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By John Helmer in Moscow

Russia has been locked out of the largest nuclear power contract ever prepared in Africa, despite two years of promises from the South African government that it would invite Russia’s nuclear industry to join a competitive tender with the French and American companies, Areva and Westinghouse.

The lockoutappears to be regional in scope, blocking a bid by the Russians to build a nuclear reactor in Namibia, that country’s first. It also makes unlikely that ambitious schemes to draw Russian investment into uranium mining, ore concentration, and uranium fuel enrichment will materialize in southern Africa.

According to the SA utility Eskom, the first SA reactor to be commissioned would cost an estimated R120 billion ($15 billion); six power stations to produce an estimated 20,000MW would cost more than R720 billion ($90 billion), Eskom officials have publicly estimated.

The circumstances in which SA officials made their decision to exclude the Russians have been kept secret for weeks, while crisis talks were held by officials of the two governments, first in Moscow on February 12, and then in Pretoria on March 10.

The secret spilled out after SA Foreign Minister Nkosazana Dlamini-Zuma came to Moscow, along with the acting director-general of her ministry, Gert Gobler. A communique issued by Pretoria claimed their meeting was a routine session of the SA-Russia inter-governmental trade and economic committee (ITEC).

The communique claimed there was progress on nuclear power issues, although both Dlamini-Zuma, Gobler and their Russian counterparts knewthe reason for the meeting was Russian anger at being shut out of both the nuclear power and the aerospace sectors.

The conflict between Moscow and Pretoria in aerospace follows therecent breakdown of agreements for the Russian space agency Roskosmos to launch SA satellites, one of them the civilian Sumbandila satellite; and another, a South African military communications and reconnaissance satellite.

According to Dlamini-Zuma last month: “thetwo sides welcomed the establishment of the Joint Co-ordinating Committee for co-operation in the peaceful use of nuclear energy with a view to ensuring a proper and structured implementation of the agreement signed during the visit of President Vladimir Putin to South Africa in September 2006.”

This is a reference to agreements reached, not only during Putin’s visit to Cape Town, but to subsequent reiteration of SA promises to Prime Minister Mikhail Fradkov in March 2007, and at meetings in Sochi with Putin and other Russian officials in mid-2007.

Dlamini-Zuma also claimed there was no problem in the aerospace sector. She reported on February 13, after her Moscow talks, that “the two sides considered enhanced South Africa – Russia co-operation in the sphere of space research and the finalisation of a Memorandum of Understanding (MoU) between South Africa and Russia in this regard. “

On February 26, Gobler briefed reporters ahead of the visit of French President Nicolas Sarkozy. Leaks in the French press had earlier reportedthat Areva believed it was SA’s preferred bidder for the first nuclear contract.

Gobler referred to a paper leaked to his ministry in February, which disclosed the crisis that had erupted in Russian-SA relations over the cancellation of the invitation to Atomstroyexport (ASE), the Russian reactor builder, and thetit-for-tat cancellation by the Russian space agency Rosatom over agreements to launch SA satellites.

“Many of those allegations are totally unfounded, if not simply untrue,” Gobler said. “The real fact is the insinuations that there are major problems between Russia and South Africa is [sic] simply also not true.”

But Gobler admitted that the nuclear reactor bid was one “of the issues that were raised in that article [and] were up for discussion between the two governments.” The discussion, he added,had been “in a constructive and amicable spirit”, and “that issue is being currently discussed on a government to government level.”

Thereport on crisis between the SA and Russian governments, Grobler said, was a “list of questions, allegations and insinuations that obviously… involves a number of government departments and that I would not like to comment on this at that point because it needs further consultation with these departments who are accused or allegations are made.”

Although Gobler insisted on February 26that “the relations between Russia and South Africa are in fact very good,” he did not mention that First Deputy Prime Minister Sergei Ivanov was expected to visit Mbeki shortly after Sarkozy had departed.

Ivanov arrived on March 10, accompanied by two ministers:Yury Trutnev, Minister of Natural Resources, is co-chairman with Dlamini-Zuma of ITEC; and Yury Levitin, the Minister of Transport.

An announcement was issued in Pretoria by Vice President Phumzile Mlambo-Ngcuka just ahead of Ivanov’s arrival. This claimedthe visit was “within the context of South Africa’s priority to strengthen bilateral political, economic and trade relations with the Russian Federation. In this regard, relations between Russia and South Africa are driven through the Inter–sessional Intergovernmental Trade and Economic Committee (ITEC)”. The SA statement added that Ivanov was expected to discuss “the status of bilateral political, economic and trade relations between the two countries…[and] preparations for the ITEC that will be hosted by Russia in May 2008.”

