driven byshort term perceptions of a plentiful market,since other inventories may not be readilyavailable in times of shortage. Generally usersshare these views.

CONVERSION, ENRICHMENT ANDFABRICATION

Conversion capacity continued to coveradequately the EU requirements.

The downward pressure on prices resulting fromsales of natural uranium inventories whichincluded conversion, as foreseen in last year’sreport, became evident in 1998 . The conversionspot price as published by the trade pressdecreased from over US$ 5/kgU to US$ 3.5/kgUduring the year. Long term prices fell also but toa lesser extent.

Enrichment and fabrication facilities in the EUprovided adequate coverage for users’ needs.The market remained relatively stable, andworld-wide capacity is more than sufficient tomeet current requirements. Current over


capacity was used to re-enrich depleted uranium(“tails”) in Russia.

In contrast to the market for natural uranium, theenrichment market is supplied by a very smallnumber of producers world-wide, and thenumber of spot transactions is relatively low.Most deliveries take place under long termcontracts, and enrichers have adjusted theirproduction to take into account the disposition ofinventories. Although the prices for multiannualcontracts have dropped since the early nineties,the changes have been much smaller than thoseobserved in natural uranium contracts in relativeterms.

REPROCESSING AND USE OF MIXED-OXIDEFUELS

Reprocessing of spent fuel in France and theUnited Kingdom and subsequent use ofreprocessed uranium and plutonium (Pu) inmixed-oxide (MOX) fuels continued normally.The construction of BNFL’s Sellafield MOX FuelPlant (SMP) was completed. The plant whichhas a nominal capacity of 120 t of MOX fuel peryear is ready to be commissioned as soon asgovernmental authorization is granted.

Four new 900 MW reactors were licensed to useMOX in France bringing the total of MOXlicensed reactors in that country up to 20.

Utilization of MOX may contribute to reducesignificantly the EU’s plutonium inventories. It isestimated that the use of a single MOX fuelelement consumes 9 kg Pu and avoids theproduction of 5 kg Pu. Thus each MOXassembly used reduces the inventory of Pu by14 kg.

As part of its nuclear policy, the new Germangovernment announced the intention to end thereprocessing of spent fuel from Germanreactors, which would require the utilitiesconcerned to terminate their contracts with

Cogema in France and BNFL in the UnitedKingdom (1).

MOX FABRICATED FROM MILITARYPLUTONIUM

The use of MOX may contribute towardsreducing significantly Russian and US stocks ofweapons grade plutonium, thus aiding thedisarmament process and in addition generatingelectricity through an efficient use of such fuel incivil nuclear plants.

The United States and Russia continued todiscuss a means to reduce and dispose ofmilitary Pu in a parallel fashion, following anagreement between the US and RussianPresidents.

In order to dispose of the US excess weaponsgrade Pu, the US DOE issued a request forproposals from the private sector for MOX fuelfabrication and reactor irradiation services, onthe assumption that the required fabricationfacility in the US would be licensed by theNuclear Regulatory Commission. At the year-end the team including Cogéma Inc with thecontribution of Belgonucléaire and EDF was theonly one left in the process.

Franco-German-Russian co-operation continuedon a parallel project which aims to build a MOXfabrication plant in Russia (DEMOX). Theproject has the support of the G8 governments.It foresees the transformation of 2 t Pu per yearfor utilisation in 7 Russian VVER-1000 reactorsand in the fast neutron reactor BN-600.

1 At the time of finalising this report (March

1999) there was no consensus on the matter anda final decision was postponed.


SUPPLY OF MATERIAL FROM THENEW INDEPENDENT STATES (NIS)

The NIS countries remained the largest sourceof supply of natural uranium to the EU. Duringthe year, EU utilities took delivery of 4 300 tUunder purchasing contracts (as natural uraniumor feed contained in enriched uranium product(EUP). A further 1 000 tU were delivered as aresult of exchanges. The total acquisitions ofnatural uranium from the NIS were thereforesome 5 300 tU representing about 34 % of thetotal deliveries to the EU utilities underpurchasing contracts in 1998 (32 % in 1997) or29 % of the total amount of fuel loaded in EUreactors during the year. Of this amountacquisitions from Russia were 3 700 tU underpurchasing contracts and 700 tU underexchange contracts resulting in a total of 4 400tU representing 28% of the total deliveries to theEU utilities under purchasing contracts in 1998or 24% of the total amount of fuel loaded in EUreactors during the year.

There were 6 new supply contracts concludedby the Supply Agency for NIS uranium duringthe year, for 1 500 tU. This figure was lower thanin previous years. It appears that, as the pricegap between NIS and other sources closed, theusers felt more encouraged to diversify theirsources of supply.

Re-enrichment of western origin tails in Russiafor EU companies was established as a furthersource of feed material, it provides a supply inthe order of 1 000 to 2 000 tU (natural uraniumequivalent) per year. Part of this material is soldto EU utilities and the remainder exported.

The Agency’s Advisory Committeerecommended that such re-enriched materialshould be assimilated to Russian naturaluranium, if sold as imported, but that nolimitation be imposed if it is further enriched inthe EU. In its supply policy the Agency isfollowing this recommendation. The impact ofthe sales of re-enriched tails is being monitored,and the policy could be revised if a need arises.

PHYSICAL IMPORTS OF NIS ORIGINMATERIAL

Physical imports from the NIS of natural uraniumor feed contained in enriched uranium product(EUP) amounted to some 11 600 tU in 1998.However, deliveries to EU end users were only5 300 tU during the year, as mentioned above.

For the period 1992-98 imports of naturaluranium or feed contained in the EUP from theNIS amounted to a cumulative total of 87 300 tU.This figure compares with 32 200 tU of NISorigin delivered to EU end users during thesame period (see table 1).

Table 1 - Physical imports by EUoperators of NIS naturaluranium or feed contained inEUP (in tU)

YEAR TotalImports

Deliveries (1)To EU utilities

% Supply(2)

1992 9500 2700 231993 12100 2700 221994 12200 4500 321995 12100 5200 321996 17600 6800 431997 12200 5000 321998 11600 5300 34Total 87300 32200 32

Notes : (1) Including exchanges

(2) Percentage of NIS deliveries relativeto total deliveries to EU utilities underpurchasing contracts during therespective year.

The Supply Agency has been conductingstudies to analyse the above figures by sourceand commercial destination. These studiesreveal that the greater part of NIS naturaluranium was imported by intermediaries (about80%), while imports of enriched uranium and thefeed contained was spread amongst utilities,intermediaries and fabricators. So far it has beenpossible to establish the use or destination ofabout 80% of imports. Preliminary resultsindicate that most of the gap between imports


and EU consumption is explained, first, byidentified exports, secondly, by storage pendingfulfillment of contracts with EU utilities and,thirdly, by market operators’ inventories awaitingsale. The study is still to be completed.

As a result of the imports referred to above, ithas been observed that the total inventories ofnatural uranium in the EU have increasedsignificantly in spite of the utilities’ reduction oftheir own stocks.

It should be noted that the studies and analysisof NIS imports mentioned here relate strictly tothe commercial use and destination of suchmaterial. All such imports are subject to Euratomand IAEA safeguards while on the territory of theMember States.

SUPPLIES DERIVED FROM DISARMAMENT OFNUCLEAR WEAPONS

Deliveries of low enriched uranium (LEU)derived from the former military Russian HEUcontinued to be made to USEC. However, in1998, they were below the scheduled amount of723 t LEU (from blending 24 t HEU); in fact, only454 t LEU (from blending 14.5 t HEU) werereported to have been delivered. In 1999 andthereafter the annual scheduled deliveries are ofthe order of 900 t LEU (from blending 30 t HEU).

Negotiations between the Russians and aconsortium of three western companies(Cameco, Cogéma and Nukem) concerning thedisposal of most of the feed of the downblendedHEU continued throughout the year. It appearsthat these negotiations were particularly difficultdue to the weak market conditions and reporteddisagreements on price and requiredguarantees. Progress was reported to havebeen made following intervention by the USgovernment which, amongst other initiatives,was prepared to allocate the necessary funds toacquire the feed accumulated at USEC duringthe years 1997 and 1998 and to accept a 10year moratorium on sales of that material. By theyear-end a final agreement between the

Russians and the consortium appeared to be insight.

The feed of the downblended 30t of HEU whichis scheduled to be delivered annually from 1999onwards represents a supply equivalent to some9000 tU of natural uranium per year until 2013.The Agency continued to follow the matter withgreat interest in view of its impact on the market.The material is considered to be of Russianorigin and subject to restrictions in the US. Thepolicy on its sale within the EU has yet to bedecided.

MOX derived from excess military Pu in the USand Russia may become a new source ofnuclear fuel in these countries around 2005 (seepage 9); however it is not expected thatsignificant amounts of MOX from military Pufrom these two sources will be used in the EU inthe foreseeable future.

US SUSPENSION AGREEMENTS

In 1998 complaints were made by USproducers that a series of sales and purchasesby a Japanese company represented aprohibited circumvention of the US anti-dumpingSuspension Agreements. It was reported thatover 700 tonnes of Australian origin naturaluranium were sold on the US market, while atthe same time the Japanese companypurchased almost identical amounts of Russianmaterial. As it seems that the Australian originmaterial was ultimately delivered to US end-users, it was claimed that the transactions hadamounted to an indirect import of Russianmaterial into the US.

Without commenting on this pending case, theAgency would recommend EU companiesinvolved in nuclear trade to be cautious whencomplex series of sales, purchases andexchanges are proposed. The Agency hasnoticed that more and more operators areincluding in their contracts an “anti-circumvention clause”, which states that thematerial has not been acquired via operations


involving materials subject to a SuspensionAgreement and, in some cases, it is also statedthat the material is not intended for any suchoperation. Conversely, if the material has beenobtained through an exchange or anotherindirect operation involving material subject to aSuspension Agreement, the anti-circumventionclause takes note of that circumstance, and thiseffectively prevents subsequent owners of thematerial from importing it for final use in the US.

