Canada's Global Partnership Progress and Status Report IAEA Contact

Canada’s Global Partnership Progress and Status Report IAEA Contact Expert Working Group Far East Russia Workshop May 26-28,2010 Vladivostok, Russia Introduction Slide 1 Following the attack on the United States in September 2001, there was an urgent need to examine the risks of all potential terrorism acts including nuclear or radiological. At the 2002 G8 leaders summit in Kananaskis, under Canada’s leadership, the Global Partnership Against the Spread of Weapons and Materials of Mass Destruction was initiated. As an integral component of this initiative, the Russian Federation requested the international community’s assistance in advancing the elimination of its nuclear powered submarine legacy with the aim of eliminating the problem by 2010. Before the 2002 Kananaskis G8 Summit, Japan and the U.S. had already been assisting Russia with nuclear powered submarine elimination. Following the creation of the Global Partnership, Canada, Norway, the United Kingdom and Italy joined this effort. Canada has been actively engaged in dismantling decommissioned Russian nuclear powered submarines since August 2004. We should take pride in the progress that Russia and its international partners have achieved in NPS elimination. Slide 2 With today’s presentation, we will endeavor to update the Contact Experts Group members with the status of Canadian NPS programme activities here in the Far East. The presentation will review Canada’s NPS Programme Objectives, Funding, International Cooperation aspects, Far East Implementation activity and potential Future Works. Global Partnership NPS Program Objectives Slide 3 Having passed the turning point towards 2012, Canada reaffirms the commitment to its goal to "reduce the proliferation, environmental and security risks posed by Russia’s decommissioned nuclear submarines and spent nuclear fuel." Proliferation of nuclear materials is of primary concern. Later in the presentation, we will have the opportunity to also discuss the approach that Canada has taken to address some environment challenges that NPS dismantlement activities present. 1 IB82972416 Programme Funding Fiscal Years 2004 - 2012 Slide 4 The conclusion of a bilateral agreement with Russia at the Sea Island G8 Summit in June 2004 enabled Canada to conduct projects directly with the Russian Federation (RF). Under the agreement Canada implements the NPS programme through the mechanism of negotiated “Implementing Arrangements” direct with RF recipients. The total Canadian NPS programme funding contribution for Fiscal Years (FY) 2004 through 2008 was CAD $113.8 million. Project funding for Fiscal Years 2008 through 2012 is approximately $80.0 million CAD. The NPS program carries an overhead of approximately 5%. To date, Canada has negotiated ten total Implementing Arrangements (IA’s); six with the Joint Stock Company (JSCo) Shiprepairing Center Zvyozdochka and four with the JSC Far Eastern Plant Zvezda. The total funding obligation is approximately $180 million CAD. Total IA funding (IA#5, IA#7, IA#8, IA#10) for Far East based initiatives currently stands at $43.4 million. The planned ratio for Northwest versus Far East expenditures is in the order of 66%/33%. Canada additionally contributed $32 million to the Northern Dimension Environmental Partnership Support Fund in 2003 bringing its total commitment related to NPS remediation and elimination to approximately $210 million CAD. Slide 5 Implementing an international programme of the magnitude of the Canadian NPS dismantlement programme presents obvious challenges in regard to budgeting, funding and program execution control. To date, DFAIT has negotiated IAs with a total value of $177 million. The Canadian contribution funding profile since 2004 shows excellent programme execution. IAs averaged approximately 16-18 months for program implementation. Canada approached the execution of funds in a similar manner as the United States (U.S.), in that IA was negotiated as a fixed price with payment of funds in Canadian dollars not authorized until each agreed work package is completed via a milestone. To date, approximately $161 million has been expended, that is payment received by the shipyards. On average, DFAIT has expended ~$25 million per year in 2005 through 2009. Both JSCo Zvyozdochka and JSC Zvezda shipyards have demonstrated an excellent record of project implementation (maintaining cost and schedule). Note the Canadian approach places both currency risk and cost over-run risks squarely with the implementing shipyard. A significant component of Canadian program implementation is the role of Canada’s Office of the Inspector General who audit the recipient’s compliance with financial terms and conditions in each IA as well as to reviewing the overall programme management of the IA’s. The NPS programme has received excellent Inspector General reviews with a total of four audits completed and two more scheduled this year; one with Zvyozdochka (IA#6 and IA#9) and one with Zvezda (IA#8). 