Ivanov’s spokesman told Minewebthat the visit to the SA capital, where he met President Mbeki, was not decided until the week before their March 10 meeting. Trutnev said through a spokesman that he had no agenda for the visit, but was there to accompany Ivanov. Levitin told Mineweb, also through his spokesman, that he was accompanying Ivanov, and had no discussion bearing on the satellite controversy.

A newspaper report in Moscow, published immediately after Ivanov’s meetings with Mbeki and Mlambo-Ngcuka, cited a Trutnev deputy, Igor Maidanov, as saying”the supply of energy is top on the agenda.”Maidanov is the director of the Natural Resource Ministry’s international cooperation department. “Russia is aware of South Africa’s present energy problems. I believe that the delegation will discuss this issue in order to find ways to help.”

Russia’s nuclear assistancewas the cat Maidanov let slip from the bag SA officials were determined to keep shut.

As co-chairman of ITEC, Trutnev has been a public promoter of deals in the uranium mining, fuel processing,and reactor building sgements of the nuclear market. Russia “would invest as much as needed” in new nuclear power stations and joint uranium mining ventures, he told the SA audience last year; a sentiment repeated in SA communiques on the progress of ITEC.

A source close to Atomstroyexport (ASE) hasrevealed that early in March, just before Ivanov decided on his SA visit, officials from the SA Department of Minerals and Energy (DME) and the SA Embassy in Moscow had conveyed Pretoria’s message — the decision had been taken at the highest level not to include ASE in the nuclear tender.

An announcement from Levitin and the Russian Transport Ministry claimed the object of their visit to SA this month was to check on the operation of a Russian satellite navigation system, GLONASS;to inspect Russian aircraft modification and flight operating plans for the Antarctic; and to call at Novolazarevskaya, the 47-year old Russian scientific station on Queen Maud Land.

Roskosmos was also represented in Ivanov’s delegation. But asked to say if Ivanov had discussed the satellite problem, Roskosmos spokesman, Alexander Ryadinskiy,replied: “nothing extraordinary happened”.

Ivanov has not commented publicly on the substance or outcome of his SA talks. But a source close to him denied the purpose of his trip had been to visit SA. The source told Mineweb that Ivanov was intending to visit Russian operations in the Antarctic. He had stopped off in Pretoria on his way south, the source now says. Ivanov’s spokesman, Pavel Zinovich, told Mineweb that Ivanov’s talks had “nothing to do with the intergovernmental commission”.

Before he visited SA, Ivanov wason record as urging Roskosmos to do more for the GLONASS system and for Russian satellite launches.

Tseliso Maqubela, who heads the nuclear division of the DME, and Bheki Langa, the SA Ambassador, refuse to answer questions about the crisis triggered by the nuclear power exclusion, and the satellite launching spat.

In Moscow in March, junior SA officialstold the Russians they may be invited to bid for the second round of reactor contracts; these are scheduled to be tendered at the end of the 5-year construction period for the first reactors.

This is a sop. Nuclear sector expertsin SA and Russia acknowledge that, on account of the differences in technology, training protocols, site and fuel specifications between the French, American, and Russian nuclear reactor systems, it is very rare for a country to buy and operate more than one type of system. South Korea is the exception, however.

In a report this week on Russian marketing efforts for its nuclear power exports, Moscow analyst Yury Humber suggested that outside of China and India, where ASE reactors are dominant, “the competition for nuclear-plant sales may broadly play out along Cold War lines, with Russia grabbing contracts among former Soviet satellites such as Bulgaria and the Czech Republic and African allies including Namibia.”

He quoted US sourcesas confirming that “Russia is likely to be shut out of U.S. and Western European markets partly because of historical ties to local manufacturers, said Gene Clark, chief executive of U.S. consulting firm TradeTech. ‘The markets that Russia’s going for, I’m not too worried about,’ said Dan Lipman, senior vice president for nuclear power plants at Pennsylvania-based Westinghouse. ‘Myanmar’s not on my list.'”

A source close to ASE told Mineweb that Namibia, a major international mine source for uranium, has made no firm commitment to a reactor tender, or to inviting the Russians to bid.

A visit to Windhoek a year ago by Mikhail Fradkov, then Russia’s Prime Minister, proposed a variety of options for launching nuclear power generation for Namibia. One of the options reported by Mineweb at the time as discussed with Namibian President Hifikepunya Pohamba was a low-capacity floating nuclear power plant. “We want our own power plant utilising our own (uranium) resources… We are pleased the Russian Federation wants to assist Namibia in this field,” Pohamba was quoted as saying.

Last month, the Namibian government repeated its policy target to develop nuclear power generation, and the beneficiation technology to convert locally mined uranium for fuel.

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