In view of the continuing difficulties concerningexports to the US, the government ofKazakhstan notified on 10 November its intent toterminate its suspension agreement with the US.As a result, provisional anti- dumping duties of115.82 % are again applicable on imports ofKazakhstan material in the US from 11 January1999.

LEGAL DEVELOPMENTS

Oral arguments were heard by the Court ofJustice in the KLE case1 on 25 September 1998.The Advocate General issued his opinion on 19November 1998. He made an in depth analysisof the applicable supply provisions and of thearguments raised by KLE. He concluded that theright to refuse the conclusion of supply contractscould legally be used to ensure a properdiversification of supply sources. The finalJudgement is expected in 1999.

Sweden’s Supreme Administrative Courtannounced in December a delay in issuing itsfinal ruling on the closure of Sydkraft’sBarsebäck-1 plant.

1 See for a summary of the Judgement of the

Court of First Instance, Annual Report 1997, p.11-13.

OTHER DEVELOPMENTS

RESEARCH REACTOR FUEL CYCLE

Until 1991, HEU for research reactors in the EUwas supplied almost exclusively by the US-DOE,but the amendment to the Energy Policy Act in1992 made it practically impossible to obtainfurther HEU material from the US. For thisreason, some of the research reactors in the EUwhich still require this material entered intonegotiations with Russia to obtain supplies.Following the earlier conclusion of agreementsat government level the first shipment of HEUfrom Russia to France took place at the end of1998.

For the back end of the fuel cycle, mostoperators opted for returning their spent fuel tothe US-DOE according to the Department’spolicy on acceptance of spent fuel from foreignresearch reactors containing uranium enrichedin the US. Cogéma continued to offer toreprocess HEU fuels by diluting them withcommercial LEU fuels at its plant in La Hague.One operator confirmed its decision for directdisposal.

The policy which permits the return of spent fuelto the US-DOE expires in 2006 and is notexpected to be renewed. Due to the long leadtimes required to implement solutions for thedisposal of spent fuel, particularly for thosecountries that do not have commercial nuclearpower programmes, it is becoming urgent insome cases to decide on alternative courses ofaction.

MERGERS AND PRIVATIZATIONS

In the uranium mining industry, Cameco(Canada) acquired Uranerz (Germany),strengthening its competitive position.

The association between BNFL and Siemens,announced last year, has yet to materialise.However, in 1998, in partnership with the USengineering and construction group, Morrison


Knudsen, BNFL acquired the nuclear businessof Westinghouse.

The privatisation of USEC was completed duringthe year through a public offering.

ENLARGEMENT OF THE EU COMMUNITY

The Supply Agency participated in discussionswith applicant countries for EU Membership onmatters relating to the nuclear fuel cycle.

CLIMATE CHANGE

The awareness of global warming, highlighted in1997 by the Kyoto conference and by the naturaldisasters of 1998 attributed to el niño, againcalled attention to the role which nuclear energycan play in the avoidance of greenhouse gasemissions. CO2 is one of the greenhouse gaseswhich are considered to be the main contributorsto global warming. In the EU, the 34% share ofnuclear energy of total electricity generation (1)avoids the emission of some 700 million tonnesof CO2 each year(2) (2.3 billion tonnes of CO2

worldwide, or 10% of current total CO2

emissions) (3).

1 In 1998 the electricity generated in nuclear

power stations in the EU amounted to 800 TWhrepresenting 34% of the total electricityproduced which amounted to 2339 TWh (sourceEurostat).

2 Source : Illustrative Nuclear Programme (PINC)COM(97)401Final.

3 Source : FORATOM.

The process started in Kyoto was furtheradvanced at the 4th Conference of the Parties onclimate change which took place in BuenosAires in November 1998. During this conferencean action plan was adopted concerningtechnology transfers and “flexibility mechanisms”(tradable emission rights). The nuclear industryhad a large representation at this Conference.



CHAPTER II

SUPPLY OF NUCLEAR MATERIALS AND ENRICHMENT SERVICESIN THE EUROPEAN UNION

REACTOR NEEDS/NETREQUIREMENTS

During 1998, 2,800 tU of fresh fuel were loadedin EU reactors containing the equivalent of 18400 t natural uranium and 10 400 t SeparativeWork (SW), most tails assays were in the rangeof 0.25 – 0.35 %.

Future EU reactor needs and net requirementsfor uranium and separative work, based on datasupplied by EU utilities, rounded to the nearest100 t, are estimated as shown in Table 2.

Table 2 - Reactor needs and netrequirements for uranium andseparative work

A) From 1999 until 2008

Year Natural Uranium(tU)

Separative Work(tSW)

Reactorneeds

Net require-ments

Reactorneeds

Net require-ments

1999 21300 18100 12000 11100

2000 21200 18300 11700 10900

2001 21500 18400 12000 11200

2002 21800 19000 12200 11200

2003 21300 19000 11900 10900

2004 22100 20000 12400 11600

2005 21600 19500 12200 11300

2006 21700 20000 12200 11300

2007 21600 19800 12400 11400

2008 21600 19800 12300 11300

TOTAL 215700 191900 121300 112200

Average 21600 19200 12100 11200

B) Extended forecast from 2009 until 2018

Year Natural Uranium(tU)

Separative Work(tSW)

Reactorneeds

Net requi-rements

Reactorneeds

Net requi-rements

2009 20900 19300 12100 11300

2010 20900 19400 12200 11400

2011 20700 19400 12200 11600

2012 20200 18900 11900 11300

2013 20000 18700 12000 11400

2014 19800 18500 11900 11300

2015 19200 17900 11600 11000

2016 19200 17800 11500 10900

2017 19400 18100 11600 11000

2018 19000 17700 11400 10800

TOTAL 199300 185700 118400 112000

Average

1999-2018

20300 18900 12000 11200

Net requirements are calculated on the basis ofreactor needs less the contributions fromcurrently planned uranium/plutonium recycling,and taking account of inventory management ascommunicated to the Agency by utilities.

Average reactor needs for natural uranium overthe next 10 years will be 21 600 tU/year, whileaverage net requirements will be about 19 200tU/year. Relative to 1997 the reactorrequirements remain stable but the netrequirements decrease slightly.

Average reactor needs for enrichment over thenext 10 years will be 12 100 tSW/year, whileaverage net requirements will be in the order of11 200 tSW/year.


NATURAL URANIUM

CONCLUSION OF CONTRACTS

The number of contracts and amendmentsrelating to ores and source materials (essentiallynatural uranium) which were dealt with inaccordance with the Agency's procedures during1998 is shown in Table 3.

Transactions involving natural uranium totalledabout 17 100 tU, some 8 800 tU of which werethe subject of new purchase contracts by EUutilities (spot and multiannual), in addition 2 600tU were contracted under amendments toexisting contracts. Some 7 800 tU transactedrelated to purchases by producers orintermediaries, as well as exchanges, loans, etc.In comparison with the figures reported for 1997,the total amounts contracted have decreased by18 %.

Table 3 - Natural uranium contractsconcluded by or notified to theSupply Agency

Contract Type Number Quantity (tU) (1)

Purchase (by a EU utility/user)– multiannual (2)- spot (2)

139

8155682

Sale (by a EU utility/user)– multiannual– spot

23

--89

Purchase-sale (between two EUutilities/users)- multiannualspot

01

0--

Purchase-sale (intermediaries)(3)– multiannualspot

414

16012188

Exchanges (4)Loans

410

39880

TOTALIncluding contracts of less than 10t

8713

1708848

CONTRACT AMENDMENTS (5) 5 2600

Notes

(1) In order to maintain confidentiality the quantity hasbeen indicated only when there were at least 3

contracts of each type, but all quantities have beenincluded in the total.

(2) "Multiannual" contracts are defined as those providingfor deliveries extending over more than 12 months,whereas "spot" contracts are those providing for eitheronly one delivery or deliveries extending over a periodof a maximum of 12 months, whatever the timebetween the conclusion of the contract and the firstdelivery.

(3) Purchases/sales contracts between intermediaries -both buyer and seller are not EU utilities/end users.

(4) This category includes exchanges of ownership andU3O8 against UF6. Exchanges of safeguards obligationcodes and international exchanges of safeguardsobligations are not included.

(5) Concerning purchasing contracts only. The quantityrepresents the net increase (or decrease).

VOLUME OF DELIVERIES

During 1998, natural uranium deliveries underexisting purchasing contracts amounted toapproximately 15 800 tU compared with 15 600tU in 1997(1). Deliveries under spot contractsrepresented about 6 % of the total (12 % in1997).

The deliveries taken into account are thosemade under purchasing contracts to the EUelectricity utilities or their procurementorganisations; they include also the naturaluranium equivalent contained in enricheduranium purchases. Deliveries under purchasingcontracts and fuel loaded into reactors by EUutilities since 1980 are shown in Graph 1. Thecorresponding table is in Annex 1. Thedifference between deliveries and the amount offuel loaded can be explained by the use ofreprocessed uranium, MOX and drawdown ofinventories.

1 Due to late reporting by two utilities, the total

deliveries of NIS under purchasing contracts in1997 needed to be corrected to 15 600 tU(instead of 15 100 tU).


Graph 1 - Natural uranium feed contained in fuel loaded into EU reactors and natural uraniumdelivered to utilities under purchasing contracts (in tU)

0

5.000

10.000

15.000

20.000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998

tonn

es U

0

5.000

10.000

15.000

20.000

tonnes U

Fuel LoadedDelivered

AVERAGE PRICES OF MULTIANNUALCONTRACTS

Prices for deliveries under multiannual contractswere expressed in 5 different currencies. Tocalculate the average price, the original contractprices were converted into ECU1 and thenweighted by quantity. For the conversion intoECU the Agency uses the average annualexchange rate of the respective currency aspublished by Eurostat. A very small number ofcontracts where it was not possible to establishreliably the price of the natural uraniumcomponent (e.g. in some cases of enricheduranium deliveries priced per kg of EUP) wereexcluded from the price calculation.

