Adam Smith [00:06:46] Welcome to Titans of Nuclear. I'm Adam Smith, and today we have a very special episode with Stefano Buono, the founder and CEO of newcleo. Stefano, welcome to the show.

Stefano Buono [00:06:57] Thank you very much. Welcome, everyone. I'm very happy to be back here.

Adam Smith [00:07:02] Yeah, as you say, I should be saying, "Welcome back." Actually, this is your second time coming onto the Titans of Nuclear podcast. For those who haven't listened to our previous episode, Stefano, could you give us a little bit of background about yourself? Where did you grow up? How did you get into the nuclear industry or just the energy industry, broadly?

Stefano Buono [00:07:22] Yes, I'm an Italian physicist. And after my thesis, I went to work at CERN, the European Center for Nuclear Research. And after three or four years, I started to work with Carlo Rubbia, who was a Nobel laureate and was Director General at the time, on the idea to make a nuclear reactor that was very innovative because it was supposed to be very safe. And this technology was linked to the use of lead as a coolant, so that would pass the reactor using lead. And actually, we got to know a lot of things about lead. And this has been, essentially the project that, just a couple of years ago, became a company, and now we're engaged with newcleo.

Adam Smith [00:08:16] Perfect. Wow. Just to clarify, you've gone with the lead breeder fast reactor, right?

Stefano Buono [00:08:24] Not really breeder.

Adam Smith [00:08:26] Just fast reactor.

Stefano Buono [00:08:28] Yes, in the sense that when, in the '90s, there were fast reactors, they were conceived to be breeders, actually, to produce more plutonium than what is used. After 35 years, maybe the situation in some countries, the opposite. There is a lot of nuclear waste, so there is a lot of plutonium in this nuclear waste. And maybe a lot of countries prefer to burn the plutonium. Essentially, we designed the reactor to be a small burner. So, to burn slowly, the plutonium, but to be negative with respect to the plutonium stockpile. Which is good because we need to eliminate the big stockpiles of plutonium that are on Earth, rather than putting plutonium underground, or even worse, using for military purposes. It's better to make energy; that's really what we want to do.

Adam Smith [00:09:31] Yeah, absolutely. Would you say the focus of newcleo then is being able to minimize the waste from nuclear that has traditionally accumulated?

Stefano Buono [00:09:42] Exactly. And for some countries, even to eliminate the need of a geological repository because, of course, with such a hard spectrum that we have using land, even harder than sodium, we can control the quantities not only of plutonium, but also the manner of actinides, all of them. So, we actually eliminate that part of the waste that is the long-term waste. And I believe only with the fission fragments. It's a minimal part in volume and weight.

Stefano Buono [00:10:18] I remember that one gigawatt electric of power, of any nuclear power, produces only 900 kilograms of fission fragments per year. So, that's less than a cubic meter. It's really a very good amount of waste. So, if we engage into multi-recycling, that was the dream of the engineers in the '70s, the '80s. If we engage in that, we can really get to the point where the final waste remains only fission fragments. And so not only that they are a small quantity, but the toxicity is very small. And essentially after 150 years, the toxicity can come back to the level of natural radioactivity of the material that was extracted. So, we can really close the cycle of the waste for nuclear.

Stefano Buono [00:11:20] And I think now it's time to transform this dream into reality; we can. Technically, we can do it. Of course, burning the plutonium, it's easier because for more than 60 years now, well, there has been MOX manufactured, so only a mixture of uranium and plutonium oxide. And this has been successfully used in fast reactors, but even in PWRs, especially in France. So, there is a lot of experience and it's relatively easy to manufacture this kind of fuel. But we cannot even imagine a situation in which we can also put, in different forms, the other types into the fast reactor and keep also the quantity of these elements controlled.

Adam Smith [00:12:18] Wow. This seems like a very versatile reactor in terms of fuel source. I mean, PWRs... You've can use a little bit of MOX in the system, but my understanding is you can't use a 100% MOX fuel load, at least currently. So, it seems like you can use other fuels, you can use MOX, you can use low-enriched. I'm assuming you can use high-enriched as well.

