Argentina unusual nuclear agreement with China

Argentina unusual nuclear agreement with China

The Argentine government is closing at this time the final section of the agreement with China for the construction of the Atucha III nuclear power plant. This unusual nuclear agreement with China is based on a complex financial structure with a soft loan of 7,5 Billion USD and 2,5 Billion USD in cash for infrastructure works. The concrete work will start in 2020.

The Undersecretary of Nuclear Energy, Julián Gadano, and the Argentine ambassador, Diego Guelar, were last month in Beijing this week negotiating with the Chinese authorities the fine print of both the macro agreement to carry out the work and the financial contract that will support the financial support of China. The nuclear agreement with China must be ready for the signature before November 30, which is when the G20 summit will be held, because on December 2, Macri will receive in Xi Jinping on an official visit. The intention of Presidents Mauricio Macri and Xi Jinping is to maintain intact their vital strategic alliance. In Latin America, with the exception of Brazil, no other country has this high category of bilateral relations.

The 20-years credit that China inflicts to Argentina for the Atucha III Hualong One Pressurized Water Reactor is at a rate of 5% per annum and under flexible contractual estates in the middle.

In return, the administration of Xi Jinping will ensure that Argentina does not cancel this initiative due to budgetary problems, as it happened last May with the Atucha II nuclear power plant project. This project was to be carried out with Canada and China, using CANDU, a Heavy Water Reactor, a technology used historically in Argentina.

The extra amount of 2,5 Billion USD that Beijing will allocate is directed for the construction of public works in Argentina.

The Atucha III plant that is projected with China will not be made in Río Negro as originally planned but, in the Lima-Zarate-Campana complex of the province of Buenos Aires.

In practice, this nuclear agreement with China for Atucha III will imply at least 50% of localization in Argentine, and all the the workforce is local. The production of enriched uranium in that plant is not subject to any future concession that a government makes in the coming years.

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Arnaud Lefevre

Arnaud Lefevre is the Chief Executive Officer of Dynatom International. Arnaud is in charge of the international development of the business portfolio.