The average price for 1998 rounded to thenearest ¼ ECU was as follows:

ECU 34.00/kgU contained in U3O8

(ECU 34.75 in 1997)

1 The Ecu was replaced by the euro on 1 January

1999 with a conversion rate of 1:1. However,historical references (pre-1999) to the ECUcontinue to be labelled as ECU.

AVERAGE PRICES OF SPOT CONTRACTS

The 1998 average price of material deliveredunder spot contracts, calculated according to thesame principles, was as follows:

ECU 25.00/kgU contained in U3O8

(ECU 30.00 in 1997)

COMPARISON OF PRICES

Graph 2 shows prices for deliveries undermultiannual as well as spot contracts since1980, expressed in ECU. For ease of reference,historical data on prices published in previousAnnual Reports and variations in exchange ratesare presented in Annex 2.


Graph 2 - Average price for natural uranium delivered under spot and multiannual contracts (ECU/kgU)

0

25

50

75

100

125

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998

EC

U/k

gU

0

25

50

75

100

125

EC

U/kgU

MultiannualSpot

ORIGINS

EU utilities or their procurement organisationsobtained in 1998 approximately 94 % of theirsupplies from 11 countries outside the EU(graph 3). The largest suppliers were Niger(1)and Russia, which represented each some 25 %of external supply under purchasing contracts(24 % of total supply under purchasingcontracts).

1 Partly due to stockpile usage.

Acquisitions of NIS origin natural uranium by EUutilities since 1990 are shown in Graph 4, whichis provided for reference purposes and bringstogether information already published inprevious Annual Reports.


Graph 3 Origin of the natural uranium delivered to EU utilities under purchasing contracts

Graph 4 Acquisitions of NIS origin natural uranium by EU utilities (in tU)

0

2.000

4.000

6.000

8.000

1990 1991 1992 1993 1994 1995 1996 1997 1998

tonn

es U

0

2.000

4.000

6.000

8.000

tonnes U

Exchanges / LoansPurchases / Sales

NIS

Gabon+Niger

Australia

Canada

Others

EU

Namibia+S.Africa


SPECIAL FISSILE MATERIALS

CONCLUSION OF CONTRACTS

The number of contracts and amendmentsrelating to special fissile materials (enrichment,enriched uranium and plutonium for power andresearch reactors) which were dealt with during1998 in accordance with the Agency'sprocedures is shown in Table 4.

DELIVERIES OF LOW ENRICHED URANIUM(LEU)

In 1998, supply of enrichment services to EUutilities totalled approximately 9 200 tSW,delivered in 2 500 tLEU which contained theequivalent of some 15 800 t of natural uraniumfeed. Some 75 % of this separative work wasprovided by EU companies (Eurodif andUrenco). Deliveries of separative work underspot contracts were in the order of 2%.

ENRICHED URANIUM FOR RESEARCHREACTORS

Enriched uranium for research reactors isnormally supplied in two enrichment assays: justunder 20 % (LEU) and about 90% (HEU).

Although the quantities involved represent aminor amount in terms of EU needs for enricheduranium, HEU supply is very important to thescientific community.

Supply of LEU to research reactors continuedunhindered. Reactor requirements for HEU weremet, but the source of future supplies continuedto be the object of considerable attention (seealso Chapter I). The Supply Agency continued toprovide support to reactor operators in theprocurement of fuels.

PLUTONIUM (Pu)

In 1998, transactions involving Pu were againmainly related to its use for MOX fuel fabrication,and the Agency concluded 29 such contracts.

Table 4 - Special fissile materialcontracts concluded by or notified to theSupply Agency

Contract Type (1) Number

I. Special Fissile Materials

Purchase (by a EU utility/user)- multiannualspot

716

Sale (by a EU utility/user)- multiannualspot

312

Purchase-sale (between two EU utilities/users)- multiannualspot

07

Purchase-sale (intermediaries)- multiannualspot

919

Exchanges (swaps) 6Loans 19TOTAL, including (2)- Low enriched uranium- High enriched uranium- Plutonium

98591129

CONTRACT AMENDMENTS 10II. Enrichment Contracts (3) 13- multiannualspot

130

CONTRACT AMENDMENTS 19

Notes:(1) See explanations under Table 3, as appropriate.(2) Some contracts may involve both LEU and plutonium or

HEU and plutonium.(3) Contracts with primary enrichers only.

COMMISSION AUTHORISATIONSFOR EXPORT

Under the provisions of Article 59(b) of theEuratom Treaty (and Article 62.1(c) in the case ofspecial fissile materials), the authorisation of theCommission is required for the export of nuclearmaterials produced in the Community. Requestsfor these authorisations are submitted to theCommission by the Supply Agency.

During 1998, three authorisations were grantedby the Commission for the exports of 196 tLEU(with enrichments below 5%). Two additionalauthorisations were granted for the export ofPlutonium.


CHAPTER III

NUCLEAR ENERGY DEVELOPMENTS IN THE EUROPEAN UNIONMEMBER STATES

BELGIQUE/BELGIË – BELGIUM

ENERGY POLICY

The implementation of the law of 15 April 1994concerning the protection of the population andthe environment against the dangers of ionizingradiation and the creation of a Federal Agencyfor Nuclear Control has made some progress. Asecond series of articles has entered into forceand the Director General of the Federal Agencyfor Nuclear Control has been nominated. Thetransfer of the personnel of the severalministerial departments and scientific institutionswith activities in the nuclear field, who have theappropriate skills, is in preparation.

The Minister in charge of energy matters hasdecided to create a committee of expertsassembled from the different universities andspecialized scientific organisations of thecountry. This committee, after consultation withthe national and international actors in thenuclear sector (the electricity producers, thenuclear industry, the organisations charged withnuclear studies and radioactive waste, theresearch institutes, … ) will issue within 18months a report, the purpose of which is toprepare the future choices with respect to theproduction of electricity.

NUCLEAR ELECTRICITY GENERATION

In 1998 Belgium’s nuclear power stations(including the French share of Tihange 1)generated about 43.9 TWh. This is 2.7% lessthan in 1997. It represents 55.2% of thecountry’s total electricity production in 1998. Theslight drop in production is due to the fact that all

units were shut down in 1998 for revision andfuel replacement, while Tihange 1 and 3 had nofuel replacement in 1997, and that the shutdown of Tihange 3 was extended to about twoand a half months for the replacement of thesteam generators. The performance of theBelgian nuclear power plants remained excellentduring 1998, with an average availability factorof 88%.

FUEL CYCLE DEVELOPMENTS

Belgium produced 14.6 tonnes of naturaluranium in 1998, derived from importedphosphates.

The production of MOX fuel by Belgonucleaire inits Dessel plant amounted to 38 tonnes in 1998,to be used in Belgian, German, Japanese andSwiss power plants.

In line with the recommendations of theresolution of Parliament, adopted on 22December 1993, concerning the use of MOXfuel in Belgium’s nuclear power plants and thesuitability of reprocessing spent fuel, a reporthas been drafted by the competentadministrations, which contains a synthesis andan evaluation of the work which has beenrealised by the firms and institutions involved. Asseveral works are still in progress, the reportconcluded that no definite choice in favour ofone or the other option was necessary in thenear future and that nothing could justifyeliminating one of them. The Government hasasked the competent administrations to draft amore complete report towards the end of 1999,taking into account the results of the workrealised until then. The Government decidedthat the two options have to be kept open andthat Synatom had to terminate the contract it


concluded in 1991 with Cogéma, theperformance of which has been suspendedsince December 1993.

Other important events can be mentioned:

- the execution of the reprocessing contractconcluded in 1978 between Synatom andCogéma. Spent fuel assemblies have beentransported to La Hague;

- 16 MOX fuel elements were loaded in 1998 inunits Doel 3 and Tihange 2, which brings thecumulative total to 72;

- work has progressed on the reference conceptof the conditioned spent fuel and on theconceptual design of a spent fuel conditioningplant;

- general R&D-work on the geological disposalof conditioned spent fuel and high-level,medium-level and long-lived waste, carried outmainly by the Nuclear Research Centre at Mol,coordinated and managed by Niras/Ondraf andfinanced by the waste producers viaNiras/Ondraf, apart from the co-financing bythe European Commission, continued inseveral directions. In particular, theconstruction of the second access shaft for theextension of the underground researchlaboratory intended for the Praclaydemonstration programme has advanced well.The drafting of the report SAFIR 2, giving anoverview of the results presently obtained andindicating future orientations for R&D, hasadvanced well too;

- during the year 1998, 120 spent fuel elementswere placed in 5 dry storage containers in theinterim storage building at Doel. This brings thetotal to 416 fuel elements placed in 16containers. At Tihange 294 spent fuel elementswere placed in the wet storage building, whichbrings the total to 371.

At the beginning of the year the Governmenttook the following decision with regard to longterm management of low-level and short-lived

waste, on the basis of a report presented byNiras/Ondraf in 1997:

- a solution which is flexible, reversible andwhich can progressively become permanenthas to be worked out;

- a technical and economic choice will have tobe made as soon as possible between nearsurface disposal and geological disposal;

- in order to enable a choice to be made,Ondraf/Niras has been charged with theexecution of a programme consisting of landreconnaissance on the 4 existing nuclearzones in Belgium and the zones ofmunicipalities having shown an interest, thefurther elaboration of the near surface andgeological disposal concepts and thedevelopment of local co-managementstructures in order to integrate the projects atthe local level.

Niras/Ondraf has effectively started theexecution of an action programme, which isexpected to last about three years and the aimof which is to present integrated preliminary nearsurface or geological disposal concepts for eachzone.

RESEARCH REACTORS

The BR2-research reactor at the NuclearResearch Centre of Mol operated as scheduledduring 105 days- equivalent full power. The mainscientific programmes are related to the testingof fuel behavior, reactor pressure vessel steelembrittlement and irradiation assisted stresscorrosion cracking. The scientific programme iscombined with the commercial production ofradioisotopes and nuclear silicon doping.

Two transportations of spent BR2 fuel elementsto La Hague have taken place in the frameworkof the reprocessing contract concluded withCogéma in 1997.


