18: Dr Kelvin Kemm
CEO: Nuclear Africa
‘We’ve got the capability of becoming nuclear world leaders in numbers of other fields, not only our medicine and our silicon chips…there’s huge money to be made.’
19 June 2019
CIARAN RYAN: This is CFO Talks and today I am delighted to welcome Dr Kelvin Kemm to the studio. Kelvin is the former Chairman of the Nuclear Energy Company of South Africa, also known as Necsa. Kelvin is also chief executive officer of Nuclear Africa, which is a nuclear and business consulting company. Necsa is a state-owned company and its primary asset is the SAFARI-1 nuclear reactor, which today is used to make various products, nuclear isotopes used in the treatment of cancer, and South Africa, believe it or not, is the world leader in that field. We’ll get to that in a minute. But I think it’s important to give some background here, Kelvin and two of his fellow board members were suspended last year from their positions at Necsa by then Energy Minister Jeff Radebe. There’s a labour court case going on at the moment to resolve this issue, so we may not want to get too much into the backwards and forwards of that but we wanted to invite Kelvin to CFO Talks to discuss various things, including South Africa’s participation in the world nuclear industry and, just as importantly, political interference in state-owned companies, which I think is something that he’s very, very passionate about avoiding. Welcome, Kelvin.
KELVIN KEMM: Thank you, Ciaran, thank you very much for having me here today.
CIARAN RYAN: Give us a bit of background about yourself and how you ended up as chairman of the Nuclear Energy Company of South Africa.
KELVIN KEMM: I’m a nuclear scientist, I studied in Durban at what was then the University of Natal and now it’s the University of KwaZulu-Natal but for my masters and my doctorate I worked a lot at Pelindaba, just outside Pretoria, that’s the name of the site of Necsa. I used to come up about every six weeks and spend a week or so here working on the reactor and then go back and analyse the results and so on. So I have had a very long association with Necsa, I then moved up here because this is where the nuclear was and I have lived in this part of the world, I am actually from Pretoria. I got very interested over the years in integration in companies generally, so now I do a lot of wok with companies on strategic planning, problem-solving and so on. Believe or not, I even got invited a while ago by the Governor of the Reserve Bank of Zambia to go to Zambia for a week to help them redesign aspects of the Reserve Bank, which I did, with the Governor and 64 members of the Reserve Bank.
CIARAN RYAN: Using your knowledge of nuclear science to do that?
KELVIN KEMM: That’s right and this is where physics is an analytical process that plots out pathways, you don’t have to be an expert in finance to say this pathway through a bank or that pathway is not working because I understand things like electronic circuits and processes. So I’ve done things like cement factories and make-up production lines, motor cars, property development companies, all sorts of things, I get asked to go along and do a cold analysis about what’s going on structurally and to recommend a way forward.
CIARAN RYAN: Where did you study nuclear science?
KELVIN KEMM: At the University of KwaZulu-Natal, initially basic degrees in science, maths and so on, and then for my masters and doctorate I went on to specialise by actually working at the reactor and working at Necsa and interacting with various people around the world. I’ve met many interesting people.
SA one of the oldest nuclear countries in the world
CIARAN RYAN: What is the quality of South Africa’s education in nuclear science, this is all done down in Durban, right?
KELVIN KEMM: That is but it’s all over the country. We’ve got very good nuclear, for example, at North West University, Wits, Pretoria, all over. South Africa is actually very well respected, we’re one of the oldest nuclear countries in the world.
CIARAN RYAN: Just explain that.
KELVIN KEMM: As far as I am aware, South Africa is the third country in the world to get into nuclear, Interestingly enough, today, June 12, is 75 years to the day when Jan Smuts and Winston Churchill crossed over to land on the Normandy beaches just after the D-Day landings.
CIARAN RYAN: That’s interesting, you’re talking about General Smuts.
KELVIN KEMM: General Smuts, Prime Minister of South Africa at the time, one day Winston Churchill, when Smuts was in London, sent him a message, he had a special lecture for him and Smuts arrived to find that he and Churchill were the only two people in the room and the next moment in walked the lecturer and the lecturer was none other than the legendary nuclear scientist, Niels Bohr. This was mid-1944 and Churchill said I’ve got something for you to hear and he told Niels Bohr to go ahead and Niels Bohr gave a lecture on the nuclear bomb development. South Africa was the third country after the US and the UK to be informed that the nuclear bomb was being developed and they said, we need your uranium, you are the people with uranium. So at that point Smuts was aware of what was going on when the bomb went bang, of course, which was the worst public relations birth of any technology is to have two cities blown off the face of the earth and then say, well, nuclear is good for mankind.
