Memorandum, Foreign Minister Azeredo da Silveira, Information for the President of Brazil, 'Nuclear Issues. Meeting at 13/02/78. Alvorada Palace.'

(Document 6)

MINISTRY OF EXTERNAL RELATIONS

SECRET- EXCLUSIVE

INFORMATION FOR THE PRESIDENT OF THE REPUBLIC

No. 060

Date: February 23, 1978

Subject: Nuclear issues. Meeting at 13/02/78

              Alvorada Palace.

                    Under the presidency of the President of the Republic, a meeting on nuclear issues was held on February 13 at 20:15, at Palácio da Alvorada. Those present were:

Minister of External Relations, Ambassador Antonio Francisco Azeredo da Silveira

Minister of Mines and Energy, Dr. Shigeaki Ueki

Minister-Chief of the Gneral Secretariat of the National Security Council, Brigadier-General Gustavo Moraes Rego Reis

President of CNEN, Professor Gervásio Guimarães de Carvalho

President of NUCLEBRÁS, Minister Paulo Nogueira Batista

Counsellor Ronaldo Sardenberg

Counsellor Sebastião do Rego Barros Netto

Lt. Colonel Glicério Vieira Proença Júnior

2.        President Ernesto Geisel opened the meeting by explaining that he wished to look back at nuclear issues with a view to his trip to the Federal Republic of Germany and the programmed visit of Carter to Brazil. He requested, therefore, Minister Ueki and the Presidents of CNEN and NUCLEBRÁS to make an exposé on the development of the Brazilian nuclear program.

3.        The Minister of Mines and Energy explained that the situation that existed at the time of the signature of the Brazil-FRG Agreement had changed and that, at the moment, the same number of reactors previously calculated for 1990 was no longer envisaged. He stated that our needs were of only 80% in relation to the period 1974/75.

4.        Next, he mentioned the situation of the Angra-I plan. Interventions were made by the Presidents of CNEN and NUCLEBRÁS. In sum, Minister Ueki clarified that despite the fact that the United States Nuclear Regulatory Commission had not yet released enriched uranium for Brazil, what worried him more was the timetable for the construction of Angra-I, which is running late. According to CNEN, not even the container to store the fuel is ready. It is in principle envisaged that the cold test for the Angra-1 plant could occur in November, when the enriched uranium would already be needed. President Geisel expressed the view that the United States would not fail to supply the enriched uranium and that if they did so, we could and should exploit the fact internationally. The authorities in the energy area agreed that the United States should in fact make the first supply, but that serious problems might arise when it came time to refuel of the reactor. It was clarified that the first refueling would occur one year and a half after the start of commercial operation of Angra-I.

5.         In this context, the hypothesis that the USA would commit itself to supplying Angra-I refueling was raised. Some informal conversations on the issue had already indicated the possibility of involvement of the FRG in the operation, since its reserves of enriched uranium are high (approximately 3000 tons) obtained through an offset agreement with the United States. According to Minister Ueki, the time to deal with the question was now, in order to allow time for the Germans to prepare the fuel elements appropriate for Angra-I.

6.       President Geisel said he would wait for Carter’s visit before taking a decision on this point, that he would talk with the Americans in good faith and in case Carter’s answer would not be reassuring, then we should deal with the FRG.

8. [number jump— no item 7 in original]   On Agra-II and III, Minister Ueki explained that just like Angra-I, both plants were running late. Angra-II is at the stage of the construction of its foundation (which is presenting problems); Angra-III is still at the earthwork stage. The building company is the same for Angra-I, Odebrecht, which, according to the President of NUCLEBRÁS, has not worked satisfactorily in the construction of the first plant. A debate between the Presidents of CNEN end NUCLEBRÁS ensued, with divergent views on the reasons for the delay of both plants. Minister Nogueira Batista clarified that Furnas, responsible for the civil engineering section of the construction of Angra-I, had taken the same job for Angra-II and Angra-III. In view of many problems that had emerged, including the fluxogram of decisions (many stages and institutions involved), a shortcoming that had been pointed out by the Germans, it was decided that NUCLEN would be responsible for the construction of the plants. Minister Ueki also mentioned the replacement of the President of Furnas as a possibility for better development of the work from now on.

9.          Three problems mentioned here in passing were raised:

a) the project to create a Foundation, with public and private participation, for the control of industrial quality – the President of the Republic was not totally convinced that a Foundation should be set up and said he would study the problem further;

b) equal fiscal treatment as that granted to hydroelectric companies: exemption of taxes and concession of prizes – there was also a negative reaction from President Geisel to this idea;

c) intention to renegotiate with the FRG the prices agreed in 1975, which had become too high in view of the rise of the value of the German mark – the President of the Republic was informed and considered that this problem was difficult to solve. He instructed the competent area to explore the possibilities and clarified that the issue should not be treated at his level.

10.             The problem of enriched fuel for Angra-II and Angra-III was then brought up.  President Geisel asked about the main aspects of the decision by the Netherlands Parliament on the issue. Minister Aeredo da Silveira explained that the basic difference between the decision of the Dutch Parliament and the agreement we had signed with the members of URENCO was the moment in which the international or “ad hoc” mechanism for the storage of plutonium should be negotiated. According to the understanding, it was envisaged that the mechanism would be ready before the supply of enriched uranium to Brazil. The Minister of External Relations also stressed the role that the Dutch Parliament had tried to assume, by claiming the right to follow the negotiations, and pointed out the difficulties that this would certainly cause to the Dutch Government in the negotiations with its partners at URENCO. He also informed about the growing German irritation with the Dutch hesitation and about the seeming willingness of the Bonn Government not the renew the URENCO Agreement.