DANMARK - DENMARK

RADIOACTIVE WASTE

Denmark has no nuclear power plants and theamount of radioactive waste is therefore small.At Risø National Laboratory there are tworeactors in operation: a research reactor, DR3,and a small homogeneous reactor, DR1, usedfor education. DR3 is operated at 10 MW andused for basic research, silicon doping andisotope production. Spent fuel is sent by ship tothe United States according to the US policy forresearch reactor fuel of US origin. There are noplans for disposal of high level waste inDenmark.

Low-Level Waste (LLW) and Intermediate-Level-Waste (ILW) are collected, treated and stored intwo intermediate storage facilities on the site ofRisø. A storage facility for LLW receives about100-120 200L-drums per year. Two-thirds of theamount is produced by Risø NationalLaboratory, the rest comes from hospitals,industry, laboratories and other users ofradioactive isotopes in Denmark. At the momentabout 4 500 drums are stored in this facility,which has a total capacity of 5 000 drums. Astorage facility for ILW receives about 0-5 drumsper year. The amount is decreasing after the hotcell facility was closed in 1994. At the momentabout 130 m3 of long-lived LLW is stored in thisfacility.

Solid LLW is compacted in drums and liquidLLW is treated in an evaporator and abituminization plant. The waste, embedded inbitumen, is then stored in drums. The ILW is nottreated but stored in stainless steel containers ordrums.

At the moment Denmark has no plans forconstruction of a repository for final disposal ofLLW and ILW.

DEUTSCHLAND - GERMANY

In 1998, Germany’s nuclear power plantsgenerated about 161 TWh of electricity, 5.1%less than in the record year of 1997. Nuclearpower’s share in the public electricity supplyamounted to almost 33%.

The decline has been caused by stoppages oflonger duration for some reactors (e.g. Krümmeland Unterweser) whose production losses couldnot be compensated for by the others , despitetheir very good availability.

Of Germany’s 20 commercial nuclear powerplants, 19 were connected to the grid, as in theprevious year. The Mühlheim-Kärlich nuclearpower plant continued to be out of operation forlegal reasons. In January 1998 the FederalAdministrative Court confirmed the revocation ofthe first partial permit, because in the Court’sopinion this permit had been granted withoutadequate examination of the site’s seismicsuitability. The operator RWE Energie AG has inthe meantime submitted to the authorities of theLand Rheinland-Pfalz a request for a new firstpartial permit.

After the federal elections of 27 September1998, the new Federal Government announcedsteps aimed at the termination of nuclear energyuse in Germany. It is intended to arrange thephase-out of the use of nuclear energy and theresolution of waste disposal questions throughdiscussions with the utilities, if possible on aconsensus basis and without indemnification.The Federal Government wants to realizeimportant objectives of the new governmentalpolicy through an amendment of the AtomicEnergy Law. This will include the deletion of therequirement to promote nuclear energy, therequirement of annual safety checks, theclarification of the burden of proof in case of asubstantiated suspicion of danger, theprohibition of reprocessing and the imposition ofdirect disposal as the only means of wastemanagement ; the new law will also provide forthe partial annulment of the Atomic Energy Law


modifications of May 1998 and an increase ofthe liability coverage.

In the framework of the basic designoptimization phase for the EuropeanPressurized Water Reactor (EPR) project it waspossible to demonstrate that the requirementscurrently applicable in Germany can be fulfilled,i.e. that even in case of severe accidents,including a core melt-down, additional measuresoutside the plant site are not necessary. Byincreasing the reactor capacity it would bepossible to realize the project at an attractiveand competitive price in a commonFranco/German installation. Until a decision onconstruction is taken, which could happen afterthe European elections in mid-1999, clarificationwork will continue with the nuclear technologycommittees established by the governments.

In November 1998 a presentation was made tothe qualified public of an innovative boiling waterproject, the BWR-1000, which has beendeveloped in cooperation between the Germanutilities and Siemens AG. In this project, thesafety requirements are to be met throughpassively working components and systems tocontrol failures and breakdowns. Thepresentation obtained a large resonance in themedia.

The URENCO enrichment plant in Gronaureached the originally authorized capacity of1000 t SW/year in February. The installationoperated at nearly 100% capacity and withoutinterruption. The capacity extension to 1.800tSW/year is progressing. The next cascade ofthis extension will start operation in early 1999.In addition, a further capacity extension by2.200 tSW/year to a total of 4.000 tSW/year isplanned. The application for the necessarylicence for this extension was submitted inSeptember.

The ANF fuel fabrication plant in Lingencontinues to dispose of a maximum processingcapacity of 650 tU/year. In order to improve theefficiency of the fabrication process and thesecurity of supply for customers, additional and

modified installations are planned as back up forthe production of uranium oxide pellets and fuelrods. These plans are currently the subject ofthe atomic licensing procedures.

In spring 1998, the interim storage facility forfuel elements in Ahaus received three Castor-containers V/52 with fuel elements from theBWR Grundremmingen and three Castor-containers V/19 with fuel elements from thePWR Neckarwestheim. Since April 1995,already 305 charged Castors THTR/AVR havebeen stored there. At the identically constructedinterim storage facility in Gorleben capacityutilisation, namely eight charged containers,remained unchanged. The two facilities areoperated by the Gesellschaft für Nuklear-ServicembH, located in Essen.

The pilot conditioning installation (PKA) atGorleben has almost been completed. The «coldcommissioning » operation is nearingconclusion. The operating licence is expected tobe granted in mid-March 1999. Even if for thetime being no actual conditioning work will beundertaken, the PKA remains an importantinstrument for an optimal use of the containers,especially when for political reasonsreprocessing is to be replaced by directdisposal.

The storage of radioactive waste in the easternpart of the Morsleben final waste disposal facilityhad to be interrupted, following a decision bythe Upper Administrative Court of Magdeburg of25 September 1998. Since then, the storageoperations have completely ceased. For the timebeing, additional decisions in the main courtprocedure must be awaited. So far, 22.300 t oflow and intermediate level waste have beendeposited there.

The licensing procedure for the planned Konradfinal disposal site is reaching its completion. InJune, a general positive assessment had beenexpected. However, the responsibleenvironment minister of Niedersachsen usedthe events related to the contamination of fuelelement transportation casks and in his view the


« unresolved nuclear waste transport risks » asan opportunity to interrupt the procedure.

The exploratory work on the suitability of thesaliferous rock at Gorleben as a final disposalsite for all kinds of radioactive waste continuedin 1998 according to plan. After completion ofthe construction work for the tunnels andcavities, it was possible to start work for theadaptation and equipment of the undergroundlaboratory and storage rooms. In addition, theventilation system on the 820 m floor has beenestablished.

The decommissioning of the Karlsruhereprocessing plant continued in 1998 accordingto plan. Preparations for the deconstructionwithin the operation building by means ofmanual, semi-teleguided and teleguideddismantling of certain process units have beenundertaken, which will allow a speedydemolition in coming years. Plans for theconstruction of a vitrification plant in Karlsruheare being pursued in parallel ; the plant is to bebuilt for the vitrification of the high level waste(about 70 m³) produced through previousreprocessing. The first partial permit wasgranted on 30. 12. 1998.

ELLAS - GREECE

Greece has no nuclear power plants. Electricityis produced by plants fueled with lignite or oiland by hydroelectric plants. At the NationalCentre for Scientific Research (NCSR)“Demokritos”, GRR-1, a 5 MW ResearchReactor is in operation for basic and appliedresearch, radioisotope production and otherapplications.

Two subcritical assemblies are used foreducation at the Athens Polytechnic Universityand at Thessaloniki University. Spent nuclearfuel is sent by sea to the US according to thepolicy of acceptance of research reactor fuel ofUS origin for permanent disposal.

Low-Level and Intermediate-Level Waste aretreated and stored at NCSR “Demokritos” site.Greece’s nuclear policy objectives place astrong emphasis on radiation protection andemergency preparedness.

ESPANA - SPAIN


Gross production of electrical energy of nuclearorigin in Spain during 1998 was 58.96 TWh,which represents approximately 33% of the totalnational production. As in recent years, theperformance of the nuclear park has been highlysatisfactory, as reflected in the average loadfactor of 88.4%.

The following are the most significantdevelopments that took place in 1998.

NUCLEAR INSTALLATIONS

During 1998 the Ministry of Industry and Energyauthorized increases of electrical power inseveral nuclear plants. As a result ofmodifications in the turbines of the Santa Mariade Garona nuclear plant as well as in units I andII of the Asco nuclear plant, there has been anincrease of 6 MW in the former and of 10.24 MWin unit II of Asco. In the Cofrentes plant, as aresult of the thermal power increase authorizedin 1997, there has been an increase of 35.4MW. These developments bring the total powerof the Spanish nuclear park to 7637.75 MWe.

The replacement work of the alternator of theTrillo nuclear plant, due to a technical failure ofthe connection of the stator, took place betweenMarch and June.

On 28 January 1998, the Ministry of Industryand Energy authorized the transfer of ownershipof Vandellos I nuclear plant from HIFRENSA,the operator, to ENRESA which has receivedthe authorization for its dismantling. The transferof ownership took place on 4 February 1998.


This is the first authorization granted in Spain forthe dismantling of a nuclear plant.

The programme retained for the dismantlingincludes a first phase during which the buildingsand structure of the plant, except the reactorvessel, will be dismantled and demolished. Thereactor vessel will be completely insulated andall means of access will be sealed. Theenvironmental and radiological conditions insidethe reactor vessel will continue to be monitored.After the completion of the first phase, which isexpected to last five years, approximately 80%of the plant’s site will be available for other uses,and a waiting period of around 30 years willhave to elapse before commencement of thesecond phase during which the remainingelements of the plant will be dismantled.Eventually the so-called level three will bereached and the former site of the plant couldthen be used without any limitations. During1998 some preparatory activities within theframework of the dismantling and closure plantook place.

The control and surveillance programme relatedto the dismantling and closure of ENUSA’s LoboG uranium ore processing plant at La Haba(Badajoz) was approved in January 1998. Thisprogramme will have a minimum duration of 5years and will come to an end with the officialclosure of the plant installation.

