Nuclear power for peace

North and South Korea have never oficially ended their conflict, and the demilitarised zone between North and South Korea has for a long time been seen as a potential flashpoint. North Korea's hardline communist ideology, and its lack of political contact with other governments , meant that other countries were very concerned about the possible implications of North Korea developing its own nuclear programme. When surveillance satellite imaging provided evidence of a covert nuclear programme in the mid 1990s the international community had to search for a way to persuade the North Koreans to give up their programme.

The KEDO project is an international security project intended to meet non-proliferation objectives by transforming North Korea's programme. Work on a reprocessing plant had reached an early stage: that was halted. The graphite-moderated reactors originally planned for the Nyongbyon site will be replaced by LWRs under international safeguards, so that North Korea will not be able to produce weapons grade plutonium. A parallel part of the project has been to provide North Korea with fuel oil as an alternative source of energy until the first of the reactors is completed.

It has been a long, slow process, but progress is being made. Following preparatory work on the site, preconstruction activities were started in February 2000. Following this increase in the pace of construction work the number of workers has increased from 200 to 600, and it will peak at a few thousand.

The discussions started in December 1995, when it was agreed in principle to supply the two LWRs, each of 1000MWe, to North Korea. This was associated with the development of protocols for communication and transport and people to and from North Korea. Part of the 1995 Agreement was that North Korea would have to achieve full compliance with the International Atomic Energy Agency safeguards before the key nuclear components can be delivered.

Meanwhile, negotiations have been carried out between the Korean Peninsula Energy Development Organisation (KEDO) and the Korea Electric Power Company (Kepco) on the turnkey contract for design and construction of the plant itself, which will be based on the Korean Standard Nu clear units at Yonggwang and Ulchin. These are in effect Combustion Engineering System 80 units.

Kepco started the work of ground breaking in August 1997, with site grading, the construction of access roads and facilities for on-site workers, and large construction equipment brought to the site. The chosen location was Shinpo in Kumho district, on the east coast 100 miles north of the demilitarised zone. According to Kenji Nakano of KEDO, construction work at the site is progressing well. The mountains have almost been levelled, the living and working facilities have been built. KEPCO has removed 2,250,000m3 of rock and soil from the mountainside. Large rock from the excavations has been stockpiled for future use in building the breakwater and barge docking facility that will form an intake channel to obtain water for cooling and a safe docking facility for boats transporting materials to the site.

Kepco has also developed an aggregate site at the Namdaechon River, 15km from the LWR site. This site will provide aggregate for concrete batching during the project. The company has also begun installing a pipeline to transport construction water from the Namdaechon River to the site.

FINANCING

The key element to making further progress was to make arrangements for the finance. This was largely resolved in December 1999, when a $4.6 billion turnkey contract between KEDO and Kepco was signed. The Export-Import Bank of Korea agreed to carry 70% of the cost, and the Japan Bank of International Co-operation (JBIC) committed $1 billion in loans. These two do not cover the whole of the cost of the project, and KEDO is trying to resolve the funding shortfall.

The full status of contributions to the KEDO funds is listed in the panel. The European Union, through Euratom, has been giving an annual grant to KEDO since 1997. The value is E75 million per year. This grant ceases at the end of 2000, but Euratom and KEDO are currently in negotiation for a renewal. The first session of these negotiations was held in Seoul in July 2000, and the second meeting was held in Brussels in September.

At the end of February 2000, KEDO and Kepco called a procurement seminar for potential bidders. Kepco has identified its preferred bidders, but the choice has not been finalised. As a result, in September Kepco was not yet in a position to indicate which of the bidders were likely to be successful.

The key question – that of when the units will commence operation – is still not yet answered, and it will depend on the successful development of the protocol for delivery and the construction schedule.

The first unit is expected to commence operations 85 months after the start of reactor construction. However, one of the biggest outstanding issues is that of nuclear liability protection. The issue of how such protection affects sub-suppliers must be resolved before any equipment can be shipped.

The next milestone is setting up the performance protocol. Negotiations for this have not yet been set up.

Co-operation and its consequences

There have been a number of consequences – both expected and unexpected – of the co-operation necessary for this project. Construction workers on the site are from both South and North Korea. The joint work necessary has resulted in the workers gaining a better understanding of each other's culture and work practices. It has also been necessary to allow much greater communication between the two peoples.
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