CIARAN RYAN: That was Nagasaki and Hiroshima.
KELVIN KEMM: That’s right, obviously Smuts immediately realised what we had with the uranium, so South Africa had nuclear development plans, Necsa, by the way, was founded in law in 1948, as far as I am aware the world’s third.
CIARAN RYAN: That was also the birth of apartheid, 1948.
KELVIN KEMM: Yes, in the early ‘50s we had policies to build nuclear reactors to develop uranium and so on. So we are not new kids on the block in this game by any stretch of the imagination.
CIARAN RYAN: So this is a technology that’s been around here for close on 70 years?
KELVIN KEMM: Yes.
CIARAN RYAN: Wow, okay. We have the SAFARI-1 nuclear reactor at Pelindaba outside Pretoria and we have the Koeberg nuclear power station in Cape Town, how long have these been around?
KELVIN KEMM: Koeberg is of the order of 35 years or something now that it’s been running and it’s still got quite a few years to go, it’s now South Africa’s cheapest electricity by far. It runs steadily day in, day out, producing highly, highly profitable electricity for the country. It’s one of the best run nuclear plants in the world, by the way. Koeberg is the only nuclear power station in the world that is completely licensed under American legislation and European legislation. We saw the writing on the wall many years ago, one visionary power station manager at the time, and he decided to go for both of them so that we were squeaky clean around the whole world in the way we did things and it’s really paying off now. Nuclear power is cheap.
CIARAN RYAN: We also, of course, developed the nuclear bomb and we tested that in I think it was the South Atlantic Ocean, together with Israel, back I think it was in 1976. There was a book brought out called The Samson Option by Seymour Hersh but he went into this in some detail, how this bomb was tested in the South Atlantic. But, of course, then in 1994 South Africa [7:00] Ploughshares moment and we decided that we were going to dismantle the bomb and then use that enriched uranium for something else. Just go into that a little bit.
KELVIN KEMM: I’ll just correct you on us testing a bomb, we never detonated a bomb, it was a bang that went off in the South Atlantic and it was never shown to be a nuclear weapon from South Africa. So we’ve never tested a bomb.
CIARAN RYAN: So we disown that one.
KELVIN KEMM: We disown that one but what we did do, which has been said in public, is that we built entire weapons, we did dummy tests and we fired the mechanisms to show how they would work internally with what’s called depleted uranium, that was done and we also did the famous experiment called tickling the tail of the dragon, where you actually bring the real components together in the laboratory to show that the radiation is rising and that things would go off. So there’s no doubt about the fact that South Africa built six-and-a-half nuclear weapons and the reason why it’s and-a-half is when F.W. de Klerk came into power, within a fortnight of him becoming president he said building nuclear weapons is not the way to go, stop today, basically. So they stopped in the middle of the seventh weapon.
CIARAN RYAN: This was before he unbanned the ANC and released Nelson Mandela from prison.
KELVIN KEMM: Correct. At that stage South Africa had never denied that we had nuclear weapons capability and people kept saying have you got it and Pik Botha would famously say bring me evidence before you expect an answer. So we never ever denied it but then we announced it. When we did, we became the only country in the world to announce the possession of nuclear weapons and then, with the International Atomic Energy Agency as overall inspector, to dismantle these things and to destroy the weapons in public.
CIARAN RYAN: So this was a secret programme that we had when we had the bomb, although it was known that we had the nuclear reactor and we had the Koeberg power station but the bomb itself was a secret.
KELVIN KEMM: That’s correct, it was but then it was made very public when it was dismantled and, as you say, they went to Ploughshares and there’s a little plough at the moment that’s on display at the International Atomic Energy Agency made out of the metal that came out of one of the weapons.
CIARAN RYAN: I think important to note is that South Africa is the only country in the history of mankind to voluntarily dismantle its own nuclear bomb.
KELVIN KEMM: That’s correct but we made our point and what also happened then as a spinoff is that South Africa was able to make the fuel for the SAFARI nuclear reactor and the Koeberg nuclear reactor at the time, which is a very high precision job to actually produce that uranium to a certain level of enrichment and then to manufacture a fuel element, which in the case of Koeberg is a nearly four-metre long assembly of a cross section of a biscuit tin, so to speak, and those slide into the reactor and are there for about 18 months or so before they are replaced. But you actually have to take the uranium and put it into an assembly and that’s called fuel fabrication.