The Ministry of Industry and Energy authorizedthe dismantling of the experimental reactorArgos of the University of Cataluna in Barcelonaon 20 April 1998. This reactor, of the Argonauttype, was operated between 1963 and 1977. Itsfuel was withdrawn in 1992.

FUEL CYCLE

During 1998 the Quercus uranium concentratesproduction plant, which is owned by ENUSA,continued to operate below design capacity andproduced 300.6 tones of locally mined U3O8(255 tU in U308). The closure of the production

activities of Quercus is scheduled for the year2000.

The Juzbado (Salamanca) fuel fabrication plant,owned by ENUSA, continued to manufacturePWR and BWR fuel elements both for Spanishnuclear plants and for various Europeancountries. Its production in 1998 was 784elements containing 230 t of U, of which 208elements are for Spanish PWR, 132 for SpanishBWR and 444 for export to Sweden, Belgium,Germany and Finland.

The intermediate and low-level solid radioactivewaste storage of the Empresa Nacional deResiduos Radioactivos (ENRESA) at SierraAlbarrana (El Cabril) continued to operatesatisfactorily. By 31 December 1998, 27.6% ofthe storage facility had been filled. It isscheduled that the storage facility will becompletely filled around the middle of thedecade starting 2010.

With regard to the intermediate storage of spentfuel, the work to change the spent fuel pools inthe Jose Cabrera and Santa Maria de Garonaplants was completed in 1998. Thus, all nuclearplants in Spain have now undergone such work.

FRANCE

HIGHLIGHTS

At 31 December 1998, the French nuclearfacilities numbered 57 pressurized waterreactors in operation (thirty-four 900 MW, twenty1 300 MW and three 1 450 MW), and one fastreactor (PHENIX). The permanent closure ofSUPERPHENIX was decided by the FrenchGovernment at the end of the year. Thedecommissioning of the facility will occur in1999.

One reactor of 1 450 MW is under constructionfor commissioning during 1999. In the course of1999, four new 900 MW reactors were allowedto use MOX, bringing the total of MOX licensed


reactors up to twenty. The French Government,notably at the time of its press conference of 9December, stated that “the choice of nuclearenergy will be maintained as the majorcontributor to the national electricity supplies.

Following the investigations with a view totesting underground disposal of nuclear waste,the French Government decided in December tobuild two laboratories : one in clay, in easternFrance (on the border between the Meuse andthe Haute-Marne departments) and the other ingranite, in a place to be found.

NUCLEAR POWER AND ELECTRICITYGENERATION IN 1998

Gross national consumption of electricity rose to422.5 TWh, showing an increase of 3.0%compared with 1997. Industrial consumptionwas up by 1.8% compared with 1997. Tertiaryindustries and domestic consumption increasedby 4.6%. The export balance decreasedcompared with 1997 and amounted to 58 TWh.

Total net production of electricity rose to 486.2TWh, i.e. 1.1% more than 1997. A total of 368.4TWh was produced by nuclear power stations,representing approximately 76% of domesticproduction. Thermal production from fossil fuelrose to 51.8 TWh, with an increase of 36%compared with 1997. Hydroelectric productiondecreased by 1.8% compared with 1997 andamounted to 66 TWh.

As regards nuclear operation, 1998 showed adecrease in availability factor, which was 81.2%compared with 82.8% in 1997. This reduction ismainly attributable to the technical problemswhich occurred at the reactor containment atBelleville and Flamanville nuclear powerstations in 1998 (with an impact of 1.6 % on thenational availability factor).

In addition, Units 1 and 2 of Chooz (N4generation), which were connected to the gridrespectively in August 1996 and April 1997,have been undergoing a plant shutdown since

February 1998. Also, unit 1 of Civaux, inoperation since December 1997, has been shutdown since May 1998.

Two technical problems affected the start-up ofthese three power stations in 1998 :1. deterioration discovered on the main turbines

since March 1998; and2. crackings on two parts of the residual heat

removal system discovered atCivaux unit 1 in May and December 1998.

The updated schedule for reconnection (orconnection) of these 3 units is the following :Chooz B1: March 1999Chooz B2: April 1999Civaux 1: April 1999Civaux 2: October 1999 (first connection).

The daily peak of domestic consumption,expressed in GW, amounted to 69 GW which isclose to the record of 70 GW reached on 31December 1993.

The Creys Malville fastbreeder did not operateduring 1998. The official act for the definitiveshutdown of this fastbreeder was issued on 31December 1998.

The programme of testing and removing vesselheads has been carried forward. Since 1994, 30vessel heads out of the 54 in operation havebeen replaced. Also, 6 removals of steamgenerator have been achieved since 1995.

At the end of 1998, 17 reactors were operatingwith MOX fuel. During the year 1998, the Chinonpower plant was licensed to load MOX fuel.

Finally, Unit 1 of the Tricastin power station wasshut down in November 1998 for an outage afterten years’operation. It is the first unit in Franceto undergo an outage after a second 10 yearperiod of operation.


URANIUM MINING

In 1998, the national uranium productionamounted to 508 tU in concentrates, around30% down as compared with 1997.

Production came mostly from SMJ (Société desMines de Jouac) in Limousin; the mining divisionof Hérault also produced a small quantity.

With regard to French mining interests outsideFrance, in Canada the first production of theMcClean mine was again delayed due to thelack of administrative authorisations. Productionis now expected to commence around mid 1999.In Niger, production reached 3 715 tU inconcentrates. In Gabon, the closure of COMUFfacilities is planned for 1999.

URANIUM CONVERSION

In 1998, the two Comurhex plants of Malvésiand Pierrelatte operated very satisfactorily,reaching a good level of production.

URANIUM ENRICHMENT

The Georges Besse facility at Tricastin ranextremely well, with seasonal adjustment of theproduction being made in order to optimize theelectricity consumption.

REPROCESSING

The UP2 and UP3 plants operated verysatisfactorily during 1998 : 1 633 tonnes of oxidefuel were reprocessed, bringing the cumulativequantity reprocessed to 13 537 tonnes since1976.

A total of 162 spent fuel casks were received atla Hague. This number is a slight decrease ascompared with 1997, because the casks wereaffected by cask contamination problems whichoccurred as from May 1998.

IRELAND

Ireland does not have a nuclear power industryand there are no plans for such. Ireland’snuclear policy objectives place a heavyemphasis on the enhancement of nuclear safety,radiation protection and emergencypreparedness world-wide. Ireland remainsopposed to the operation and expansion of thenuclear industry. In the implementation of itsnuclear policy, the Irish Government is advisedand assisted by the Radiological ProtectionInstitute of Ireland.

ITALIA – ITALY

ENEL AND THE DECOMISSIONING OFNUCLEAR POWER PLANTS (NPP)

In 1998 ENEL carried out decommissioning ofits four nuclear power plants in accordance withits programme to reach the passively safecondition. In particular for the Garigliano NPPwaste conditioning was nearly completed andthe passively safe condition for the nuclearisland was reached. Therefore, tests to verify therespect of the design parameters were started.

At Caorso NPP, all the fuel was transferred fromthe reactor to the pools inside the reactorbuilding. The reactor is now ready for the firstphase of the decommissioning to becommenced to reach the passively safecondition, once the authorization of the Ministryof Industry has been received. Meanwhileconventional and nuclear activities which arenecessary to prepare for decommissioning werecarried out.

At Trino NPP, the conditioning of the plant toreduce the maintenance cost pending theapproval to start the first phase ofdecommissioning was continued. Conventionaldismantling was also carried on.

At Latina NPP, the removal of a part of theprimary circuit was completed. Also conventional


dismantling was carried out. Toxic wastes wereremoved from the plant.

ENEL continued the management of contractswith BNFL for the reprocessing of irradiated fuel.Its staff is involved in international workinggroups. ENEL is working to sell the residualfresh nuclear fuel.

ENEA AND THE MANAGEMENT OF WASTE

ENEA has continued to carry out itscomprehensive programme on the treatmentand conditioning of radioactive waste producedin the past in its pilot plants (EUREX and ITRECreprocessing plants, Plutonium Laboratory, HotCells).

The Basic Design and the Preliminary SafetyReport for the vitrification plant, using the “coldcrucible” technology, to be built at the EUREXPlant, have been completed and are now underexamination by the Italian Nuclear SafetyAuthority (ANPA).

In 1998, the Ministry for Industry (responsible forenergy policy in Italy), launched, together withthe Conference of the Regional Authorities, aconcerted action aimed at defining a properdecision process for the choice of the nationalrepository site for short-lived, low and mediumlevel radioactive waste and the interim storageof spent fuels and high-level activity vitrifiedwaste.

A Programme Agreement between theGovernment and the regional authorities hasbeen jointly defined with this aim, and a national“consultation table” has been set up, with allinterested parties.

In November ’98, a National Conference onEnergy and the Environment was held in Rome,co-sponsored by the three concerned Ministries: Industry, Environment, University andResearch, and organized by ENEA.

A specific paper, proposing a comprehensivenational plan on radioactive waste and irradiated

fuel management, nuclear installationsdecommissioning and site selection process inItaly has been jointly prepared for theConference by ENEL, ENEA and ANPA.

On the basis of the conclusions of theConference and in the framework of theliberalisation process of the national electricitymarket, the government is now preparing apolicy act for these matters, including thereorganization of the activities carried out byENEL and ENEA in these areas.

A public body responsible for the managementof radioactive waste and irradiated fuel, as wellas the realization and operation of the repositoryand the interim storage facility is foreseen.

NEDERLAND – NETHERLANDS

In the nuclear energy field, no newdevelopments took place in the Netherlands in1998. Therefore, the information on :- nuclear electricity generation and consumption- nuclear fuel cycle developments andresearch reactors provided in the Agency’s

Annual Report for 1997 is still accurate.

Furthermore, the Urenco enrichment plants atAlmelo operated satisfactorily at a capacity of1600 tSW per annum. Civil construction of thefirst hall of a new plant was completed. Firstproduction from this plant is planned from mid2000. The already decommissioned firstproduction plant was returned to green field site.

