CHAIR —I welcome Senator Carr, the Minister for Innovation, Industry, Science and Research, and Mr Mark Paterson and officers from ANSTO. Minister or officers, do you wish to make an opening statement? Minister?

Senator Carr —No.

CHAIR —Mr Paterson?

Mr Paterson —No thanks, Chair.

CHAIR —We can begin straightaway with questions then.

Senator EGGLESTON —I have asked about ANSTO at the last two lots of estimates, of course. The plant at Lucas Heights, I understand, has been closed for 11 of the past 14 months. Is that the case?

Dr Cameron —Yes.

Senator EGGLESTON —What has been the ongoing—

Dr Cameron —As you know, the very last time the plant was shut down for about 10 months for an issue to do with fuel, which is now resolved. So the plant is currently operational.

Senator EGGLESTON —It is currently operational. There was a problem, however, with a water leak, was there not?

Dr Cameron —That is correct. There still are ongoing investigations into the best method to deal with the seepage that we have from the light water into the heavy water, which is an internal problem within the reactor.

Senator EGGLESTON —Can you provide us with a little bit more detail on that? Obviously heavy water is important in terms of the development of isotopes and the general use of this facility, but how is it that light water, so-called—and what is light water? Is that ordinary water or water without the addition of hydrogen?

Dr Cameron —Yes, certainly. I am very happy to give the background. The light water is ordinary water which is used to cool the reactor. It is pumped in the bottom and out the top and acts as a coolant. At the bottom of the reactor pool there is another vessel called the reflector vessel, which sits directly round the core. The purpose of the reflector vessel and the heavy water in that reflector vessel is to reflect the neutrons back in so we get maximum use of neutrons. There has been some seepage of the ordinary water in the pool into the reflector vessel. That is not a safety issue; it is just an operational issue for us. Over a period of time, it degrades the purity of the heavy water, and so we lose some neutron flux, and we have been looking for about a year now at the best way to resolve that. During the shutdown there was a partial solution to that problem which was partially successful, but we are looking for a more final disposition of that issue. The responsibility for finding that disposition is totally with the reactor vendor, INVAP.

Senator EGGLESTON —Thank you. The most important role, I suppose, of the reactor is to produce isotopes for medical use in Australia. I asked some questions about that in the last lot of estimates. Could you perhaps provide us with some information about the production of medical isotopes at the present time. Are you meeting Australia’s needs at the present time, and what isotopes are being produced, of course?

Dr Cameron —Yes, I think we are meeting Australia’s needs. The last cycle of the reactor worked, as usual, for 26 days. During that time, we did 55 irradiations. We essentially irradiated all the isotopes that we need, except for molybdenum-99. We are continuing to import molybdenum-99. That is not an issue to do with the reactor; it is to do with the fact that we are at this stage commissioning a new molybdenum-99 plant. We took the opportunity of having a new reactor to build a new plant, and that plant is going through a hot-commissioning phase, which we hope to be completed by Christmas. So we hope that early in the New Year we will be in full production of indigenous molybdenum-99. Currently we import that.

Senator EGGLESTON —Where are you importing it from?

Dr Cameron —Mainly we import it from South Africa.

Senator EGGLESTON —Are there any problems with the reliability of the South African supply?

Dr Cameron —From time to time we get a number of problems. It could be that they have had a production problem themselves, it could be that they are shut down for regular maintenance, as has occurred recently, or it could be that sometimes we have radiopharmaceuticals offloaded from planes so they do not make the transport. About every two weeks we have some sort of problem with import. We are nearly always able to recover that by bringing our staff in and working very long hours to see if we can supply, even though we get late or partial deliveries, and generally our delivery in full on time is about 97 per cent or 98 per cent.

Senator EGGLESTON —And this is mostly from South Africa?

Dr Cameron —It is mostly from South Africa.

Senator EGGLESTON —You mentioned other sources for molybdenum-99. What other countries supply you with this isotope?