Stefano Buono [00:12:42] In the beginning, we wanted to use 20% enriched uranium as a first load because it's more difficult to produce plutonium. But in Europe, after the invasion of Russia in Ukraine, then uranium became very difficult to get. I think close to the US, it's quite difficult to get. So, we elevate the MOX program. And actually, we found huge support from France, and this helped us in accelerating this program and going directly to a more sustainable approach on the fuel, is what we consider.

Adam Smith [00:13:20] And do you receive a longer fuel cycle as well because you're using... In an ideal world, you're using some either MOX or higher plutonium content since you're trying to burn that up. Do you receive a longer fuel cycle when you use those elements?

Stefano Buono [00:13:36] We can. The more plutonium we want to burn, the shorter is the resonance of our reactor, so if you go to easier mode, I would say, the timing is slightly longer than the normal uranium fuel. So of course, if you accept a little bit of breeding, that would even produce a very, very long fuel cycle for your fuel inside the reactor. But as I mentioned, we prefer to be negative in the amount of plutonium in these quantities.

Adam Smith [00:14:19] Amazing. If there was a breeder reactor out there using lead, what kind of fuel cycle would you see? Or, how long a fuel cycle do you think something like that would last?

Stefano Buono [00:14:33] Well, I give you the example of France. The uranium extracted and recycled that is present in France can allot 2,000 years of power for all of France, 100% of their electricity needs.

Adam Smith [00:14:53] Oh, man.

Stefano Buono [00:14:55] Only if you do the multi-recycling because the past recycle has created so much depleted uranium that you can go. And having the lead reactor allows, actually, to use any kind of plutonium. So, even if you accommodate the pairs, 24, and 242, into and PWR, it's still good to be burned in our reactor, even better. We can really enable, for example, or use the MOX from the French second pass, I would say, that is resident into the French pool today and is accumulated because there is no strategy at the moment for this kind of fuel. This could go through our reactor and then used MOX in our reactor could either be used again in a PWR or to be recycled into the fast reactor.

Stefano Buono [00:16:16] And this is really the dream of the past. In the '70s, the nuclear engineers were thinking that the water reactors, the thermal reactors were only a passage, a phase of the development of nuclear. That in the future only fast reactors would have survived because of the nature of the fuel cycle, the possibility of this multi-recycling and the better use of resources. So, we are trying to make this, finally after so many years, this dream a little bit true.

Adam Smith [00:16:53] Yeah, yeah. You're building the future of it. Going straight to the fast reactors.

Stefano Buono [00:16:59] Yes, yes. Exactly.

Adam Smith [00:17:02] Wow, that's amazing.

Stefano Buono [00:17:05] To make this strategy successful, you have to solve another problem, that is the cost. We all believe in nuclear that the use of lead is key for that. Why? Because when we approach the same strategy using sodium, we have to control the chemical risk of the materials. So, the fast reactors became very cumbersome and very expensive.

Stefano Buono [00:17:35] In France, in '84, let's say, EDF was ready to order four new fast reactors of the Superphénix kind if the cost would have been capped at 20% more expensive than PWR at the same power. But the reality was that the consortium that created Superphénix was not able to go below 160% more expensive. 60% was not justifying the virtuous recycling of the fuel. 20% more would have justified, financially, the recycling; 60% was not justified. So, EDF in '84 didn't order four new reactors of the faster type and they remained with the thermal reactor because of a reasonable cost. And of course, when there was no need for decarbonization the cost was everything. So of course, fast reactors remain very non-interesting because of the higher costs.

Stefano Buono [00:18:58] But in '94 when we started to use lead, we realized that many Russian submarines were built using lead. And one characteristic of these submarines were they were very compact. So, the submarine was much more compact and powerful. The submarines did 48 knots underwater. They beat every record for these kinds of machines.

Adam Smith [00:19:33] Yeah.

Stefano Buono [00:19:38] But the compactness is also a synonym of less steel, of less material, and less cost. These show the way that there was a possibility to change the design in order to reduce the cost. And that's what we did. And I think the optimization lasted, essentially 25 years. Because more and more ideas came in order. We had to go away from the concept that was developed for sodium and make the better out of the properties of lead.

