Development of NECSA

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Development of NECSA The Research Era

• 1959
• The Atomic Energy Board (AEB) is instituted as an
  autonomous research organization to serve as
  South
• Africas national nuclear authority and for basic
  nuclear research.
• Cabinet approval for the four point nuclear
  research and development programme.
• Four Point Nuclear Programme
• Development and refinement of the RSAs nuclear
  raw materials
• Promotion of nuclear power
• Development and utilisation of nuclear technology
  in industry, medicine, agriculture and for
  research
• Basic research in support of the above

Mining
of
Uranium
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Development of NECSA The Strategic Era
1960 - 1989

Interior of Z-Plant
Koeberg fuel element
SAFARI-1 fuel element
Commissioning of SAFARI-1 research reactor (1965)
Vaalputs waste disposal facility becomes
operational (1986)

• Strategic Weapons Programme

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Nuclear Reactors
Koeberg Power Station
SAFARI-1 Research Reactor

• Commissioned 1984
• Generates electricity
• 2 Reactors
• 1 840 MW
• Fuel elements

• Commissioned 1965
• Research reactor
• 1 Reactor
• 20 MW
• Fuel elements

Two Koeberg fuel elements being prepared for
transport
Actual size of SAFARI-1 fuel element
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THE COMMERCIALISATION ERA 1989 - 2001

• Commercialization of Nuclear and related
  products
• Downsizing the organization
• Commercial and non commercial organizations

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THE NEW ERA

• November 2001 Senti Thobejane joins NECSA As CEO
• The Mandate
• CLOSE The Organization
• TURN AROUND the Business and Align To National
  Imperatives

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The Choice is to create a

• World-class African-based business
• providing Nuclear Technology excellence for
  sustained social and economic development.

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• January/February 2002 the New Vision is created
• February onwards all our Stakeholders are
  involved
• Minister
• Deputy Minister
• DME
• Board of Directors
• May June The Vision is Shared With All
  employees
• June Restructuring Committee is Constituted to
  Assist With Implementation
• Now The road Ahead

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The future belongs to those who prepare for it
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VISION 2010 ..A vision of growth.
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VISION
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Mission

• Applied research and development

• Commercial application of nuclear and associated
  technology

• Fulfilling the states nuclear obligations
  including safeguards agreement

• Contributing to the development of skills in
  science and technology

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Mission

• Total commitment to health and safety, and to
  care for the environment.

• Human Resource development

• Excellence in satisfying stakeholder requirements

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Action without vision is only passing time,
Vision without action is merely day dreaming, but
Vision with action can change the world.
Nelson Mandela
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• VISION 2010
• Is about creating our own future
• It involves decisions that will successfully
  guide our business
• Our aim is to take our business beyond the
  borders of our country
• We will economically manage South Africas
  Nuclear responsibilities on behalf of the
  Government

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Vision overview

• Harnessing market principles to optimize the
  utilization of our resources
• Government policy and legislation provide the
  framework for conducting our business
• We must build meaningful partnerships with all
  our Stakeholders
• Our competitive advantage is our knowledge-base
  and expertise in the Nuclear and related fields

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Key Elements critical for Success
Align structure with new Vision of nuclear
Create a strategy for turn around and growth
Focus on the core competencies in high technology
Align with the National imperatives

• Research and development

• Human resources development

• HIV / AIDS

• Social upliftment

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Managing the Risks Key Elements critical for
Success
Nuclear Institute
Ring fence Liabilities and Risks done on behalf
of the State

• Managing down government liability

Nuclear Waste management

• Exploit capability and capacity

• Research and development

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Innovation and Development Key Elements critical
for Success
Knowledge-based organization capability
Value adding research and development

• Focused on product development
• Contracted RD

National and nuclear imperatives

• Exploit capability and capacity

• For the good of the country

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Sustainable Growth
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Knowledge Based Organization
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Benefits of strategy

• Align with
• Innovation
• HRD
• Social upliftment
• HIV/AIDS

• Refocus on Core Competency of NECSA
• Managing down of State liabilities
• Ring fencing of NUCLEAR activities