As regards national energy policy, the furtherliberalisation of the Netherlands electricity sectorhas been implemented by the adoption byParliament in June 1998 of the new ElectricityAct. As a result of this the government’s role willchange dramatically. Its central role in planningcapacity will decline and with that its influenceon the choice of fuel. Furthermore, its task ofregulating prices will largely disappear.


In the nuclear field, as far as reprocessing isconcerned, a discussion was initiated in theDutch Parliament about possibly terminating thereprocessing of spent fuel from the Dodewaardand Borssele Nuclear Power Plants.

At the request of the Ministry of EconomicAffairs, ECN carried out a study mainly withrespect to environmental, proliferation andfinancial aspects of reprocessing as comparedwith its alternative, direct storage. Based on thisstudy, the government took the view that therewere no urgent reasons to change the actualstrategy based on the reprocessing of spentfuel. On 22 January 1998, a discussion tookplace between the Minister of Economic Affairsand the Minister of Housing, Planning andEnvironment on the one hand and Parliament onthe other hand on this issue. One of theopposition parties agreed with the above-mentioned position of the government. However,two of the governmental parties expresseddoubts on this issue. Finally, a motion asking formore investigations with respect to possibilitiesand consequences of changing the reprocessingstrategy including financial aspects wasadopted. It is expected that the results of thisinvestigation will be sent to Parliament in early1999.

Finally, as regards nuclear research, it can bestated that the High Flux Reactor operated byECN in Petten, is of increasing significance forthe medical industry in the whole of Europe. Thisreactor is the main producer of medicalradioisotopes in Europe and is the leader inresearch of cancer treatment by neutrons (theso-called Boron Neutron Capture Therapy). As aconsequence of changing markets the ECNnuclear research operation merged with thenuclear research division into the NuclearResearch and Consulting Group (NRG), asubsidiary of both ECN and KEMA.

ÖSTERREICH - AUSTRIA

ENERGY POLICY PRINCIPLES

The Austrian energy policy, based on theprinciples of the International Energy Agency ofthe OECD and laid down in the Energy Report ofthe Austrian Government 1996, remainsunchanged.

The implementation of this policy wascontinuously pursued giving special attention tochanging energy and environment policyrequirements, both at the national andinternational level, and with the aim of meetingthe challenges arising from the facts that :

- European integration continues to progressand requires constructive co-operation as wellas respective legal adaptations;

- the anticipated global climate changenecessitates CO2 reduction measures on anational basis;

- the far-reaching changes in the economies ofCentral and Eastern Europe open up newchallenges and co-operation possibilities.

Taking into account these challenges, the mostimportant objectives of the Austrian long-termenergy policy - such as satisfying energyrequirements, security of supplies,environmental compatibility and conservation ofenergy resources, social acceptance, utmostpriority for energy efficiency, the reduction of oilconsumption and oil import dependency as wellas of energy imports in general and theincreased utilisation of renewable energyresources - remain unchanged.

AUSTRIA’S ENERGY POLICY ACHIEVEMENTS

The following figures about the development ofenergy and oil consumption show that theAustrian energy policy has proved to be verysuccessful :


- energy intensity, expressed in terms of primaryenergy supply (PES) per unit of GrossDomestic Product in Austrian Schillings (ATSGDP), decreased from 895.1 MJ/1000 ATSGDP in 1980 to 723.4 MJ/1000 ATS GDP in1997, i.e. by 19.2%;

- the share of oil in energy supply fell from 49%in 1980 to 39% in 1997. The share ofrenewables increased from 20% in 1980 to26% in 1997. The overall carbondioxideemissions stabilised at the level of the earlyseventies;

- specific energy demand in industry (industrialenergy input per unit of industrial net product)further decreased by about one- third in thelast 15 years (recent data are not available).

Combined efforts of the Federal Government,the Länder (provinces), the producers and theconsumers – the so-called social partners – willensure that the common energy policyobjectives will be achieved also in the future.

NO UTILISATION OF NUCLEAR ENERGY INAUSTRIA

Austria has no nuclear power plants. The originof this situation is a law of 1978 establishing theprohibition of nuclear power plants on Austrianterritory. This was the legal consequence of areferendum in November 1978 resulting in anegative vote against the nuclear power plantproject Zwentendorf. The events in Chernobyl in1986 reinforced this parliamentary decision andfurther strengthened the opposition of theAustrian population against nuclear power.

RESEARCH REACTORS

Although Austria has no nuclear power plants,there are, however, three research reactors inoperation in Vienna, Seibersdorf and Graz.

(With regard to the ASTRA Reactor inSeibersdorf there are plans to close down the

reactor as from 31 July 1999 and to begin theappropriate steps to decommission the reactorpermanently.)

The overall situation for the two other remainingreactors, as previously reported in the 1997annual report, remains unchanged.

RADIOACTIVE WASTE IN AUSTRIA

Since Austria does not operate nuclear powerplants, there is no major production of high levelradioactive waste (HLW). Consequently, there isno need to consider intermediate or final storagecapacities in Austria for HLW. The relativelysmall quantities of HLW resulting from theAustrian research reactors are covered by aframework contract for “US-origin nuclear fuel”and will return to the US during the next decade.

Low and medium level waste (L/MLW) fromhospitals, industry and research laboratories(30-40 tons/year) is collected and treated by theAustrian Research Centre at Seibersdorf. Theresearch centre is equipped with suitablefacilities to process and condition low andmedium level waste (incinerator,supercompactor and wastewater evaporator). Asa conditioning process, cementing ispredominantly used.

INTERIM STORAGE FACILITY

On the basis of a joint agreement between theRepublic of Austria, the community ofSeibersdorf and the Austrian Research CentreSeibersdorf, the intermediate storage facility isscheduled to be operated until 2012 on the siteof the research centre with a capacity of 15.000drums of conditioned waste. After this date, thewaste will be transferred to a final storage facilitywhich is planned to be built on a site to beselected at the beginning of the next decade.


PORTUGAL

ENERGY POLICY CONSIDERATIONS

The dependence on imported energy remains ata high level, of the order of 90%.

In 1996 the Total Primary Energy Supply (TPES)amounted to 19 088 x 103 toe which representeda small decrease (-0.4%) compared with theprevious year.

Imported oil and coal contributed 69 % and 18 %respectively to the total energy supply in thatyear.

In order to diversify energy supply and reducethe growth of CO2 emissions, Portugal isintroducing natural gas which comes fromAlgeria. The first deliveries took place in early1997, and since October 1997 natural gas isbeing used to fuel the dual fired power plant ofCarregardo (6x125 MWe).

As to the construction of the gas fired powerplant of Tapada de Outeiro (3x330 MWe), thesecond unit started operation in October 1998.The first unit, originally scheduled for March1998, has been delayed but should startoperation in March 1999. The third unit,scheduled for October 1999, is expected toenter into service early in May 1999.


Portugal has no plans at present to use thissource of energy.


Uranium (yellow cake) production remains at avery low level and amounted to 18.5 tU (21.5 t ofU3O8) in 1998.

SUOMI/FINLAND - FINLAND


There were no new policy decisions in 1998directly related to nuclear energy. However,developments in the fields of the general policyand the climate policy are believed to have anindirect effect on the role of nuclear energy.These developments include the ongoingrestructuring of the electricity markets, as well asthe signing of the Kyoto protocol, followed by theagreement on the burden sharing within the EU.As a consequence, the public attitude towardsnuclear power has become slightly morefavorable, but simultaneously the long termeconomic advantages of nuclear power havelost some of their weight in relation to otherfactors to be taken into account in investmentdecisions.

Each of the two power companies operatingnuclear power plants in Finland has decided toincrease its readiness to start a new nuclearproject by launching as a preparatory step anenvironmental impact assessment procedurerelated to a new power unit situated on anexisting site. In both cases the first phase of theprocedure was passed in 1998.

NUCLEAR ELECTRICITY GENERATION ANDCONSUMPTION

New operating licences for increased powerlevels were granted to all four nuclear powerplant units during 1998. Altogether the newpower levels mean an addition of 350 MW to theFinnish electricity generation capacity. The totalamount of electricity produced by these units in1998 was 21.0 TWh or 4.7% more than in 1997.This corresponds to 31.3% of the electricitygeneration and 27.4% of the electricity supply inFinland.


RADIOACTIVE WASTE POLICY ANDDEVELOPMENTS

An operating licence for a final repository of lowand medium level wastes from the Loviisanuclear power plant was granted in April.

The site selection of a deep geologicalrepository for spent nuclear fuel is scheduled forthe year 2000. In 1998, the nuclear powerutilities were finalizing site selection studies andpreparing an environmental impact assessmentreport concerning four alternative localities.

RESEARCH REACTORS

There is one 250 kW Triga Mark II reactoroperating in Finland. This reactor, the originalpurpose of which was education and research,has since been modified to serve mainly as aneutron source for boron neutron capturetherapy of brain tumor patients.

SVERIGE – SWEDEN


In February 1998 the Government decided thatBarsebäck Kraft AB was to close down theoperation of power reactor Barsebäck 1 by 1July 1998. This decision was based on the 1997Act on the phasing-out of nuclear power.Following an appeal against this decision theSupreme Administrative Court ordered apostponement of the implementation of thedecision until completion of the legal procedurehas been completed. No final decision had beentaken by the Court by the end of 1998.

In December 1998 the Government, havingearlier informed Parliament about its intention,decided to release the nuclear power utilitiesfrom their requirement to maintain jointlystrategic stocks of enriched uranium, enough togenerate 35 TWh. In future each utility will befree to decide its own stock-holding policy.


The Swedish nuclear power stations generated70.5 TWh in 1998, 5% more than in the previousyear. Nuclear power represented ca. 46% of theelectricity generated in Sweden in 1998 (hydroca. 48%). Following the unusually high waterflow to the reservoirs, hydro electricityproduction was at record level and consequentlythe nuclear power production capacity was notfully utilized.

Availability of the Swedish reactors was onaverage 84.8 % in 1998, compared with 78.8 %in 1997.