Stefano Buono [00:20:17] And I think that the process has really been optimized so far that we are at the end of the journey and we are ready to deliver reactors that, in our goals, have to cost €4 per watt installed. That's our goal, which is very competitive today with PWR. It's much less expensive. I think that is a winning move that we need to do, make these reactors not only safer but also less expensive.

Adam Smith [00:20:55] Yeah, absolutely. That's how you grow the entire industry. And it seems like you're really leading the charge there with the lead0cooled fast reactor. Do you have any milestones over the past year that you can talk to about your developments of bringing this technology to market?

Stefano Buono [00:21:16] Yes, one year ago we started the regulatory process with the French authorities, both for the reactor and the fuel factory. And the French system has decided to try to accelerate the process because everyone is trite, I think, by the fact that new nuclear projects are taking too much time. And of course, longer investment phase in a reactor is also not good for the industry because it is making bad use of capital, so we have to reduce also the time of the full process.

Stefano Buono [00:22:06] And so, the French authorities are engaged into a new process that goes through frequent meetings and also the possibility to have a pre-authorization. So we have this run into three phases. We are almost at the end of the first phase, and we have to enter the second phase that will lead to a pre-authorization. This we will be starting in September, and this could last as little as two years. So in two years, we could have the equivalent of a generic design assessment authorization UK, or I think there is a similar authorization also in the US. Not a construction permit, but a design certificate.

Stefano Buono [00:23:05] So we are, I would say, two-and-a-half years away from this goal. And of course, this process can be started only at the level of the basic design, so we are entering into the basic design for our reactors. We will be starting a process in parallel in France, UK, and Slovakia, another European country, because we have plans to deploy a reactor in these three countries. And we became almost 700. If we spoke 1 year ago, maybe we were at least 200 people less.

Adam Smith [00:23:48] That's amazing.

Stefano Buono [00:23:49] The company is really growing. As part of our strategy, we are also making use of our capital by investing in existing companies and consolidating the market. And we are investing in those companies that can become part of our supply chain. So, maybe they have an activity of sales or services in nuclear, but then work for us, of course, and become one of our suppliers or providers of a system for us.

Stefano Buono [00:24:31] And that means that in 2024 we should reach about 50 million, five zero million of turnover. We are in a strange position of being, at the same time, a company producing revenues but also innovating in the field, which is, I believe, a little bit rare. Sometimes either you are a consolidated company like EDF or Rolls-Royce, you have a new project, or you are a startup and you only have a project on paper and you are spending money. So, we are entering into this situation, where we have building and expanding a turnover in the field while we are, actually, our main focus is to develop this reactor in this industry.

Adam Smith [00:25:26] That must be an interesting story to tell investors, since you are, as you said, in that middle position where you are pre-revenue on the SMR side, but you are a well-established company. If you look at your equipment suppliers or your partners, you've vertically integrated through your company. Have you seen any specific interest out of investors because of that story? Do you see that as a positive growth story for you?

Stefano Buono [00:25:56] Well, by chance is how I grew my previous company in nuclear medicine. We wanted to develop nuclear medicine drugs, treatment. But that was longer and complicated. And after two years, we started to produce fluorodeoxyglucose. That is another drug diagnostic and was generating pre-revenues. When we finally registered the drug... So, we reached the big goal of having a nuclear medicine treatment for cancer... Very successful treatment for neuroendochrine tumors. We had 160 million of pre-revenues, so it was important very much.

Stefano Buono [00:26:50] When you make a new drug, it's a little bit like making a new company in nuclear. You have to spend maybe 10 years of development and at least 1 billion in expenses. But if you have pre-revenues, you are already building a company underneath this. So, it's the same mechanism. So, I think that investors are also looking at my previous success because the company was then sold to Novartis after being listed on the NASDAQ for $3.9 billion.

Stefano Buono [00:27:27] By looking at my background as also an entrepreneur... And at the end, the same strategy adopted in the nuclear field, which is of course different, because there's medicine and energy. But there's a very high level of complexity, of nuclear complexity as well. I think, this is encouraging investors to support us financially.