Dr Cameron —Generally around the world there are very few suppliers, and that is why the OPAL reactor is so important. There are about four other major suppliers in the world, which are all operating with very old reactors, and some of them are coming near the end of their life. So it is very important that we have our own indigenous supply. That issue will become increasingly serious over the next few years. When we are operating our own molybdenum production next year, we will also have the capability of helping out some other countries which are facing shortages.

Senator EGGLESTON —Who are the other four main suppliers?

Dr Cameron —The other major supplier is Nordion, which is in Canada. There is a major supplier in Europe from the Petten reactor and a group called IRE, which is a radiochemical company that sources from a number of reactors currently. The Petten reactor is shut down, and they are now sourcing some from France and some from elsewhere. Then in Argentina there is also a supply which is not in that major league but is a significant supply nevertheless.

Senator EGGLESTON —What specifically is molybdenum used for? Is it for imaging or treatment?

Dr Cameron —Molybdenum itself is not used directly. What happens to molybdenum is that it is loaded into a generator. The generator is supplied to a hospital or a nuclear medicine centre. In the course of its decay, molybdenum decays into technetium-99m, and it is technetium that is usually injected as a diagnostic. Technetium provides something like 80 per cent of the diagnostic needs of the nuclear medicine community.

Senator EGGLESTON —Thank you. You mentioned a new plant. Have you received adequate funding for that? Given that you had a cut to your budget in the May budget, how are you funding that new plant?

Dr Cameron —Yes, that plant is funded out of capital. We have had no cuts to our capital budget, so there is no difficulty in completing that plant.

Senator EGGLESTON —I understand that you are involved in the construction of cyclotrons at Lucas Heights. Is that not the case?

Dr Cameron —That is correct.

Senator EGGLESTON —And they are used to produce traces used in PET scans. But I have a comment that the construction of the cyclotrons was not put to tender in a competitive market. Is that the case or not? How is that cyclotron-building program being funded?

Dr Cameron —Can I give you just a little bit of background. We were the first in Australia to produce FDG, which is the main PET isotope you are talking about. We did that out of our national medical cyclotron at the Royal Prince Alfred Hospital. It was never really designed for that purpose, and it became increasingly uneconomic to do so, so we stopped supplying FDG some years ago.

However, there was still a big demand in the market for PET isotopes, and a number of hospitals and others approached us, so we decided to re-enter that market. We announced that we would build a cyclotron to produce that isotope. The process was we had discussions with all the major players in the market. We had discussions about partnerships with a number of the local players as well. We had, essentially, estimates from the major manufacturers of cyclotrons as to what it would cost, but what we were looking for was really the best product for the Australian market. We took all that information to our board, and the board made the decision that PETNet, which is the major brand of PET isotope suppliers around the world and has the best reputation for reliability and innovation, was the right group for an innovative organisation such as ourselves to partner with.

Senator EGGLESTON —I would just like to ask you a question about your workforce. In Dr Switkowski’s 2006 report on the viability of a domestic nuclear industry, he identified manning as one of the key issues. As a consequence of the budget cuts which were made to ANSTO, I understand from previous answers to questions that you cut back on your training program. Could you tell me where we are now with training of people to work in the nuclear industry and the nuclear medical industry in Australia?

Dr Cameron —Yes. Obviously, training and staff development is a very important issue for us. That arises because there is no indigenous course in nuclear engineering in Australia or in some of our core areas as well. We used to be able to rely on recruiting people from overseas, but with the global expansion in nuclear, particularly in nuclear power, it is increasingly difficult, if not impossible, to do. So we do put a lot of effort into recruiting graduates and other staff and developing them internally, plus we also use secondments overseas for that purpose. So we continue to put a lot of effort into that, and we do not see ourselves going back on that process.

