The Nuclear sector in South Africa is governed by the Nuclear Energy Act, No. 46 of 1999 ("Nuclear Act") and the National Nuclear Regulator Act, No. 47 of 1999 ("NNRA") both of which are administered by the DME.
Klydon operates in a regulatory environment where the Minister has wide powers to direct the continuous furnishing of information by Klydon. The Nuclear Act does not contain any express prohibition against or requirement for the approval of the entry by entities governed by the Nuclear Act, into commercial arrangements with other entities. However, activities undertaken by a company operating within the nuclear industry without obtaining the necessary authorisation constitutes an offence under the Nuclear Act which is punishable by way of a fine and/or imprisonment. Thus, Klydon's management follows a policy of transparency and regular communication with the South African regulatory regime and any commercial arrangements with other entities are continuously notified to the Minister.
The export of technology without the authorisation of the Minister is expressly prohibited. Accordingly, to the extent that Klydon intends to commercialise its technology, for example, by the entry into license agreements, the written authorisation of the Minister will be required.
From an international regulatory perspective there are no express regulatory provisions which prohibit or require approval for the entry into commercial arrangements with other entities by a company operating within the nuclear industry or the commercialisation of a nuclear company's technology. At the international level, the need for international regulatory bodies to avoid hampering the economic development of each state party is in fact emphasised. However, it is customary for individual states to write their own laws in order to regulate transfer of technology related to the nuclear sector. Knowledge of, and a working relationship with such regulatory bodies in countries where commercial arrangement will be made is thus essential.
As part of its international obligations, South Africa is committed to the non proliferation of nuclear weapons and fully supports the efforts by the international community to strengthen the effectiveness and to improve the efficiency of the safeguards system as a contribution to global nuclear non-proliferation objectives. South Africa is a party to the NPT as a non-nuclear weapons state. Its safeguard agreement ("Safeguards Agreement") under the NPT came into force in 1991.
In 2002 South Africa signed the additional protocol in relation to its Safeguards Agreements with the IAEA ("Additional Protocol"). The predominant focus of the Additional Protocol is to strengthen the IAEA's capability to detect undeclared nuclear material and activities to provide credible assurance of their absence. The IAEA's capability to detect the diversion of declared nuclear material, and thus provide credible assurance of the absence of diversion, continues to be based primarily on the measures provided for in the Safeguards Agreement. The Additional Protocol is integral to the strengthening of the safeguards system. Its principal aim is to enable the system to provide assurance about both declared and possible undeclared activities.
The Safeguards Agreement and the Additional Protocol specifically provide for advance notification to the IAEA of intended transfers of nuclear material subject to the Safeguards Agreement, but do not contain any provisions which restrict or prohibit the entry into commercial arrangements with other entities by a company operating within the nuclear industry or the commercialisation of such company's technology.
Klydon maintains strong relationships with nuclear-related control authorities both locally and internationally and have complied with their requirements.
- International Atomic Energy Agency (IAEA): South Africa is a signatory to the Nuclear Non-Proliferation Treaty and under its obligation in terms of the additional protocol, governing member states must declare fully to the IAEA all research and development on nuclear related programs. During the past year the IAEA was updated on Klydon's planned program to demonstrate the ASP technology for the enrichment of uranium isotopes. Klydon is subjected to regular inspections.
- SA Council for Nuclear Non-Proliferation and Weapons for Mass Destruction: Klydon was registered with the Council in April 2002 in terms of the Non-Proliferation Act as the user of "dual use" technology and this declaration has been updated in 2008 to include uranium. The Council operates from within the Department of Trade and Industry (DTI).
- Department of Minerals and Energy (DME): An application was submitted to the DME in terms of the Nuclear Act for approval to investigate the ASP technology for uranium enrichment. Furthermore, Klydon adheres to all requirements of the NEA with regard to the importation of equipment and instrumentation defined as "nuclear-related equipment", by giving prior written notice and getting the required authorization to import the equipment.
- Klydon has to date not done any work directly on Uranium.
- National Nuclear Regulator (NNR): Under the NNRA, any entity wishing to site, construct, operate, decontaminate or decommission a nuclear installation must apply in the prescribed format for a nuclear installation license to the NNR. Klydon is in process of preparing an application to the NNR to authorize it to start testing the ASP technology on UF6 gas.