• Accountability for actions
• Measures of Score-card system to pull people
  toward the overall Vision

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Benefits of strategy

• Focus on Core competencies
• Emphasize and package as Knowledge based
  organization

• Create entrepreneurial spirit
• Manage communication.
• Transformation built on trust

The style in which we manage the integration
process will set the tone of the new organization.
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Vision 2010 10 YEAR IMPLEMENTATION PLAN
Phase 1
Phase 2
Phase 3
Turn around
consolidation
growth
1988
2004
2002
2007
2010
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OUR CHALLENGE TO CREATE A SUPPORTING
ORGANIZATION A representative Restructuring
Committee was appointed in May to facilitate the
process of implementing the new NECSA VISION 2010
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THE RESTRUCTURING PLAN
STAGE ONE

• All Divisions and Units internalize the NECSA
  2010 Growth Strategy and workshop their sections
  to

• Reorganize current divisions into defined
  business along Nuclear versus Non-Nuclear
  activities and Commercial versus Non-Commercial
  activities

• Create Cost and Profit centers

• Commence the review of policies and operational
  manual

• Establish an accelerated transformation Plan

• Develop and implement a sound financing structure

• Ring-fence commercial assets

• Corporatize HTP and NTP

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A practical approach to building a new
vision Leadership is ultimately about how we
can collectively shape our future Joseph
Jaworski
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VISIONARY LEADERSHIP
we have a clear sense of purpose,
notwithstanding the transition into a global
player of note and the fluidity of decisions
impacting our destiny. The organisation has
focus and will continue to add exemplary value to
the economy of South Africa.
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VISIONARY LEADERSHIP
we are already making headway and we are set to
remain a valuable leader in the field of nuclear
in terms of our business, research, partnering,
training, and community programs Necsa is
already a strong proponent of growth and
development in our country.
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Committed to our vision and values
were in your world.
Our vision and values define our identity as an
organisation as well as the operating ethics and
qualities that drive our performance. Ultimately
our values will define how we will achieve our
strategic intent to be the pre-eminent African
nuclear and related high technology business , of
a global stature.
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Our vision and strategic direction
With good corporate governance as our foundation,
our vision is to further transform the
organisation from one focusing only on our
current business, to being a successful
continental and global player. Here we are
guided by our strategic intent of being the
pre-eminent African nuclear and related high
technology business of global stature. Our vision
and strategic direction are continuously being
informed and influenced by what is happening on
the continent and around the globe.
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Organization model
Nuclear Activities
Commercial businesses
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CHIEF EXECUTIVE OFFICER
CEO OFFICE
CORPORATISED
NUCLEAR
CORPORATE SERVICES
CORPORATE SERVICES
NTP
NUCLEAR TECHNOLOGY
FINANCIAL SERVICES
HTP
NUCLEAR SERVICES
FACILITY MANAGEMENT
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THE NEW NECSA BOARD OF DIRECTORS
CHAIRPERSON Mr WR Jardine CEO, Kagiso
Media DEPUTY Dr PM Ngwenya
Exec. Director Phathani Consult Mr JF Brownrigg
MD WesternAreas/ Randfontein Ms L Dlhamini
Deloite and Touche ( Accountant) Mr P
Goosen Dept Foreign Affairs Mr H
Haricharun Dept Minerals Energy Ms MB
Madumise Madumise Consultants Mr AS Minty
Deputy DG, Dept Foreign Affairs Mr S
Motlhaloga Dept Minerals Energy Dr P
Mpikashe MEDUNSA Mr LDS Thobejane CEO,
Necsa
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MEET THE NEW EMC These are the persons who will
lead the organisation into the future..
Senti Thobejane CEO, Necsa
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Pule Tsatsi GM, HTP
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Don Robertson MD, NTP
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Karel Fouche GM, Nuclear Services
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Van Zyl de Villiers GM, Nuclear Technology
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Maphutha Diaz GM, Corporate Services
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Ayanda Myoli GM, Facilities Management
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Sybrandt van Vuuren Acting GM, Financial Services
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OUR CHALLENGE TO GENERATE WEALTH We have an
opportunity to use our skills and intellectual
capital to perform our mandate to grow and indeed
to generate wealth through Nuclear and related
technologies
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CONTRIBUTION TO THE RE-AWAKENING IN NUCLEAR
At the core of of NEPAD and the African
renaissance is the acceptance that Africas
people and their institutions have the capacity
to create, foster and maintain economic, social,
and developmental processes and practices that
define us as competent and proud citizens of of
the continent and the world on par with the best
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CONTRIBUTION TO THE RE-AWAKENING IN NUCLEAR