Senator EGGLESTON —Thank you. The only other question I would ask you is about ANSTO’s plan to add a new store for radioactive waste on site by February next year because of the delays by the federal government in establishing a federal nuclear waste dump elsewhere. Would you like to provide us with some information about that?

Dr Cameron —Yes, I welcome that opportunity, because that story has been incorrectly reported a number of times. We store nuclear materials on site. That is not radioactive waste; that is nuclear materials. Nuclear materials are distinguished from radioactive waste. They are covered by the safeguards act of things that we have to look after appropriately. Currently we store them in two or three locations on site. What we wanted to do was build a single store where we could put all that material. So we made an application under the EPBC Act for a nuclear materials store, and that is just to centralise our storage of existing nuclear materials. However, one advantage of doing that is that it does create some space, and that space can be used for storing radioactive waste. We are, of course, very much hoping for the development of a radioactive waste repository as soon as possible, and this does give us a little bit of space to continue to store the waste safely on site, pending that repository being established.

Senator EGGLESTON —The chair has ended my time, but I may have some questions to put on notice for you.

Senator LUDLAM —I might just perhaps continue on the line that Senator Eggleston was pursuing. Can you confirm for us that you do not think that your referral under the EPBC Act for the nuclear materials store should qualify as a nuclear action and be caught under EPBC?

Dr Cameron —That is correct. There is a requirement under the act to define whether or not it is a controlled action under the act. Our judgement is that because of the nature of what we are doing it would not be a controlled action, but, nevertheless, we have to put our submission, and that determination is made by the department. The department has notified us that it agrees with us that it is not a controlled action.

Senator LUDLAM —Why would the construction of a nuclear materials store not be, in your view, a nuclear installation under the act?

Mr McIntosh —There are two things to be satisfied under the act. For it to be a controlled action, it must be a nuclear action and it must be likely to have a significant impact on the environment. We said that it was a nuclear action but because of the controls in place it was unlikely to have a significant impact on the environment, and the department of the environment has agreed with that assessment. So we are not disputing it is a nuclear action; what we are saying is it is a nuclear action but not a controlled action.

Senator LUDLAM —Is it not the case, though, that while you are consolidating the storage of nuclear materials in the new store that is yet to be built you will be moving waste materials into places where they have not been stored before? Is that not a consequence? Did I misread what you have said before?

Dr Cameron —No, that is correct; but, of course, we manage radioactive waste and nuclear materials on our site every day of every year, so there are inevitably movements across our site. The determination under the act was whether there was any likelihood of an environmental impact. With the controls which we have in place, there has never been, and there is not likely to be, any environmental impact, and that was an argument which was accepted.

Senator LUDLAM —Can you give us a bit of a sense of the costs, or the annual maintenance and running costs of the new reactor?

Dr Cameron —Yes. The annual operating costs are around $10 million.

Senator LUDLAM —What were the costs of the shutdown? Have you quantified the overall costs of the 10- or 11-month shutdown of the reactor?

Dr Cameron —Yes, we have. Those total costs amount to approximately $14.4 million. However, of that amount, $4 million relates to the costs of importing isotopes; about $4.3 million relates to the cost of new fuel, which is still a contractual issue that we are dealing with between ourselves and the reactor vendor; and about $6 million is related to the loss of income that we might have had if the reactor had been operating and we had been producing isotopes.

Senator LUDLAM —So what is the status of your negotiations with INVAP over cost recovery and liability issues?

Dr Cameron —Well, those are being conducted under the contract. The contract has the appropriate remedies and processes that we have to follow for dealing with notification of defects, discussion with the reactor vendors and how that goes, and we have followed the contract and sought appropriate legal advice on doing that. Clearly, initially our view was that the principal aim for us was to resolve the issues as soon as possible. Now the issues of the fuel are resolved, we still are working with the reactor vendor on the issue of the seepage that we discussed earlier, but we are well into the process of negotiation. Those are obviously commercial negotiations, but we will be applying the terms of the contract rigorously.