Adam Smith [00:27:57] Yeah, you can certainly tell the story well to them; you can draw those parallels. And are you out raising in the capital markets right now to raise more money for the company to build the SMRs, or are you fully funded today and you're ready to go and you've got your investors onboard?

Stefano Buono [00:28:16] We are. We are fully funded in the sense that we have a runway of a few years. But I think we will never end raising money. Yes, we are in the process of raising money. There is a nice momentum for us. We are in the middle of a raise. I think we're going to announce an important milestone by the end of the summer. That is building up, so we are actually getting subscription and so on. So, I think we're going to communicate on that by the end of the summer as a first step of, let's say, two tranches of the operation that we have in mind.

Adam Smith [00:28:59] Amazing. I was looking at your history before this interview. And one pervasive issue with the nuclear industry is raising enough capital, especially through the private capital markets. And it seems like you've been fairly successful with your previous raises. I always love to see more private capital markets investment into some of these newer Gen IV, or just broadly, SMR companies.

Stefano Buono [00:29:26] Yes. One important thing is that you don't have to deceive the investor, ever. We try not to overpromise and we of course try to deliver a little bit more, more than what we promised.

Adam Smith [00:29:42] Underpromise, overdeliver.

Stefano Buono [00:29:45] Yeah. Sometimes it's difficult because if you are fair, you have to tell them that they're not going to see a reactor being operated before '31, which is already for Europe, an aggressive schedule, especially for an advanced nuclear reactors generation. But we cannot miss these dates and we have to work on that, otherwise we will not have the support. We have to be delivering on the milestones that will lead to these results. So far, we were lucky because we managed to deliver on these milestones. And I think that our strategies of also consolidating the industry was a little bit of a surprise for our investors. A positive surprise, because if they see contribution from revenues supporting their investment, it's nicer than just having a cash burn.

Adam Smith [00:30:48] Yep, yep. It's all about the cash flow at the end of the day. And is that 2031 timeline... Is that your timeline for the first 30 megawatt system to go online?

Stefano Buono [00:31:01] Yes. The nice thing is that by the end of '26, we will be having a non-nuclear reactor operating. That is a machine that will be heated by heated rods. But it will contain all of the elements of our reactor up to the turbine. Which is important for us because the operating temperature of a lead reactor, quite peculiar. We cannot go below 350 degrees in every part of the system. Meaning that if we connect the steam generator to the reactor, it has to be fed at that temperature control.

Stefano Buono [00:31:49] So, all of the BOP is peculiar to our use. The operation, the startup of the reactor. There are other things that need to be tested and integrated in its integrity. We decided to build and operate this precursor, we call it, essentially for five years before before finally having the real reactor operating. The components will have a longer qualification, I would say. Some components will be the same scale, some others will be in a little bit smaller scale. We are not going to produce 100 megawatt thermal, of course, because it would be too costly. The power scale is one-tenth.

Stefano Buono [00:32:45] We are also building and we actually already have some equipment, lead loops, to test the components and qualifying the components separately. We have already completed two of these installations, these loops. We are going to install the first one by the end of this year, a fourth one at the beginning of next year. So, we are building a huge qualification and testing facility that is useful for the demonstration of our reactor. And it's going to be useful for the future because we would like to increase the operating temperature of lead. Lead is boiling at 1,742 degrees, so it's a very high boiling point. We could go higher in temperature if you have the right materials. So, this facility will be useful not only to qualify the full system, but also to test new materials for the future.

Adam Smith [00:33:50] What are the benefits of going with a higher temperature system using lead?

Stefano Buono [00:33:57] Of course, we plan to use the reactors not only for producing electricity, but also for producing heat to combine in industrial processes. As far as the electricity is concerned, the thermal cycle of Superphénix had a higher temperature of 520 degrees. And with this temperature, the efficiency of electricity production was 42%. So, we want to at least reach this 42% that has been demonstrated like 50 years ago. It's a minimum goal for us.