11.                Next, mention was made to the convenience of expressing to the Germans, during the visit to the FRG, the Brazilian concern with the Dutch uncertainties and the consequent danger for the Brazilian Nuclear Program to rely on such an unsure source for the supply of the fuel needed for its nuclar plants. These arguments would be prsented to the Germans with the final objective of proposing the sale by the FRG to Brazil of an enrichment plant with the ultracentrifuge process, since this process was more economic that the “jet nozzle.” In 1981 the Germans would be released of their commitments with URENCO regarding the ultracentrifuge technology. Minister Ueki said that in case the FRG would agree to sell this process, we could go on toward the construction of a commercial enrichment plant.

12.              Regarding that possibility, several points were raised: a) President Geisel expressed doubt that what had been agreed at the Club of London would allow the FRG to sell the ultracentrifuge process to Brazil; b) the President of CNEN declared that the ultracentrifuge process is ideal for weapons purposes, but that the technology could be transferred to Brazil if we were to be considered a nuclear country by the Club of London; c) Minister Ueki pointed out the fact that Interatom, a German company, was a partner of Brazil and URENCO and that this could facilitate the obtaining of the ultracentrifuge technology; Minister Azeredo da Silveira recalled that in the case we would be able to obtain the ultracentrifuge technology, we might even sign the NPT in the case that this gesture became a decisive condition for obtaining the process. President Geisel agreed with this line and commented that we should make every effort to obtain a technology more developed than the “jet nozzle.”

13.             Asked about our needs of enriched uranium, the President of NUCLEBRÁS  said that these are of 5.800 tons until 1990. He clarified that we have 2.000 tons already contracted with URENCO and this amount can be elevated to 4.400 tons. Furthermore, the Brazilian production should be of 1.400 tons.

14.            Regarding reprocessing, the energy authorities said that the pilot plant, which will be built in Espírito Santo for environmental reasons, is officially foreseen for 2 tons/year, but its project allows for the construction of a plant for 10t/year. According to Professor Gervásio, but contested by Minister Nogueira Batista, a commercial reprocessing plant must have a capacity of 1550t/year.

15.              At that time, President Ernesto Geisel mentioned his conversation with Cyrus Vance, Secretary of State of the United States, about reprocessing. He summarized the Brazilian position on the matter, favorable to safeguards, and said he doubted Vance’s assertion to the effect that there were stages of reproccesing where effective control was impossible. In this regard, Professor Gervásio made a long technical explanation, concentrating on measurement aspects for control objectives. The President of NUCLEBRÁS, at the close of the explanation, recalled that the physical inspection carried out by IAEA was equally important, which increased the effectiveness of the safeguards.

16.            Finally, the Vance proposal regarding the thorium cycle was discussed. Once again it became clear the difference of views betweeen the President of CNEN (favorable to thorium and champion of the thesis that Brazil has enormous reserves of this metal)  and NUCLEBRÁS (more skeptical about Brazilian reserves). Minister Nogueira Batista expressed his opinion against Brazilian participation in the quadripartite agreement (FRG, USA, France and Switzerland) on high temperature reactors, believing that  any cooperation with the USA in the nuclear field would have negative repercussions, since it would certainly give the impression that we were embarking on an alternative to the Brazilian Nuclear Program. Professor Gervásio said that the United States was willing to return to cooperating with Brazil in the nuclear field and that FRG-USA cooperation in the field of thorium was more formal than real.

17.                The Minister of External Relations proposed that bilateral cooperation with the United States in the field of thorium be immediately increased and that we should again tell the USA that we are studying the possibility of joining the quadripartite; that we should study the financial and human resources implications that our adherence to the quadripartite would entail; and that the bilateral agreement with the FRG would be, in any case, the center of our activities regarding thorium, whether or not we joined the quadripartite.

18.               Finally, the possibility that NUCLEP, a subsidiary of NUCLEBRÁS for the manufacture of heavy equipment, would enter in an association with the German Krauss Maffei for the production of tanks in Brazil was mentioned. The issue was dealt with in a preliminary way. An observation that the fact that a company associate with NUCLEBRÁS would make armaments might provoke a negative effect was made. Generally, however, there was a positive reaction to the idea.

19.                  A discussion on varied topics that do not warrant being recorded ensued.

20.                  Among the several issues dealt with at the meeting, the following must be highlighted for their importance and because they merit reflection: a) the possibility of supply by the FRG of the recharges of enriched uranium for Angra-I. b) the supply of enriched uranium for Angra-II and Angra-III, and particularly the idea of trying to obtain the ultracentrifuge technology; c) the development of the thorium cycle and the possibilities of exploring the bilateral option Brazil-FRG; the option of the Quadripartite Agreement, or both, with the qualifications contained in paragraph 17 above; d) the association of NUCLEP with Krauss Maffei.

(Signed) Antonio F. Azeredo da Silveira

Minister of State of Foreign Affairs

SECRET EXCLUSIVE