Production today at Necsa
CIARAN RYAN: So we’ve got the SAFARI nuclear reactor at Pelindaba, outside Pretoria, tell us about that facility and what is produced there today?
KELVIN KEMM: Today what happens with the SAFARI reactor is that it produces a number of things, one of which is nuclear medicine and we’ve been very proud of that. Something that I must tell you, by the way, from your introduction that I wanted to add at the time, under my chairmanship Necsa was profitable.
CIARAN RYAN: Give us the figures, give us the thumbnail sketch there.
KELVIN KEMM: With the medicine, we are not the size of Eskom by any stretch of imagination but the medicine, for example, we turned around R1.3 billion on the medicine per year and we were aiming to double that and that can be done. Something to be very proud of with the medicine is that A. we’ve got a unique South African process to produce certain things that are developed here. The second thing is that we can move it around the world, we would say that we could inject anybody on planet earth in under 36 hours. We were exporting like three times per day, seven days a week to over 60 countries around the world. Primary exporters to the United States, for example, but exporting from the US to the Far East to Germany to South America and so on.
CIARAN RYAN: How effective is this, we hear a lot of discussion about a cure for cancer, we are apparently a world leader in the production of these medical isotopes. How effective is this as a treatment? Tell us a bit about that.
KELVIN KEMM: Well, it’s actually a marvelous thing, the first part is the diagnostics aspect, with a nuclear tracer you inject somebody with a little bit of liquid that has been doped with a radioactive atom.
CIARAN RYAN: It’s not dangerous.
KELVIN KEMM: No, it’s not dangerous, we’re smart, these people don’t make mistakes like that. You get injected with that and it goes around and accumulates at the cancer and you’ll detect a cancer ages before you’ll find it by any conventional method. That was the diagnostics part, which is a huge market to develop still and South Africa is now a world leader in the field. That’s leading on now to therapy, an actual cure, so at the moment they’re in a crossover situation between diagnostics and therapy, it’s called theranostics. Absolutely marvelous work is being carried out by Professor Mike Sathekge at Steve Biko Hospital in Pretoria, Mike is a world authority in the field. They’ve got patients there who have been diagnosed with cancer so serious that they expect them not to live more than a few months and after Mike has worked on them they are running around a year later, completely cured.
CIARAN RYAN: Completely cured?
KELVIN KEMM: Completely cured with no sign that they had cancer ever.
CIARAN RYAN: Why are we not reading this on the front pages of the newspapers?
KELVIN KEMM: Because newspapers keep telling you all the time about Steinhoff and this and that but when you say tell them about some of the achievements, which are the basis of business, the newspapers don’t do it. Largely because they don’t understand it, but they also seem to think that people aren’t interested. The basis of any CFO’s money coming into the books is that something is being made somewhere or sold somewhere in the organisation. That’s technology, technology is not just nuts and bolts, technology is also a process. If you have a delivery guy who goes out every day in his bakkie and he drops off things at ten places and then one day he discovers shortcuts, that’s an improvement in technology, you haven’t retrained the driver, you haven’t altered the petrol, you haven’t altered the bakkie but he’ll do more delivery routes per day and, therefore, your profit will go up. So that’s why when I do things for banks and so on, I’ve done other work in South Africa for Standard Bank, for example, a technology improvement is finding a better way to execute your process, not just coming up with a new transistor. So this is the type of thing. Also, at Necsa, by the way, we produce the world’s best silicon for silicon chip technology. South Africa has got the richest silicon mine, we mine the silicon here, it goes out of the country, it’s turned into crystal form, it then comes back into the country as large ingots, the ingots go through the nuclear reactor and as they go through the nuclear reactor they are converted into the semi-conductor that is then sliced up and used to make the chip that goes into your cell phone and so on. They move that through the reactor as fast as they can, if we had a second reactor we’d do even more and make even more money by exporting that.
CIARAN RYAN: Who is the buyer for that silicon?
KELVIN KEMM: It goes largely to the Far East…
CIARAN RYAN: To the chip manufacturers?