• In South Africa the nuclear knowledge trends have
  been following the same patterns as those
  internationally.
• The existing workforce is aging.
• The nuclear knowledge base is shrinking and
• The industry is not attracting the much needed
  young
• skilled and professional people to sustain and
  grow the nuclear industry.
• Knowledge management has become a critical
  success
• factor, within the nuclear industry in South
  Africa .

Our efforts with Vision 2010 are aimed at giving
life to our contribution.
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NUCLEAR TECHNOLOGY
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COLLABORATION

• Four proposals for collaborative research
  projects with local and overseas institutions
  submitted to NRF
• Growing interest in NTs proposal for a
  feasibility study on a SA synchrotron light
  source
• Hosting of African Neutron Diffraction Meeting
• High visibility at international conferences

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PBMR SERVICES

• Comprehensive safety review of kernel laboratory
• Lab coater operation well established
• Decommissioning plan for C3/C5 submitted to NNR
  in preparation for pilot fuel plant
• Radiation and Reactor Theory services continued
• Proposal for irradiation testing of fuel
  submitted to PBMR, but changes in their strategy

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NUCLEAR LIABILITIES AND WASTE

• The draft policy and strategy document on
  radioactive waste management was published for
  comment. Implementation would imply that a
  section of NLM be included in a new National
  Radioactive Waste Management Agency reporting
  directly to DME.
• Work on the extension of the pipe storage
  facility for spent SAFARI-1 fuel will be delayed
  following DEATs decision that a public scoping
  will be required before the project can be
  submitted for a license change request.
• Three consignments containing 360 low-level waste
  containers from KNPS were disposed of at
  Vaalputs.

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I A E A

• Progress with the quantification of the HEU
  containing waste in drums, which could not be
  included in the South African nuclear material
  declaration to the IAEA thus far, is good and the
  matter will probably be finalised within the next
  year.
• A Member State Support Programme (MSSP)
  cooperation agreement between South Africa and
  the IAEA was signed in Vienna. Initial focus
  will be on the development of safeguards measures
  for the PBMR.
• Necsas contributions to IAEA related programmes
  (Technical Cooperation, AFRA, borehole project,
  safeguards, training) over the past year featured
  prominently in the Ministers address to the
  Annual General Conference in Vienna.

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CONTRIBUTION TO THE DEVELOPMENT OF SKILLS IN
SCIENCE AND TECHNOLOGY
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THE STEF INIATIVE

• South Africa is faced with a number of
  challenges of which the following is the most
  important
•          Increase the level of competency
•          Encouraging young blood into the
  nuclear industry
•          Rectifying the inequalities of the past
•          Train and develop to build up the
  eroded knowledge
• base which to a large extent is a result of the
  brain drain
•          Develop research areas that are
  attractive and
• exciting to students

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THE STEF INIATIVE

• STEF what is it?
• The MOA between Necsa, NNR,
• PBMR, ESKOM
• Registered company --- subsidiary of Necsa
• What will STEF do ?
• Source and allocate funds for development
• National nuclear training strategy
• Nuclear industry skills audit
• What benefit will this programme bring to Necsa?
• The first agreement is with AREVA

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THE STEF INIATIVEcontd

• The MOA JV between Necsa / AREVA
• Focus on skills development in nuclear
• GOALS of the JV
•  a)   Training located in South Africa and
  provided by NECSA, AREVA or appointed service
  providers
• b)     Training provided in France
• c)     Training located in South Africa and
  dedicated to disadvantaged people
• d) Community Projects

