chemical issues spur u.s.-north korea talks
TRANSCRIPT
Rhône-Poulenc posts first-half loss Sales Operating income8
$ Millions 1994
Organic/inorganic $1,359 intermediates
Specialty chemicals
Fibers/polymers Health care Agrochemicals Otherb
TOTAL
1,228
1,107 3,089 1,092 -127
$7,748
Change from 1993
4%
3
7 8 4
—
6%
1994
$ 31
80
63 333 167
-102
$573
Change from 1993
1,223%
24
861 -34
46 —
- 7% a Includes restructuring and nonrecurring charges, b Negative figures result from trading activities.
million. The decrease reflected significant restructuring charges incurred mostly by the company's 68%-owned pharmaceuticals unit, Rhône-Poulenc Rorer.
However, at the operating level— which does not reflect interest expense, gains on sales of assets, equity in affiliated companies, and taxes—the company's financial performance doesn't look so bad. Including restructuring and other nonrecurring charges, operating income for first-half 1994 dropped only 7% from 1993's first half to $573 million. Without such charges, operating income actually rose nearly 15% to $738 million.
Even including one-time charges, operating income rebounded dramatically in two sectors—organic and inorganic intermediates, and fibers and polymers—starting from very small base levels. And specialty chemicals and agro-
Chemical considerations are adding urgency to current U.S.-North Korea negotiations that began Aug. 5 and are aimed at freezing North Korea's suspected nuclear weapons program.
A primary concern is negotiating a way to safely store or reprocess some 8,000 spent uranium fuel rods removed from North Korea's nuclear reactor in May and June. In the two pools where the rods are now stored, there is an immediate threat of corrosion reactions that could result in radioactive contamination of the environment. However, the problem "can be solved if North Korea is willing to cooperate," says physicist David Albright, director of the Washington, D.C.-based Institute for Science & International Security. At press time, an-
chemicals showed sizable double-digit increases in operating income.
In the company's health sector, operating income dropped 34%, largely as a result of the impact of restructuring (income was down just 1.6% excluding restructuring). However, R&D spending in health care is being maintained at 15% of sales to support the advance of products in the research pipeline toward market readiness. Fourtou stresses that innovation, customer service, and new
product developments will be key for the company's future growth.
A healthy signal is that overall demand was up and sales volume rose 5% in the first half, notes Thomas Kirk, chief financial officer of the U.S. operations of Rhône-Poulenc. Prices of company products dropped 1.5% overall in the first half but are expected to increase in the future.
A major goal for Rhône-Poulenc is to reduce its debt, currently at $4.7 billion, which is equivalent to a debt-to-equity ratio of 46%. But Fourtou suggests that his firm is prepared to accept higher debt if given the opportunity to strengthen its position through acquisitions. And he still sees pharmaceuticals, especially in the U.S. and Japan, as a growth path for Rhône-Poulenc.
Ann Thayer
nouncement was expected shortly of any agreements reached in the first round of negotiations.
North Korea has offered to shut down its small 5-MW Calder Hall reactor—a graphite-moderated reactor that is ideal for producing weapons-grade plutonium—and to stop construction of two larger reactors of the same design, if Western nations finance construction of a new light-water reactor.
However, because of the danger that the magnesium metal alloy cladding on the rods will corrode, negotiators fear that North Korea will soon insist on reprocessing the rods, which could yield enough weapons-grade plutonium to produce up to 10 nuclear weapons. The rods are currently stored in algae-laden
dirty water that is not being treated to prevent corrosion. Albright notes that there are two basic types of corrosion of the magnesium alloy cladding: general superficial corrosion and localized or pitting corrosion. General corrosion is accelerated by high water temperatures and a pH below 11.5. Localized or pitting corrosion, which begins in cracks or crevices in the cladding, is promoted by sulfate and chloride ions.
Once the cladding corrodes, the uranium metal reacts with water to form uranium oxide and hydrogen. The hydrogen then reacts with uranium to form uranium hydride, which is pyrophoric— it burns explosively in water. The resulting combustion can lead to release of radioactivity from the spent fuel and to environmental contamination.
Western countries that store this type of spent fuel in water have taken several measures to reduce corrosion. One precaution is to keep the water's pH at 11.5 to 12 by adding sodium hydroxide and continuously removing carbonate ion. Another safeguard is to use only demineralized water, to eliminate chlorides and sulfates that can accelerate corrosion. A third measure is to keep the water cool—at 15 °C. The water in the North Korean pools has a pH of 11 and a temperature of about 30 °C and is not demineralized.
Thus, one potentially safe solution for the rods is to immediately treat the water in the pools. This step could prolong fuel storage for many months, perhaps a year, Albright says. Another approach is to place the rods in water-containing casks with a space above the water to collect hydrogen and to put these casks in the pools—a proven technology used in the U.K. and France.
A third alternative is to place the rods in dry storage. However, this technology has not been proven for rods that have been stored first in pools; it has been used only for rods stored dry directly after removal from reactors.
Even if Western nations finance a light-water reactor, North Korea will still have a source of plutonium for nuclear weapons. Such a reactor "is not a substantial barrier to proliferation," stresses Steven Dolley, research director at the Nuclear Control Institute, a public interest research center focusing on nuclear proliferation. "Reactor-grade plutonium can readily be made into weapons," he points out.
Bette Hileman
Chemical issues spur U.S.-North Korea talks
AUGUST 15,1994 C&EN 7