KELVIN KEMM: Yes, to the chip manufacturers. Also, incidentally, something that we’re rather proud of is the division that works with fluorine chemistry, a necessary part of the development of the uranium that was used for the weapons is to work with this deadly gas called fluorine, you’ve heard of the poisonous gas of the First World War, that was mild in comparison to this. We’re only one of half a dozen companies in the world that knows how to work with the fluorine and with this gas we process 30 000 motor car petrol tanks per month to make them leakproof are processed there.
From deadly gas to life-saving medicine
CIARAN RYAN: Using fluorine gas?
KELVIN KEMM: Using a derivative of it. Derivatives of fluorine gas also go into the magnets that you find in the loudspeakers of cell phones, so that’s also done using fluorine gas. There are the most amazing things. South Africa has become only about the sixth country in the world now to manufacture the HIV medicine, which has been produced now at Necsa in the past year. We’re ready to go into production but we need a few hundred million to be brought in and to go into partnership with somebody to produce the HIV medicine. I was just hearing in the last day or so somebody on TV saying, oh, we’ve got 7.3 million HIV people in South Africa but only 4 million are getting treatment every month because we can’t get to the others and also you’ve got to be able to get the medicine. We can do that. So there are opportunities for SOE’s to go into relationships them. Necsa is not in the HIV, pharmaceutical side, one would need to get a pharmaceutical business to say can we work on your property because they would need to work on the property because of the licensing of the deadly products, which are not deadly by the time they go into the medicine but they are on the pathway.
CIARAN RYAN: You’re talking from the position of being a suspended chairman, I want you to go into the background now of how that came to be. You were suspended, along with the chief executive officer and the chief financial officer, Pam Bosman, last year, what is the background to that? This, of course, was done by then Minister of Energy Jeff Radebe, who is no longer part of the Cabinet, he has disappeared…
KELVIN KEMM: He’s not a member of Parliament either.
CIARAN RYAN: He’s not a member of Parliament either, so the portfolio of energy has been taken over by the mines minister, Gwede Mantashe. Please give us the background to that.
KELVIN KEMM: Well, what happened is it was upsetting, the whole thing, But Minister Radebe at the time just fired the whole board with immediate effect. We believe it was a completely orchestrated action because later in court papers he admitted that over four months he started appointing a new board and no dissatisfaction had been brought to us. He accused me in public of being defiant because he ordered us to start doing things, which we disagreed with, it was wrong compliance, it was not moral, it wasn’t legal and when he said do this, we said sorry, we’re going to be honourable and above board and do the right things.
CIARAN RYAN: Give us an example of that?
KELVIN KEMM: For example, he instructed us to appoint a certain person onto the staff at a salary higher than the chief executive was getting. We said we don’t approve of that, that is not the right thing to do.
CIARAN RYAN: What is he doing making appointments in a company? He’s the minister, he’s not the manager of the company.
KELVIN KEMM: Exactly, a minister is supposed to give general direction. Government ministries like that are run by the Director General, not by ministers. Ministers are supposed to give a direction, like the admiral tells the fleet go from Cape Town to Rio but the captains of the ships take their ships to Rio, the admiral doesn’t tell you how fast the engine must turn over. Jeff Radebe also started having discussions with an American company with a view to selling a substantial portion of our medicine operation to the United States without me, as chairman, being informed and without the CEO being informed at all. We were horrified when we found this out. We don’t even allow foreigners on the property if we possibly can and if they are on the property, they are escorted everywhere because of all the other secrets and things that are on that property.
CIARAN RYAN: Who is this company and who is behind them?
KELVIN KEMM: It’s an American medical company that we actually sell to at the moment, so they are customers.
CIARAN RYAN: They’re a customer, is this Lantheus?
KELVIN KEMM: Lantheus was involved, that’s one of them, yes but there was also a legal company, a law firm in between and so on. Even as of now I don’t know all the details of what happened, I got copies of certain letters that were traded and so on. But the ministers before that had not been at all like that, I had gone through four ministers in my term of office, which was rather a lot, but immediately before them there were two ministers with whom I had excellent relationships and who acted respectfully like a gentleman, David Mahlobo and current Minister Mmamoloko Kubayi-Ngubane is an absolute lady and both of them, to my mind, are very honourable and decent, and I had a very good relationship. If they wanted to talk, they would ask nicely and we would chat and respect one another. We wouldn’t get ‘orders from above’ like we would get from the other but anyway we now need to go on the path of getting all these things right. There’s phenomenal opportunity in nuclear for South Africa, South African nuclear people know what they are doing and it’s not only the actual nuclear, as I have indicated, there are all these other products, HIV medicine, processing of things like motor car tanks, producing integrated circuit chip materials, there are gases for spacecraft engines and so on that have been developed and produced at Necsa, there are a whole lot of other things. Necsa is also, by the way, completely qualified in the design and manufacture of nuclear assemblies, we build things, they’ve built tanks for road tankers and things like this are made there with people who operate with nuclear-grade welding and design and so on.