Senator LUDLAM —Do you have an expected time when those negotiations will be concluded?

Dr Cameron —We would expect that certainly within this financial year we will complete those.

Senator LUDLAM —Okay. Just moving on, can you give us an idea of the current status timelines and plans for the decommissioning of the former HIFAR reactor on the site?

Dr Cameron —Yes, the process with the HIFAR reactor is it was shut down in January time. We then went through the first stage, which was to remove the fuel and heavy water and some of the other rigs. At that point, really it does not constitute a reactor anymore. We had to apply for changing from an operating licence to a possession and control licence. We made that application to the regulator for a possession and control licence. That possession and control licence has recently been granted. A possession and control licence allows us to what we would call get the reactor into safe enclosure, and that is a process that we are going through now. When that has been done, then we will apply for a licence to decommission it.

Senator LUDLAM —Decommission means demolition—cutting the building up and—

Dr Cameron —Yes, that will be restoration essentially to a greenfield site.

Senator LUDLAM —Okay. Great. What became of the fuel and heavy water from the HIFAR reactor when that was removed?

Dr Cameron —The fuel is removed and then it is actually spent fuel. Under our contract with the United States, that spent fuel will go back to the United States and there will be no waste returned to Australia. We are planning that final shipment for next year, so next year the final lot of HIFAR fuel will have gone from the site. So there will be no more spent fuel from the HIFAR reactor on the site. The heavy water is in the process of the negotiations with Argentina. We have arranged that they will take the heavy water from the HIFAR reactor. They have a plant in Argentina where they can repurify it and, therefore, reuse it.

Senator LUDLAM —When do you expect that last shipment to go out to the United States?

Dr Cameron —It will go out next year. For reasons of security I am not at liberty to disclose the actual date, but it will be in the first half of next year.

Senator LUDLAM —And it is the case that the material that is sent to the United States—we are not contracted to return any of the spent fuel that might have gone to France or to Scotland—is contracted to return?

Dr Cameron —Yes, that is correct. This is American-obligated uranium. Because it is American-obligated uranium, the spent fuel goes to the United States, and there is no waste to return to Australia.

Senator LUDLAM —So if we could go back perhaps to where we began, do you believe that you have the capacities and facilities to manage the waste and the other associated radioactive materials on site indefinitely?

Dr Cameron —We can make provision to do that, but currently our existing radioactive waste store probably has about two years left in terms of capacity. So we are looking at a number of methods to make better use of that capacity. We are doing some supercompaction, and that will reduce our waste volumes, but at some point we will have to decide whether there is a need to build another building.

Senator LUDLAM —In terms of the capacity that you are freeing up or you are proposing to free up with the new facility that was announced last month, how much more time much does that weigh?

Dr Cameron —That essentially gives us about two years.

Senator LUDLAM —Does ANSTO have first jurisdiction over the nuclear materials that are returned to Australia from France or from other parties?

Dr Cameron —The material returned from France and the UK is waste from the reprocessing of spent fuel that was sent overseas from ANSTO, so therefore it is ANSTO’s waste material.

Senator LUDLAM —And can I just confirm, apart from the material that is scheduled to be sent to the United States, there is no other spent fuel on site at this time; everything has been sent overseas?

Dr Cameron —In terms of the HIFAR reactor, with this next shipment, all that waste will go overseas. We had another small reactor called Moata, which was a reactor which we used for experiments and some irradiations. There is some spent fuel from that reactor as well. We intend to ship that as well next year. In addition, of course, OPAL is beginning to produce spent fuel. Each time we shut down we change about one or two fuel elements. The intention is that all that will go in a shipment to the United States for the first 10 years of operation.

Senator LUDLAM —Is the OPAL fuel American obligated, or was that eventually to return to Australia?

Dr Cameron —No, that is American-obligated uranium.

Senator LUDLAM —So the fuel from OPAL is not intended to remain in Australia eventually once it has been reprocessed?