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MARST PROGRAM

• University of North West M sc Radiation
  Technology students 25 students
• Post-graduate research projects 30
• Lecturers in Radiation protection at Wits
  University 4 annually

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• PSI

• CE appointed as Chairperson of Trust

• Restructuring

• Composition of Trustees

• Patrons of PSI

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B TEC

• Co-managed by Necsa
• Number of jobless person trained annually 700
• Annual contribution by Necsa R 50 000

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SOWETAN NATION BUILDING PROJECT

• Upgrading teachers in maths and science
• Teachers trained 800

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CONTRIBUTION TO REGIONAL DEVELOPMENT

• AFRA AND IAEA INITIATIVES
• Conditioning and safe storage of spent Radium
  sources Zambia, Zimbabwe, Morocco, Kenya
• Contract for Borehole Disposal Concept used for
  disposal of spent radioactive sources
• AFRA national coordinator and IAEA technical
  cooperation officer
• AFRA project coordinators

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FULFILLING THE STATES NUCLEAR INSTITUTIONAL
RESPONSIBILITY

• Manage and discharge Necsas nuclear liabilities
  on behalf of State
• Maintain, develop and utilise radiation
  technology and facilities as part of National
  System of Innovation
• Contribute to SAs role in the International
  nuclear community
• Develop and produce nuclear fuel according to
  National needs

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Commercial application of our nuclear and
associated high technology
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COMMERCIAL DEVELOPMENTS AND ACHIEVEMENTS

• 60 of all sales are on the export market
• The mechanical division was accredited as a
  supplier to the armaments counter-trade programme
• The radiation division NTP confirmed its position
  as a significant supplier of Mo-99 and NTD
  silicon
• The funding requirement of 67 for SAFARI-1 was
  surpassed through transfer pricing
• PBMR contract for the design of specialised
  valves

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• NTP received the State President Award for export
  achievement, and
• Technology Top 100 Award for the export of
  processed and manufactured materials
• R D contract with Dyneon for a range of
  high-value fluoronated compounds
• Sirius project produdtion facility for the
  manufacturing of 50 tpa nitrogen trifluoride that
  is used for manufacture of electronic computor
  chips
• Production of high quality xenon difluoride

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VALUE CREATION TOWARDS SUSTAINABILITY
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GROWTH PROJECTS

• PBMR

• BOC contract

• SILICON plant

• Water purification project

• Nordion contract

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Honing the competitive edge
BOC

• Necsa has signed a contract
• with BOC
• The plant is operating
• This contract will generate
• substantial income

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Honing the competitive edge
PBMR

• PBMR is important for the countrys
• and our future
• We will be actively involved in PBMR

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GENERATING NEW IDEAS AND PROJECTS

• New Value adding projects
• Focused R D
• Accessing employee creativity
• and ideas and rewarding them

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•   Other Projects
• .
• SSOME AREAS THAT MAY BE CONSIDERED ARE
• ü      Fluorine platform
• ü      Waste research
• ü      PBMR related projects
• ü      Fuel production capability and especially
  the possibility of partnering with BNFL in fuel
  production for Koeberg
• ü      NTP acquisitions to generate growth
• ü      Projects focused on Africa
• ü      Corporate Services and Facilities
  management
• rendering services outside the organisation.
•  

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CORPORATISATION
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When the Minister approved the restructuring of
necsa, she envisaged a process that included the
corporatisation of HTP and NTP as companies and
the introduction of the private sector into the
chemical side of the business
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NTP
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HTP
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HTP

• Mr Pule S Tsatsi was recently appointed as
  General Manager of HTP
• The Portfolio, comprising of PELCHEM, PELDEV
  AND PTS, had continued with lower Sales levels,
  which impacted negatively on Profitability and
  increased funding requirements.
• The corporatisation of the management unit was
  delayed due to the negative financial results.
• A Turnaround Strategy Savings was implemented
  and although the Year-end forecast funding
  requirement has improved, it is unlikely that
  Budgeted levels will be reached.
•  

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HTP SALES

• The lower Sales trend of the first quarter
  continued during the second quarter Sales were
  only 54 of Budget at R35.8m.
• All three Divisions contributed to this variance.
  