Solar and wind power is not a viable solution
CIARAN RYAN: Just to jump back to the issue about your suspension, there is a labour court case happening at the moment where you have challenged the suspension. We’re expecting the outcome, I guess, in the next few weeks or month or so and that may put you back in your position as chairman of Necsa or it may not, and then you will have a new energy minister to deal with and it does look like Gwede Mantashe is much more approachable and business minded.
KELVIN KEMM: He’s been giving very positive signs and also, of course, there is now a combination of ministries, it’s minerals and energy together, which means that he’s got a responsibility to exploit the coal, the uranium and also then to produce the energy, and not like we’ve been doing by this rather silly thing of bringing in wind and solar power, and no one ever mentions in a newspaper that you get no solar at night. I’m amazed at how many businesspeople I talk to who think that solar energy works in the dark and they think that wind energy works all the time. You only get wind [energy] when the wind blows, and you only get solar when the sun shines. So at night when the wind doesn’t blow you get nothing, zero, which means you’ve got to have an entire backup equal to the optimum of the solar and wind together standing in the wings, which has got to be paid for like a coal-fired power station must stand in the dark when the wind is blowing, switched off and as soon as the wind doesn’t blow you’ve got to switch it on to make up for the fact that the other two are not there. These types of things, for some strange reason, are never mentioned by the media. Even when I talk to editors fac-to-face they will still not say that.
CIARAN RYAN: There’s another point to this, of course, that if you are going to, as has happened in Denmark and South Australia and you’re going to go green and you’re going to have solar panels and you’re going to rely on wind for energy, those are two companies that are far ahead of the rest of the world and yet both grids fell over completely. The other thing that isn’t mentioned, of course, is that because you only have sunshine for a certain number of hours of the day and the wind isn’t always blowing you are having to fire up these gas turbines. That’s not good for the environment.
KELVIN KEMM: It’s not only not good for the environment but the gas turbines are horrendously expensive. South Africa has got one of the biggest turbine installations in the world now but they’re only supposed to be there for emergencies. The turbine system is designed to operate two or three hours a week if you are in trouble, not 24 hours a day all of the time and burning up diesel like you cannot believe. It’s like having a row of large jets and you just pour diesel straight into the jet engines, that’s what the turbines are doing. They are not supposed to be run this way, so it’s a very, very expensive way of trying to fill the gaps. So at the moment we have the problem of trying to get the Eskom power running, which is a completely separate thing to maybe restructuring the company. There’s been too much focus on trying to restructure the company than actually getting to the power stations so that the machinse are turning around properly and that the electrons are flowing down the wires. We’ve got the capability of doing that but you must have faith in the scientists and the engineers and not have political interference, of which there has been too much of in the past.
CIARAN RYAN: You have been to many conferences, I think you’ve met President Putin in Russia…
KELVIN KEMM: I haven’t met Putin, I sat on the same stage as President Emmanuel Macron, I was the speaker just before him. I met Bill Clinton when he was president and Hillary Clinton and a number of others. So I have met some very interesting people around the world. I chaired the opening of the Russian annual nuclear conference, which was a big affair, but Putin was not there.
CIARAN RYAN: It’s a very tight circle in the nuclear industry, so I’m sure you all know each other. When you were chairman, and this is one of the reasons given for your suspension from that position, you signed a deal with a Russian nuclear company called Rosatom…
KELVIN KEMM: Yes.
CIARAN RYAN: For the development of modular nuclear reactors, the very kind of thing that you’ve been talking about, that we can produce more medical isotopes, more fluorine gas-type products for petrol tanks and so on. Give us a bit of the background of that, I believe that was a non-binding agreement and the minister had no right to interfere or even have an opinion about it.