Dr Cameron —Let me just explain that. The Americans have an arrangement called the foreign research reactor take-back program. That program was due to expire, I think, in 2006, and it was extended for 10 years. So up to 2016 that allows for all spent fuel from our reactor to go back to the United States. After 2016 it will either be extended again or we will have to look for alternative arrangements.

Senator LUDLAM —We had better move on. We have a fairly short time. Has ANSTO been involved in discussions about siting for a nuclear waste facility in the Northern Territory or elsewhere?

Dr Cameron —ANSTO has had a role for a number of years in providing advice to the relevant department on issues to do with criteria that might need to be satisfied for siting, design of nuclear waste stores, issues to do with management of nuclear waste and what you need to do in terms of packaging or repackaging. So we provide technical advice to the department on those issues.

Senator LUDLAM —And it is your understanding that the nuclear waste facility that is intended there would be for a store for intermediate-level waste but also a long-term repository for the old reactor core and the spent fuel after it is returned?

Dr Cameron —Yes. Government policy, both the previous government and the existing government, is that it will be co-located—a radioactive waste repository and an intermediate-level waste store.

Senator LUDLAM —When are you anticipating the return of the fuel from France?

Mr McIntosh —Can we just go back to the previous question? It is a store for the intermediate-level waste, including the returned waste from the spent fuel, which would be co-located with a low-level waste repository. There is no proposal for a repository for the reprocessing waste.

Senator LUDLAM —There is no proposal for a repository for the reprocessed waste returned from France?

Dr Cameron —The waste returned from France will go to the intermediate-level waste store.

CHAIR —Senator Forshaw.

Senator FORSHAW —Have you concluded?

Senator LUDLAM —No, actually. However, I will come back afterwards.

Senator FORSHAW —I wanted to ask one question in regard to the negotiations with INVAP, and I apologise for coming in, but I have been tied up in other estimates with another committee, so I hope I am not asking a question that may have been asked before. You said you are in negotiations currently with INVAP with respect to if I can call it difficulties that have been encountered in recent times. Are you able to provide me—you can take this on notice if necessary—with details of how much compensation, level of payment, has been made by INVAP to ANSTO or the extra costs that they have had to meet to remedy the previous problems that were discovered after the construction?

Dr Cameron —There are a number of issues here. Perhaps I could take them one at a time. Firstly, the contract is very clear that the responsibility for remedying the defects lies with the reactor vendor and all costs associated with that remedy lie with them as well.

Senator FORSHAW —You can take it, as you would know, Dr Cameron, that I am familiar with the contract, as much as we were able to see of it.

Dr Cameron —No, I just thought for the record, Senator Forshaw, it was worth saying.

Senator FORSHAW —Yes, sure.

Dr Cameron —The second issue is that of course we are assisting in that process and so it is to our advantage to work that through as quickly as possible, so there will be time from our staff involved in that, but I think we have also made the point in previous estimates that in the commissioning period that we are still in with the reactor there is no penalty for business losses. That is not unusual. This is a complex piece of equipment. The equivalent German reactor took four years to commission. We expect to do it in two years. You are aware that the Large Hadron Collider in Europe is down for a long period of time. All these complex pieces of equipment take time to get working optimally. So in that period of time, no reactor vendor will take any penalty for business losses. If they were to do it, they would simply add it to the contract price; we would end up paying for it anyway. So during the period of commissioning there is no compensation for business losses. We are pursuing, though, with our insurer, Comcover, whether we are covered for business losses. So we are negotiating with INVAP and we are pursuing an insurance claim—

Senator FORSHAW —What were those business losses? I do not want to take the time of the committee. It might be better at the end if you take it on notice and give me a fuller report. I have not got the time to get all the detail out now, but I am aware of the problems that arose during construction. The holes, I think, were drilled in the wrong place, or words to that effect, if I could put it in layman’s terms. I am interested in getting a detailed analysis, a report on those repairs, costs that had to be met and who met them for the major problems that have arisen in this process.