• The lower Sales is due mainly to the strong Rand
  (-R9.4m), lower F2 ,SF6 ,WF6 ,and Siziba sales
  failed in the Chemical Divisions, with similar
  tends in Apogee, Fabritech and Flosep.

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lower levels of Sales

• lower levels of Sales are forecast to improve
  slightly to Year-end,
• namely 63 of Budget at R154.7m (Budget R246.3m).
  
• The rate of exchange (ROE) movement accounted
  for loss of Sales of R22.4m .
• Volume and mix problems are export market
  related for Pelchem where there is an unhealthy
  dependence on the semi-conductor industry.
• Volume is the issue for PTS where the domestic
  market for fixed investment has lost momentum and
  the PBMR opportunities have not materialised.

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HTP CASH POSITION

• The Net Loss (R23.8m) during the second
  quarter and an increase
• in Net Operating Capital (R6.4m) resulted in the
  Portfolio requiring R28.5m funding (via NECSA
  internal overdraft).
• The Year-end forecast shows deterioration to
  R67.4m
• (Budget R18.7m) despite the Cash Savings program
  introduced.
•  
• Budgeted Capital expenditure of R69.2m has
  been delayed due
• mainly to the unfavourable financial results and
  cash crises.

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PROFITABILITY

• The lower Sales volumes compounded by the
  unfavourable ROE has
• directly eroded Gross Profitability and resulted
  in a Gross Loss of R9.3m (-26 on Sales) during
  the second quarter Only PTS achieved a Gross
  Profit.
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• HTP Overheads exceeded Budget by R1.4m (17)
  due mainly to
• the non-achieving of management risk of R1.4m
  budgeted for. At current Sales levels the
  Overheads are unaffordable at 26 of Sales
  (Budget 12).
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• HTP Net Loss before tax increased by R23.8m
  (Budget R4.2)
• Pelchem R13.8m,
• Peldev --R4.8m
• PTS ------R2.7m.
• The Year-end forecast shows deterioration to
  R78.1m, despite the
• Cash Savings program introduced.

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Turnaround strategy

• TARGET
• Short-term financial viability, including a ltR25m
  cash requirement
• for the current year-end. To achieve this,
• restructuring of the business process and
  organogram is required.
• capital restructuring will be negotiated with
  NECSA including the write off of losses to date,
• a reduction in NECSA overheads allocated and
• an even more intensive cost-cutting exercise.

• Revisit viability of all product, businesses and
  contracts.
• Break-even and better 2005 Budget targets.
• Corporatisation feasibility
• Exploitation of Intellectual Property
• Centralisation of various functions

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CURRENT FINANCIAL REPORT
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FINANCIAL OVERVIEW 2000 2003Rm
2000 2001 2002 2003 total
1.External sales growth 250 - 307 23 301 -2 356 18 42
2.Govt Grant Activities DD Severance packages 254 231 - 23 194 166 18 10 161 142 18 1 170 140 20 10
3.Reduction Loan reduction Interest IAEA TOAL GOVT GRANT - 33 45 5 337 -24 5 39 6 244 -17 3 36 - 200 6 233 32 - 435 -33
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Cash flow Situation and Organisation Efficiency
Measures
The relatively strong RAND, the cut in interest
rates, and a general global slump in business
has impacted negatively on our cashflow
position and has resulted in EMC having to take
the drastic measures all of us have
experienced to curtail non-critical expenditure
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Top ten export countries for the quarter are as
follows  
WHERE DO WE DO BUSINESS
Total exports for the year to date amounted to
MR92,2. (MR4,0 decrease on previous quarter).
Top ten export countries for the quarter
 
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RoES Y/E FORECAST AND BUDGETED FOR THE CURRENT
YEAR.
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NECSA FINANCIAL PERFORMANCE YTD(2003/9/30) (All
figures in R Million)
ACTUAL BUDGET
VARIANCE External Sales 151 119 217 442
(66 323) Operating Expenses 275 446 329
364 78 728 Net Profit (124 327)
(111 922) (12 405)
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Cash flow Situation and Organisation Efficiency
Measures
What are doing about it ?