The four reactors at Ringhals and the threereactors at Forsmark all achieved very goodproduction figures. Due to the ongoingmodernisation programme for Oskarshamn 1,this unit was offline for about six months. Thiswork will continue and is planned to be finishedin year 2001. The two other reactors atOskarshamn continued to perform satisfactorily.The two units at the Barsebäck plant produced8.3 TWh, the highest output since 1991.

The nuclear powerplants at Forsmark andRinghals are now environmentally certifiedaccording to ISO14001.

NUCLEAR FUEL CYCLE DEVELOPMENTS

At the ABB Atom fuel fabrication plant 380 tonsof uranium dioxide powder were converted and270 tons of fresh fuel were produced during1998. More than half of the production was forthe export market.

In 1998 ABB Atom installed and brought intooperation equipment of a unique design tofurther reduce the environmental impact of itsoperation.

RADIOACTIVE WASTE

In the autumn of 1998, SKB (the SwedishNuclear Fuel and Waste Management Co,owned jointly by the nuclear power utilities)


obtained permission to increase the capacity ofthe intermediate store of spent fuel, CLAB, from5 000 tons to 8 000 tons. Work at the site hasalready commenced.

SKB has outlined a new “Programme forResearch & Development on Final Storage ofSpent Fuel”, which will cover three years. Thisprogramme was submitted to the Government inthe autumn of 1998. The programme’s main lineis to go forward, demonstrate technology andstart, in 2001, detailed investigations on apossible site for final storage.

The local municipality of Tierp, situated about150 km north of Stockholm, in the summer of1998 agreed to carry out a pre-study for a finalrepository of spent fuel, in co-operation withSKB. This means that SKB now has four pre-studies ongoing.

In November 1998, SKB inaugurated the new“Encapsulation Laboratory” which is located inthe town of Oskarshamn.

In November 1998, the utility OKG made anapplication to the Government in order to obtaina licence to use MOX fuel in its reactors.

The 1999 fee for the waste managementactivities including future decommissioning of allreactors was raised in December 1998 to anaverage of 0.013 SEK per KWh.

RESEARCH REACTORS

During 1998 decisions were made to build aBoron Neutron Capture Therapy facility at theR2-0 reactor in Studsvik. Its purpose is thetreatment with neutron radiation of patientssuffering from brain tumors. A facility forproduction of iodine-125 is also being built. Thisradioisotope is used for treatment of prostaticcancer.

Both the R2, a 50 MW MTR-reactor used for fueltesting, fuel investigations, silicon doping andisotope production, and the R2-0 (1 MW)reactors have operated at full capacity. Both

reactors also provide neutrons for basicresearch for the Neutron Research Laboratory inSweden.

UNITED KINGDOM


In its latest White Paper on energy, published on8 October 1998, the government considered thatnuclear power “makes a valuable contribution todiversity of supply and emissions reduction”.The Paper goes on to say however that the costof new construction means nuclear power’sshare of generation is expected to decrease inthe first decades of the next century as existingcapacity is retired. In the meantime, anyproposals for nuclear construction are to beconsidered against the same objectives as thosefor other types of stations – the ability to ensuresecure, diverse and sustainable supplies ofenergy at competitive prices.

In December 1997, the government announcedits detailed proposals for the merger of MagnoxElectric plc, which owns and operates the UK’ssix operating and three decommissioning civilmagnox stations, and BNFL. The aim of themerger is to improve the arrangements formanaging public sector nuclear liabilities byending the mismatch where BNFL hasresponsibility for dealing with the majority ofmagnox liabilities while Magnox meets the costs.The merger is taking place in two key stages,the first of which, transfer of the government’sshares in Magnox to BNFL, took place inJanuary 1998. The second stage, full merger ofthe combined businesses of the two companies,is expected to be completed during 1999,subject to the companies meeting therequirements of the relevant regulators.

The process of integrating Nuclear Electric Ltdand Scottish Nuclear Ltd, who between themoperate the UK’s seven AGR stations and onePWR station, continued during 1998; the two


companies now trade under the name of BritishEnergy.

On 5 June the government announced thatcommercial reprocessing at Dounreay wouldcease. The reprocessing plants will continue tooperate, subject to the necessary regulatoryconsents, only for as long as necessary to dealwith the existing liabilities and committed work.No new commercial contracts for reprocessingat Dounreay will be accepted.

NUCLEAR ELECTRICITY GENERATION ANDCONSUMPTION

The UK’s nuclear power stations supplied over90 TWh in 1998, some 1.5% more than in 1997,and representing about 27% of the electricitysupplied in the UK in 1998.


Total output from British Energy’s eight stationsfor the 1997/98 financial year, at 66.7 TWh,confirmed the company’s position as the UK’sleading generator, with a market share of 21%.During 1998 British Energy established anumber of partnerships in the UK andinternational energy sectors as part of thecompany’s development strategy. One exampleof this development can be seen in BritishEnergy’s joint venture with US utility PECOElectric to purchase Three Mile Island 1.

Urenco, the UK based British-Dutch-Germancentrifuge enricher, continued to expand itsenrichment capacity during 1998 in line withincreased business commitments. In particular,further capacity entered into operation atCapenhurst, UK, where a new plant wascommissioned in December 1997. Total capacityat all three plants at the end of 1998 was 3 950tSW per annum.

In April 1994, British Nuclear Fuels plc (BNFL)began construction of the Sellafield MOX FuelPlant (SMP) which will fabricate mixed oxide

(MOX) fuel from a blend of plutonium anduranium. The final decision on whether tocommence operation of the SMP now rests withEnvironment ministers who are considering theUK Environment Agency’s response to BNFL’sapplication. Once operating, the plant has thecapability to produce 120 tonnes of MOX fuelper year.

BNFL’s Thermal Oxide Reprocessing Plant(Thorp) at Sellafield in Cumbria began operationin March 1994. As at October 1998, some 1 750tonnes of spent fuel have been sheared anddissolved at the Plant. Thorp currently has anorder book valued at £12 billion over 15 years.

BNFL, in partnership with the US engineeringand construction group Morrison Knudsen (MK),in 1998 acquired the global nuclear business ofWestinghouse Electric Corporation.

In March 1997, the then Secretary of State forthe Environment rejected Nirex’ application toconstruct an underground rock characterisationfacility at the site adjacent to BNFL’s Sellafieldworks which it was investigating for its proposeddeep disposal facility for intermediate levelradioactive waste. Consideration continues to begiven to the consequences of this decision forintermediate level waste disposal policy and itsimplementation.

The UK currently has one operating civil nuclearresearch reactor, belonging to Imperial College.Others await decommissioning, are in theprocess of being decommissioned, or have beenfully decommissioned.



CHAPTER IV

INTERNATIONAL RELATIONS

INTRODUCTION

European Union (EU) operators acquire nuclearmaterials and services from a number ofexternal supplying countries. Moreover, someEU operators also process materials on behalfof foreign clients. While in the European Union,nuclear materials in the civil fuel cycle aresubject to the safeguards provisions of theTreaty establishing the European Atomic EnergyCommunity (Euratom or the Community) and, asappropriate, also to the agreements entered intoby the Community, its Member States and theInternational Atomic Energy Agency. In addition,nuclear materials transferred between theCommunity and three non-Community countries– Australia, Canada and the USA – are subjectto international agreements concluded betweenthe Community and the country concerned.These agreements provide for some additionalconditions which apply to such materials.Furthermore, transfers of nuclear materials withsome other countries are or may becomecovered under agreements with the EuropeanCommunity and Euratom of a more generalnature.

Under the provisions of the Euratom Treaty,international agreements are negotiated onbehalf of the Community by the EuropeanCommission in accordance with directivesissued by the Council of Ministers. Where theseagreements relate to the supply of nuclearmaterials or services, the Euratom SupplyAgency takes part in the Commission’snegotiating team and in any ongoingconsultations with the authorities of the countriesconcerned. Developments in relation to theseagreements during the year relevant to nuclearfuel supplies are reported below.

The Agency has compiled a compendium ofagreements to which the European AtomicEnergy Community is a party and which relate tonuclear fuel supply. (1)

BILATERAL NUCLEAR CO-OPERATION AGREEMENTS

EURATOM/AUSTRALIA

Following the agreement reached betweenEuratom and Australia in October 1997,whereby Australia will grant generic priorconsent, under certain conditions, for retransfersfrom Euratom to Japan of Australian obligatedplutonium after the reprocessing of Japanesespent fuel in the EU, an exchange of diplomaticnotes took place in Canberra on 28 May 1998.Following that diplomatic step, and onceAustralia notifies that all its domestic legislativerequirements have been satisfied, thesearrangements will enter into force.

EURATOM/CANADA

As provided for in Article XIII of theEuratom/Canada Agreement for Co-operation inthe peaceful uses of Atomic Energy,consultations took place in Ottawa in June 1998.

The consultations under Article XIII provided anopportunity to review the nuclear energy policyand programmes in both Euratom and Canadaand to exchange views and information on avariety of issues, such as the respective nuclearrelations with other countries, the status of the

1 This document is published by the Office for

Official Publications of the EuropeanCommunities Luxembourg under reference n°ISBN 92-828-0091-1.


worldwide nuclear fuel market and InternationalAtomic Energy Agency matters. The Euratomside raised the issue of Canadian authorizationsfor retransfers of Canadian obligated depleteduranium from Euratom to Russia for upgradinginto natural and enriched uranium product andarrangements for leaving the remaining“secondary tails” material there.

EURATOM/USA

Under Article 12 of the Euratom/USAagreement, the second round of consultationssince the agreement came into force in 1996,took place in Brussels on 19-20 October 1998.Both parties confirmed that the agreement isworking satisfactorily and exchanged views ontheir nuclear policy developments, on nuclearrelations with third countries, on the status of theworldwide nuclear fuel market and on IAEAmatters, including strengthening of nuclearsafeguards.

