US embassy cable - 04BRASILIA1503

C O N F I D E N T I A L BRASILIA 001503 
 
SIPDIS 
 
HICPAC OIC PASS TO USPACOM HONOLULU HI 
 
E.O. 12958: DECL: 06/17/2014 
TAGS: KNNP, ETTC, KSCA, PREL, BR, CH, Non-Proliferation 
SUBJECT: TALK OF BRAZIL-CHINA NUCLEAR COOPERATION OVERSTATED 
 
REF: A. BEIJING 9600 
     B. BEIJING 9152 
 
Classified By: SCI/C Daniel Rubinstein.  Reasons 1.4 (b,d). 
 
1. (C) SUMMARY.  Much was made in the Brazilian press about 
an apparent agreement reached between Brasilia and Beijing 
during Lula's May visit to China to cooperate on nuclear 
energy and technology.  The story was exaggerated.  It is now 
clear that little more than inchoate informal agreements to 
study the issue were reached.  Real exchanges of materials or 
technologies will occur only years down the road, if ever. 
END SUMMARY. 
 
2. (C) Guilherme Patriota, Senior International Affairs 
Advisor at the Brazilian Ministry of Science and Technology 
(MCT), told Sci/C that President Lula's comments on nuclear 
cooperation with Beijing during his China trip in May were 
not well coordinated within the GoB, and that early press 
coverage of Lula's and Minister of Science and Technology 
Eduardo Campos's comments was misleading.  NOTE: MCT is the 
parent ministry of the GoB's umbrella nuclear agency CNEN. 
END NOTE.  As the GoB later made clear in public statements, 
no new agreement in the nuclear field was signed, nor were 
any draft MOUs, LOAs or other documents exchanged. 
 
3. (C) Beyond mention during the May visit of the long-extant 
China-Brazil umbrella agreement on nuclear cooperation, there 
was merely oral agreement to examine nuclear cooperation 
further during the visit to Brazil of Chinese COSTIND 
Minister Zhang Yunchuan this coming August.  Laercio Vinhas, 
Senior International Affairs Advisor of Brazil's nuclear 
agency CNEN, confirmed to Consulate Rio de Janeiro the very 
general nature of the discussions during Lula's May trip.  He 
added that, while China may be interested in sourcing raw 
uranium from Brazil, Brazil has yet to determine the 
magnitude of either its actual uranium reserves or its future 
domestic needs, given uncertainties in Brazil's own nuclear 
power program.  In addition, domestic legal changes would 
likely be required to engage in such sales. 
 
4. (C) MCT Advisor Patriota noted the contradiction between 
Lula's mention of possible joint Chinese-Brazilian uranium 
mining operations in Brazil and the sale of Brazilian uranium 
to China on the one hand, and the Brazilian Constitution and 
other laws on the other hand.  All nuclear-related activities 
in Brazil are the sole dominion of the Brazilian federal 
government.  Foreign governments, and private firms of any 
nationality - including Brazilian - are barred from 
activities such as uranium mining.  The law similarly 
prevents the sale of uranium to non-Brazilian state entities. 
 
5. (C) Patriota confirmed the concrete interest within some 
(pro-nuclear power) parts of the GoB and the state-owned 
nuclear industry to find new revenue streams for Brazil's 
money-starved nuclear power program, highlighting the 
specific goal of finding new business opportunities for state 
nuclear engineering and construction firm NUCLEP in 
participating in the construction of future Chinese nuclear 
power plants.  Patriota conceded, however, that NUCLEP would 
find steep price and quality competition from Chinese and 
foreign firms in China for what are essentially mammoth 
construction jobs.  There may exist secondary interest in 
finding buyers for raw Brazilian uranium assuming the laws 
are changed, but the value added of this type of trade is not 
very attractive for Brazil.  More broadly, President Lula has 
mandated a broad interagency review of Brazil's entire 
nuclear sector, including the economic viability of the 
current modest program.  Consequently, the likelihood of 
major new activities with foreign partners coming to fruition 
soon is highly doubtful. 
 
HRINAK