• The CEO made a presentation to DME on the
  financial position of Necsa and the actions
  planned to combat the problem.
• This matter is a priority of the EMC.
• We must consider all possible actions for cost
  saving within our Divisions and also any
  initiatives / projects that can addvalue to the
  organisation

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Cash flow Situation and Organisation Efficiency
Measures contd

• The CEO will be driving a Revenue Diversification
  Plan for Necsa that will focus on
• (a) growing the Rand-based income, and
• (b) marketing all Necsas capabilities.

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• COMPEITIVE MACRO-ENVIRONMENT
• Hedging against the Rand / dollar dilema
• Covering our fixed costs in Rand
• Broadening our business case

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Some of the actions already identified to make
the organisation more profitable and effective are

• Reviewing The Business Plans Of Divisions
• Identifying areas of savings and productivity
  improvement
• Effective and Efficient Utilisation of resources
• Remove duplication
• Redeployment of under utilised staff,
• and not necessarily a cut back / retrenchment of
  staff .
• The CEO and Labour will discuss issues
• around ways to minimise job losses.

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• All management systems and procedures must be
  interrogated for inefficiencies , eg visitors
  security procedure,number of gates open at
  non-peak times, etc.
• In line with Vision 2010 there must be a drive in
  the organisation to create and identify
  strategic projects to ensure the long term growth
  of the organisation .
• The CEO will regularly report on the progress of
  the above organisation efficiency actions
• Due to the Knowledge-based nature of our
  organisation GMs are required to generate
  value-adding projects,
•  
•  

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OUR CHALLENGE TO CREATE A FAIR SOCIETY As well as
doing our business, we will harness our skills
and competencies towards contributing to the
creation of a fair society through the
implementation of equity, skills development, and
social upliftment
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• EMPLOYMENT EQUITY AT NECSA

• PRIMARY OBJECTIVES
• To promote equal opportunity and fair treatment
  in employment through elimination of unfair
  discrimination

• Implement affirmative action measures to redress
  the disadvantages in employment experienced

• Ensure equitable representation in all
  occupational categories and levels

• Ensure compliance with the Employment Equity Act

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NECSA PERSONNEL STRENGTH
30 JUNE 2003 30 JUNE 2003 30 JUNE 2003
WHITE BLACK TOTAL
Permanent 874 598 1472
Contract 12 36 48
Total 886 634 1520
30 SEPTEMBER 2003 30 SEPTEMBER 2003 30 SEPTEMBER 2003 30 SEPTEMBER 2003
Permanent 866 632 1498
Contract 33 42 75
Total 899 674 1573
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PERSONNEL STRENGTH PER GENDER AND RACE  
GENDER GENDER RACE
MALE FEMALE RACE
PERMANENT
WHITE 75.0 25.0 57.7
AFRICAN 80.3 19.7 36.8
ASIANS 72.2 27.8 1.2
COLOURED 65.1 34.9 4.2
TOTAL 76.5 23.5 100.0
CONTRACT
WHITE 93.8 6.3 42.7
AFRICAN 86.8 13.2 50.7
ASIANS - - -
COLOURED 100.0 - 6.7
TOTAL 90.7 9.3 100.0

ORGANISATION 77.2 22.8
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BLACK BUSINESS ENTERPRISES
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CHALLENGES FOR THE FUTURE

• Growth and Development
• Business development to exploit opportunities
• PBMR
• Sun energy silicon systems
• Expansion of radiation based products
• Expansion of Fluorine based chemical products
• Contract RD
• RERTR programSAFARI-1 conversion
• Green coal
• Corporatisation and growth of HTP and NTP
• Skills development and training
• Improvement of productive application of
  resources
• Restructuring and Tranformation

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• Necsas Positioning
• Alignment to DME
• Other Departments
• Political Positioning via interaction with
  Parliamentary Portfolio Committee and other
  entities
• Funding
• Necsa requires approx R 236 million additional
  governmental funding over next three years to
  address expanded institutional activities
• Legislative and Policy Matters
• PFMA
• King II
• Companies Act
• Upgrading of Site Security

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Thank you for the contribution you have made
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