Dr Cameron —I think I can tell you what I said earlier: that any defect is the responsibility of the reactor vendor, and they bear the costs of fixing it. It was only an issue of time.

Senator FORSHAW —Yes, but do we know how much?

Dr Cameron —It would not be reasonable for us to go and say, ‘We want to know all your costs.’ That is entirely up to them. We have a performance contract that requires them to perform. What we are looking for all the time is whether they are performing according to the contract, but we have not gone into the details of how much it costs them to do that.

Senator FORSHAW —Are you saying that ANSTO does not know, for instance, that when the faults were discovered some time back during construction, and there had to be major repairs and new work done, what the equivalent cost of that might have been? I think it is important that we know. I take the point that the vendor has to make good, has to deliver the product that was contracted for, but it is a project that was estimated to cost $300 to $400 million—I cannot remember the exact figure now—and if we find that during the whole process, whilst recent problems had been encountered after the reactor was started up, there are more problems which the vendor has to remedy, it is important for us that we should be able to find out the total estimated costs of fixing all of this, whether it is by government, INVAP or whoever. It goes back to one of the crucial issues that we looked at—

CHAIR —Senator Forshaw, we are running short of time.

Senator FORSHAW —It goes back to one of the crucial issues of whether or not the original contract and arrangements were actually suitable.

Dr Cameron —In answer to that, we had an original sum of money for this contract. To that was added some additional money, around $26 million, when we were in the 911 issue and we had extra security requirements. The government has provided the original contract sum plus the $26 million, and no other money. We have worked within that sum of money for all this period of time. It has been inflated according to the number of years we have gone but, other than that, there has been no additional money required from the government.

Senator FORSHAW —I put you on notice that I will pursue this again, because it is not in my view satisfactory to say that, because the vendor has to fix it, we are not entitled to find out the significance in terms of potential costs of those faults, and also the impact upon the delay and the time that this reactor has not been able to operate.

CHAIR —Thank you, Dr Cameron.

Senator ABETZ —Chair, could I have your forbearance to ask two discrete questions of ANSTO? I know that we are over time.

CHAIR —Two quick questions.

Senator ABETZ —Thank you very much. Dr Cameron, can you indicate to the committee how many scientifically qualified people ANSTO has had to let go or not replace as a result of the budget adjustments—I will make a neutral statement about that—but how many fewer scientists are currently being employed at ANSTO?

Dr Cameron —As we mentioned previously, our estimate was that we would have to let go some 80 staff. We are through that process now, and we have let go 80 staff. About 40 of those staff were from our operational side. Some of those are, of course, scientifically qualified as well; about 40 were from our research side—

Senator ABETZ —Can I truncate this? That which you indicated last time has happened? There is no change?

Dr Cameron —There is no change.

—All right, that is all I need to know on that one. I understand ANSTO has an accumulated reserve. If that is the case, is it in direct danger of Senator Carr’s ministerial colleague Tanner, who is running Operation Sunlight—I would have thought it would be Operation Darkness, quite frankly—for ANSTO. Nevertheless, do you have a reserve and is it under threat from being taken off you?

Dr Cameron —Clearly ANSTO is funded in a number of ways. We have our operational funding and our capital funding. Most of that capital funding is depreciation funding. That depreciation funding is how we refurbish and maintain and develop new facilities on site. There are proposals that would look at dealing with that depreciation in a different way so that agencies would not be funded under the current basis.

Senator ABETZ —That will have flow-on budget consequences?

Dr Cameron —That will have a flow-on consequence which is still to be worked out.

Senator ABETZ —Which might mean even more scientists having to leave.

CHAIR —Thank you Dr Cameron, for coming here today. I call the Commonwealth Scientific and Industrial Research Organisation.

[12.06 pm]