KELVIN KEMM: Exactly and, in fact, I told him months before, repeatedly I was sending him messages about it and he just ignored it all of the time. I asked for meetings repeatedly to be able to explain it and he ignored that all of the time and then later accused me of not telling him. On the day that we did the signature I informed him, and I tried to phone him multiple times and it was all ignored. But that aside now, I’ve had discussions with the Russians, when I say I, I mean me and associated people over a two-year period leading up to this and this is non-power reactor, it’s not that at all, that’s a different matter to be dealt with in another way. But they said to us, you are world leaders in producing the medicine and, particularly, South Africans know finance. They said, you people know law and you know finance, you know how to budget, you know how to do financial systems that work and the Russians said, we don’t. There’s a very elementary-type financial setup in Russia because for three-quarters of a century they were under communism. So they said that they know certain technological things but they don’t know how to put all of it together in the optimum way to create markets, we know how to do that and we’re technologically advanced in the field, why don’t we join forces. So we said, okay, let’s see this and this, I emphasise, was a two-year unfolding exercise that was going on. They wanted to use their international reach to move nuclear diagnostics for cancer into many other countries, bearing in mind that it was one of President Cyril Ramaphosa’s targets that he mentioned in his first SONA speech to address the oncology issue across the board, across the country, because so many patients are needing it. They [Russia] said we can do this together, so we said, right, let’s develop this together, we had skills they didn’t have and they had certain things that we didn’t have, so we decided to develop this together and I emphasise with South African scientists doing some of the building and so on, it wasn’t just a purchase arrangement, it was a strategic path forward. The medicine was a significant one and so was industrial radiography using nuclear and a few other things like that, they said we can get together on this. So that’s what it was all about and it was a case of us shaking hands on a number of things and drawing up a strategic plan on how to move into the future. For that you need nuclear specialists, you need people who know it, not a minister who suddenly climbs in and says he doesn’t like the idea, when he doesn’t know anything about the idea.
SA a world leader in applying nuclear rules and regulations
CIARAN RYAN: We can’t help but notice that in the wings we’ve got Russians on the one side, Rosatom, and we’ve got Americans on the other side, Lantheus. This does begin to look a little bit geopolitical because we’re talking about a nuclear asset here and, let’s face it, if you’ve got a nuclear reactor you can reconstruct the bomb in fairly short order. Not that South Africa has any plans to do that but if you’re just not connecting dots and what if we were to have a different president, this would be a strategic threat globally, I would imagine?
KELVIN KEMM: Yes, undoubtedly South Africa is known to have the capability to do just about anything in nuclear, we have the brain power, we certainly have very capable nuclear people in this country. We have made it clear over and over that we have no intention of following a nuclear weapons route, in fact, the Director General of the International Atomic Energy Agency, to my face, said to me, South Africa is an absolute leader in applying the rules and regulations and doing things properly, and he said if everybody did what you did, I almost wouldn’t have a job because you do things so well. South Africa is lauded all over the world for the superb way in which we execute the rules and we do everything according to the plans, and we invite inspectors in at any time to have a look. So we’ve got an absolutely clear indication to everybody that we have got no intention of going any weapons route but we do want to expand nuclear for the nuclear power capability of South Africa, which is the answer. We need coal from the north coming down from where the coal is and we need nuclear from the south going up. We’ve got a very big country, South Africa is the same size as the whole of Western Europe added together. People don’t realise that the distance from Pretoria to Cape Town is the same distance as Rome to London. We cannot push coal power from the top end of the country all the way down to the Cape, the three Cape provinces, we’ve got to balance it out. People must understand there’s an engineering reason for doing this, not just because somebody wants it. So we’ve got the capability of becoming nuclear world leaders in numbers of other fields, not only our medicine and our silicon chips and things like this, there’s huge money to be made. This is why I say that the CFO-type people who are running the money can’t just think that you make more money by trying to save on photocopy paper, you’ve got to look to see where are the next money makers coming from. The fact that just the other day Elon Musk’s rocket launched 60 new satellites in one shot into space to improve internet connection, they plan to put 2000 into orbit. He’s sending rockets up every couple of weeks now, people do not realise the magnitude of what’s going on, the Chinese landing on the moon, the Indians landing on the moon and this type of thing, this has all got business in mind. They’re going to have communication stations, there’s talk of mining the moon and things like this. This is going to change the structure of business; people are not just doing it for fun.
CIARAN RYAN: I want to tie this back to chief financial officers because that is the market that we’re talking to here. You said Necsa was a profitable company, it was making from medicines alone, was it R1.3 billion a year?