2 1ВИ2972416 Current Achievements Slide 6 The initial Northwest (NW) Canadian commitment for dismantling twelve nuclear powered submarines (2004-2008) was completed on schedule in March 2008. Twenty-two nuclear reactors from the eleven Victor Class NPS were de-fuelled at the JSCo Zvyozdochka shipyard in Severodvinsk and all eleven fully dismantled. One Typhoon Class strategic submarine, the largest submarine in the world, was also de-fuelled and dismantled in cooperation with the U.S. and Russia. It’s important to note that the Canadian NPS dismantlement programme is structured to maximize the use of shipyard infrastructure improvements that were funded under the U.S. Cooperative Threat Reduction (CTR) Program. A key element of the Canadian programme is use of the U.S. funded On-Shore Defueling Facility (OSDF) at JSCo Zvyozdochka and JSC Zvezda. In this regard as Victor Class NPS Hull #602 and Hull #606 in the Murmansk region (850 Nm from Zvyozdochka) were in reported poor technical condition, and could not be towed conventionally to JSCo Zvyozdochka for de-fuelling at the OSDF DFAIT decided to fund the transportation of both NPS as dry deck cargo on a heavy-lift vessel (HLV) from Shipyard #10 to Zvyozdochka. In August and September 2006, both NPS were successfully delivered to the shipyard using the “Transshelf’ HLV owned and operated by Dockwise Shipping B.V., Netherlands. In July 2008, upon Canada’s Treasury Board approval for Phase III of the Global Partnership Program activities, DFAIT initiated work on the dismantlement of two Yankee Class NPS with JSCo Zvyozdochka. Consistent with previous cooperative Victor Class NPS dismantlement in the Northwest, the Yankee NPS dismantlement IA included defueling, transportation of spent nuclear fuel (SNF) to PA Mayak and transportation of three-compartment units (3CU’s) from the shipyard to JSC Nerpa near Murmansk. The shipyard successfully completed the Yankee dismantlement work in March 2010. In February 2009, the “Typhoon business model” for tri party cooperation was again implemented to de-fUel and dismantle a second strategic submarine; the Delta III Class strategic submarine (SSBN 392). Under this IA, Canada funded the SSBN’s defueling and shipment of the SNF to PA Mayak. Canada’s contribution also included training and re-certification of shipyard workers to support reactor defueling operations. SSBN 392 was successfully de-fuelled March 2010. In the Far East, Canada agreed to support the Russian request to defuel and dismantle two Victor Class NPS (Hull #282 and #300) located in Kamchatka region. The two NPS could not be towed to JSC Zvezda using conventional methods safely and without risk to the environment given the significant distance involved. DFAIT therefore leveraged the experience gained with the HLV transport operation in the North-West and funded the transport of both NPS by HLV from Petropavlovsk-Kamchatsky to JSC Zvezda. 3 IB#2972416 Consistent with the Canadian objective to reduce the “environmental and security risks” associated with NPS dismantlement, the DFA1T has invested significant resources in infrastructure improvements in both the RF Northwest ($4.2 million) and Far East ($12.4 million). At JSCo Zvyozdochka, Canada funded the Harris Pad scrap processing area expansion with new gas cutting systems and equipment, a system to filter the water runoff to prevent the pollution of heavy metals into the sea, and warming huts to improve worker health and safety conditions. At JSC Zvezda, DFAIT funded railroad and bridge repairs needed to safely transport SNF being stored at the OSDF transient storage pad. The railroad repair was a “critical” element of the NPS dismantlement process in the Far East and is facilitating the removal of all spent nuclear fuel from the Far East region. International Cooperation Projects Slide 7 The extraordinary success that the Global Partnership Programme has achieved since the G8 meeting in Kananaskis, and the success we share at the CEG is clear evidence of the benefit of cooperation between international partners. Canada is pleased to be in partnership with the U.S. and Russia on programs in the Northwest and with Republic of Korea in the Far East. Both the Typhoon Class (SSBN 724) and Delta III Class (SSBN 392) were dismantled at Zvyozdochka in cooperation with the U.S. and Russia. Canada led with the de-fuelling of the submarine reactors, the U.S. funded the elimination of the submarine strategic missile launcher systems, and Russia dismantled the remaining sections of the submarines. At Zvezda, Canada

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