The Euratom side specifically raised the issue ofthe sale intentions of natural uranium by theUnited States Enrichment Corporation (USEC)and their potentially disrupting effects on themarket and on the highly enriched uranium(HEU) agreement between the US and Russia.The Euratom delegation reiterated prior requestsmade to the US Government to find a fair andequitable solution to the overpricing by USEC ofenrichment services supplied to two EUcompanies. It also brought to the USgovernment’s attention the case of a licenceapplication by an EU company to the USNuclear Regulatory Commission (NRC) andrequested more expeditious treatment for futurecases.

RETRANSFERS

Under the terms of the Community’s agreementswith Australia, Canada and the USA, thesesupplier countries retain the right of consent,albeit often in a long-term programmaticframework, over the retransfer from theCommunity of nuclear materials subject to those

agreements to other countries outside theCommunity.

Under the Euratom/Canada agreement,simplified procedures relating to retransfers ofcertain Canadian-obligated nuclear items are inplace for most of the Community’s nucleartrading partners. In the case of theEuratom/Australia Agreement retransfers fromthe Community of Australian obligated materialcan take place, subject to certain notificationconditions, to countries with which Australia hasa co-operation agreement in place for activitiesfor which Australia has accepted those countriesas a destination. Again, this includes most of theCommunity’s nuclear trading partners.

Under the Euratom/US agreement, amechanism providing for advance genericconsent for retransfers of nuclear items subjectto the agreement is in place based on a list ofdestinations outside the EU which includes mostof the Community’s nuclear trading partners.Advance generic consent for the retransfer toJapan of plutonium, including plutoniumcontained in mixed oxide fuel, is maintainedunder this agreement by reference to anexchange of letters of 1988 between theEuropean Commission and the US Mission tothe European Communities.

Following the entry into force of a newUS/Switzerland nuclear co-operation agreementin June 1998, a similar mechanism forretransfers of this kind to Switzerland isexpected to be operational in early 1999.

Applications for retransfer consents fallingoutside the generic consents provided for underthe above agreements are handled by theSupply Agency. During 1998, four suchretransfers were approved by the US.


BILATERAL RELATIONS IN THENUCLEAR FIELD WITH OTHERCOUNTRIES

THE RUSSIAN FEDERATION

Following the entry into force of the Partnershipand Co-operation Agreement (PCA) betweenthe European Communities, including Euratom,their Member States and the Russian Federationon 1 December 1997, a first meeting of theEU/Russia Co-operation Council at ministeriallevel took place in February 1998 and wasfollowed by meetings of the EU/Russia Co-operation Committee held in April andDecember 1998. On all these occasions theissue of EU/Russia nuclear trade was discussedand the EC side reiterated its willingness tocontinue discussions with a view to reaching anuclear trade arrangement as envisaged inarticle 22 of the PCA.

OTHER NEW INDEPENDENT STATES (NIS)

No progress was reported with regard to theproposal of the Commission to the Council forthe negotiation of bilateral nuclear cooperationagreements with the following NIS: Kazakhstan,Kyrgyzstan, Tajikistan, Ukraine and Uzbekistan.To date the Council has only adopted directivesfor the negotiation of agreements withKazakhstan and Ukraine regarding nuclearsafety and nuclear fusion. In December 1998,the Commission proposed to the Council thenegotiation of a global nuclear cooperationagreement, including a nuclear tradecomponent, with Ukraine. The provisions of theEuratom Treaty continue to apply automaticallyto uranium supplied from the NIS to the EU, justas to supplies from any other country.

JAPAN

On 25 May 1998 the Council approved anegotiating mandate for the negotiation by theCommission of an agreement on the peaceful

uses of nuclear energy between Euratom andJapan. A key objective of the proposedagreement is to facilitate nuclear trade betweenindustry in Euratom and in Japan through theestablishment of a framework for theimplementation of existing and futurecommercial arrangements.

Following substantive preparatory work on bothsides, it is expected that the first round of formalnegotiations will take place in spring 1999.

MULTILATERAL AGREEMENTS INTHE NUCLEAR FIELD

ENERGY CHARTER TREATY (ECT)

The Energy Charter Treaties entered into forceon 16 April 1998. At the end of 1998, 38countries plus the European Communities hadratified the ECT. At that date two EU MemberStates had not completed their ratificationprocedures, but they are applying the Treaty ona provisional basis. The Russian Federation hadalso not ratified, but it is committed to apply theTreaty on a provisional basis.

On 24 April 1998 the Energy CharterConference adopted the Amendment to thetrade-related provisions of the ECT. Thefollowing joint declaration made by the RussianFederation and the European Union was madewith respect to the Trade Amendment: “TheRussian Federation has raised the issue of tradein nuclear materials. The Russian Federationand the EU agreed that the partnership and co-operation agreement between the RussianFederation, the European Union and its MemberStates, which entered into force on 1 December1997, is the appropriate framework to deal withthis issue, as confirmed in the conclusions of 27January 1998 Co-operation Council”.

By its decision of 13 July 1998 (98/537/EC) theCouncil of the European Union formallyapproved the text of the Trade Amendment andauthorized its provisional application.



CHAPTER V

ADMINISTRATIVE REPORT

PERSONNEL

The staff establishment of the Agency at the endof 1998 was 24.

FINANCE

The Agency’s expenditure amounted to ECU192 578.95 for 1998. This amount was financedprincipally from the budget of the Commission,as a result of a Council decision of 1960 topostpone the introduction of a charge ontransactions to defray the operating expenses ofthe Agency as provided by the Euratom Treaty.

ADVISORY COMMITTEE

The Advisory Committee held two meetings in1998. The Agency informed the Committee ofdevelopments related to supply policy inparticular with regard to the disposition of ex-military High Enriched Uranium from Russia andsupply from other New Independent States anddiscussed with the Committee from a supplyperspective the policy treatment to be given, inthe EU to depleted uranium enriched inRussia(1). Exchanges of views took place onmarket developments, levels of production andstockpiles in those countries. Also the Agencyinformed the Committee about a proposal, stillunder discussion within the Commissionservices at the year end, to convert the Agency’scapital from EMA units of account into euro.

1 See “Supply of material from NIS” in Chapter I.

Likewise, the Committee was briefed by theCommission services and the Agency on theresults of official consultations with the US,Australia and Canada within the framework ofexisting nuclear agreements with thosecountries as well as on the status of anddevelopments relating to potential Euratominternational agreements in the area of nuclearfuel supply.

The Agency’s annual report and accounts for1997 received favourable opinions from theCommittee, as did its budget for 1999.

A new Chairman and Vice-Chairmen of theCommittee were elected for the term of officeextending to 28 March 1999.


ORGANISATIONAL CHART(AS AT 31 DECEMBER 1998)

EURATOM SUPPLY AGENCY

Director GeneralAssistant to the Director General

Mr. M. GOPPELMr. D. MONASSE (a.i.)

• Nuclear fuels supply contracts and research Mr. J.C. BLANQUARTMr. J. MOTAMr. A. BOUQUETMrs. P. BOUCHAUD-BEULE

• General Affairs; Secretariat of the AdvisoryCommittee

Mr. D.S. ENNALSMr. P. MARTINEZ-VARGAS

ADVISORY COMMITTEE OF THE SUPPLY AGENCY

Chairman Mr. S. SANDKLEF(Vattenfall Fuel, Sweden)

Vice-Chairmen Mr. L. F. DURRET(Cogéma, France)Mr. C. GIMENO SANZ(Permanent Representation of Spain)

WORKING PARTY

Chairman Mr. M. S. TRAVIS(Rio Tinto, Mineral Services, UK)

Vice-Chairmen Mr. P. GOLDSCHMIDT(Synatom, Belgium)Mr. J. HUBER(Bayernwerk, Germany)


ADDRESS FOR CORRESPONDENCEEuratom Supply AgencyRue de la Loi, 200B – 1049 Brussels

OFFICE ADDRESSrond-point Schuman, 3B – 1040 Brussels

TELEPHONE32 (2) 299.11.11

TELEX21977 COMEU B

TELEFAX32 (2) 295.05.27

INTERNEThttp://europa.eu.int/en/comm/euratom/euratom.html

FURTHER COPIES OF THIS REPORT ARE AVAILABLE ON REQUEST,

SUBJECT TO AVAILABILITY, FROM THE ABOVE ADDRESS.


ANNEX 1

Natural uranium feed contained in fuel loaded into EU reactors andnatural uranium delivered to utilities under purchasing contracts (in tU)

YEAR FUEL LOADED DELIVERIES% SPOT

DELIVERIES

1980198119821983198419851986198719881989199019911992199319941995199619971998

9 6009 000

10 4009 100

11 90011 30013 20014 30012 90011 80015 40015 00015 20015 60015 40018 70018 40018 20018 400

8 60013 00012 50013 50011 00011 00012 00014 00012 50013 50012 80012 90011 70012 10014 00016 100

15 900 15 600(*)

15 800

(4)10.0

<10.0<10.0<10.0

11.59.5

17.04.5

11.516.713.313.711.321.018.14.4

126

Total 263 800 248 500

(*)See footnote 1 on page 16.


ANNEX 2

ESA average price for multiannual and spot contracts involving natural uranium

YEAR MULTIANNUAL CONTRACTS SPOT CONTRACTS EXCHANGERATE

ECU/kgU US$/lbU3O8 ECU/kgU US$/lbU3O8US $ PER ECU

1980198119821983198419851986198719881989199019911992199319941995199619971998

67.2077.4584.8690.5198.0099.7781.8973.5070.0069.2560.0054.7549.5047.0044.2534.7532.0034.7534.00

36.0033.2532.0031.0029.7529.0031.0032.5031.8229.3529.3926.0924.7121.1720.2517.4815.6315.1614.66

65.3465.2263.6567.8963.4151.0946.8939.0035.5028.7519.7519.0019.2520.5018.7515.2517.7530.0025.00

35.0028.0024.0023.2519.2515.0017.7517.2516.1312.199.689.059.619.238.587.678.67

13.0910.78

1.3921.1160.9780.8900.7890.7630.9841.1541.1821.1021.2731.2391.2981.1711.1901.3081.2701.1341.121

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