KELVIN KEMM: Yes.
CIARAN RYAN: That reactor has been shut down now, I think it’s the third time in about 18 months that it’s been shut down by the regulator and we hear this week that there was one employee there who was exposed to fluorine gas, is he going to survive and is this a big deal? For an industry that prides itself on its safety, this is a bit of a setback.
KELVIN KEMM: Firstly, the employee, I am very sympathetic towards him and his family, he got a squirt on the chest of what is known as HF, hydrogen fluoride gas, which had he breathed it in it would have killed him but he didn’t. He was airlifted out to the Milpark Hospital. Maintenance that should have been done earlier in the year was not done because the current board instructed that the money not be spent. We had plans to improve all that and to expand it, and under Jeff Radebe that all stopped. So that was a problem. I must point out that it wasn’t the reactor that was closed down, it was the nuclear medicine, packaging and production line but since the reactor is such a major part at the front end, at times the reactor was switched off to conserve fuel and so on because it’s pointless having the motor car engine running flat out when you’re just idling in the car park. So the reactor was switched off voluntarily from time to time because of that but it’s still fully operational now as far as producing the silicon and anything else is concerned. We really need to address the money-making side and, as I say, from the CFO’s, our CFO was doing a good job, Pam Bosman, who is a Zulu lady from Durban, by the way, she’s a chartered account and she did a superb job of running the books at Necsa. With her on our board we got an award from the Auditor General for totally clean books, not a rand missing anywhere, everything balanced up. This is how you should be running an SOE, like a proper private company, where you are accountable. I was so proud when I gave my announcement in Parliament, my annual report, and said we are making money. As I walked in an MP walked past me and said, don’t come here asking for bailouts, that’s a dirty word at the moment. So I was gleefully able to stand up and say we made a profit and we paid money into SARS.
CIARAN RYAN: How much tax did you pay?
KELVIN KEMM: We paid R80 million.
CIARAN RYAN: R80 million and the profit for that year, how much was it?
KELVIN KEMM: The turnover was R1.3 billion on the medicine, the whole company is at
R2.5 billion turnover. We were taking a lot of that and routing it towards further developments, we can easily double that…
CIARAN RYAN: What was the profit figure? R300 million?
KELVIN KEMM: Those were the figures yes but, there again, we’re not declaring profits in the way that somebody does for a dividend, we were taking the profits and immediately rerouting them towards further development and so on. But we’re very proud of what we were able to achieve.
CIARAN RYAN: With the shutdown of the reactor, from what you’ve told me previously, this was largely because paperwork wasn’t done properly.
KELVIN KEMM: Well, the medical line, not the reactor, the medical line and the only reason that the regulator initially closed it down is paperwork. The paperwork is terribly stringent, when somebody opens and closes a door, which goes into the hot cell unit, you’ve got to sign that you are opening the door and you’ve got to sign that you’re closing the door and somebody else has got to do it too. You know when you’re on an aeroplane and as you’re about to take off the pilot says close the doors and do a crosscheck , the hostesses close their respective doors and then go to the other side of the plane to check that the hostess did actually close the door.
CIARAN RYAN: A double check.
KELVIN KEMM: It was that type of thing and you had to sign, and we found that Piet was signing off Mike and Mike was signing off Piet because they were buddies. They weren’t, according to the regulator, actually doing it properly. So it was closed down merely for paperwork, there was never an occasion of actual safety to individuals.
CIARAN RYAN: But this resulted in a loss of sales of about R3.5 million per day.
KELVIN KEMM: Per day.
CIARAN RYAN: Because of paperwork.
KELVIN KEMM: Paperwork, yes. That then has become a whole political-type thing under Radebe and so on and it became quite a mess. Now hopefully it can be fixed because it’s a massive national asset to be able to do that and, of course, the lives around the world, we were getting complaints from around the world that we’ve got patients lining up in countries around the world waiting for the medicine from South Africa, where is it, it wasn’t coming.
CIARAN RYAN: We’re going to have to leave it there, we are out of time. Kelvin, it’s been fascinating having you and I’d love to have you back again hopefully when you are back installed in your position as chairman and we’ll talk some more about your plans for developing this very, very interesting company and expanding it into Africa. That was Dr Kelvin Kemm, former chairman of the Nuclear Energy Company of South Africa. He is also chief executive officer of Nuclear Africa, which is a nuclear and business consulting company.
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