Stefano Buono [00:34:42] But then, of course, the higher we can go with higher temperature, the higher the temperature of the heat that we can provide. So, to improve the efficiency in some industrial processes. Of course, some of them, they need low-temperature heat. Our machine is already doing a good job in providing steam. At the same time, for example, for the production of sustainable fuel and so on, or even green chemistry. Just simply, chemical process to produce chemical product as well. So, for this we are already, of course, providing a solution, but the higher we go with the temperature, the wider is the solution we can provide. For example, if you want to decarbonize the steel industry, the higher you go with the temperature you provide, the better it is because you save energy in the process.

Adam Smith [00:35:42] Yep, capturing the entirety of the heavy industrial processes.

Stefano Buono [00:35:51] At the end, the small modular reactors don't have competitors in the renewables on industrial application because producing... Being on the side of an industry with windmills and solar is not possible because you have an industrial environment and already you don't have the space, or you connect with a long line. Then, to have the accommodation. In industrial processes, you have to work 24/7. So, you need accommodation; that's another cost.

Stefano Buono [00:36:29] And then at the end, you have to create the heat from the electricity, which does not make any sense. So in the field, I think that there is a unique role that we can play with the nuclear industry. While in the production of electricity, we have to be level with renewable energy to be complementary to these energies. We can help by having a little modulation of our energy output during the day. And this is also what we are integrating into our system, the possibility to provide more power or less power during the day without changing the power of the reactor itself, but having accumulation on the BOP.

Adam Smith [00:37:25] And this sounds like you've done quite a bit of work already on not only the customer side, but the construction or the partners that you might use for construction of your units. Do you have or are you able to say publicly who you're working with for delivery of your units?

Stefano Buono [00:37:43] Well, with many companies. And I don't want to forget some, so I won't...

Adam Smith [00:37:49] Fair.

Stefano Buono [00:37:51] But they are European, I would say, mostly companies. And of course, in France, the big companies like Framatome. But also smaller ones. But I really don't want to forget names.

Adam Smith [00:38:12] No worries, no worries.

Stefano Buono [00:38:14] I see that in companies that are really partners. Maybe they are less known in the US, these kinds of companies. And a few companies are also very active in fusion systems, because the technology that they produce is very high-quality technology. And some of the nuclear companies in Europe are supporting also the fusion research because of their projects in the past.

Stefano Buono [00:38:45] Now, I think that will be fully booked for many years, honestly, so we have to rebuild capacity. We have to, to start from the education. We have to, again, push the younger generation to become nuclear engineers or just simply engineers and technicians because we really need a lot of people in Europe. In France, it's estimated that 220,000 people work in the nuclear industry. We have to have 100,000 people in less than 10 years. So, it's a huge challenge, and it's also a huge opportunity for Europe.

Adam Smith [00:39:29] Yeah, absolutely. I personally believe that nuclear over the next 10 or 15 years will end up being a major component of every European country's baseload power, so you're going to need hundreds of thousands of workers across the European continent to really run these facilities, to build the facilities, to do additional research as you build out and look at other technologies. It doesn't matter where you're at... Even in the US, I don't think we have enough people on this just because the wave of new technologies and new power plants that will be built. We've got to start getting people into these nuclear engineering programs.

Stefano Buono [00:40:14] Well, it's exciting to have these problems. Let's think 10 years back with the drama.

Adam Smith [00:40:22] It's certainly a better problem to have in the reverse.

Stefano Buono [00:40:25] Yes.

Adam Smith [00:40:29] At newcleo, it sounds like you're working on demonstration project coming up. Are there other exciting announcements that you're looking at or exciting projects that you're thinking about in the next year or so?

Stefano Buono [00:40:44] Yes, we started to work with the industry. One nice aspect is a collaboration we have with the chemical industry, MAIRE Tecnimont. They're investing a lot in what they call green chemistry that is producing ammonia, sustainable fuels, through the production of hydrogen. They're also working on the reuse of CO2 after carbon capture.

Stefano Buono [00:41:20] And this is a big company, a big, public company in Europe. And they really believe that nuclear is the solution to be put close to their plants in order to be successful economically, and to be able to do this green chemistry at reasonable cost. This company is coming from the oil and gas industry. I hope more and more investment from this industry will power our own nuclear industry, because I believe the fears on nuclear are really dropping one after the other in Europe. I see the excitement.

Stefano Buono [00:42:12] We have interacted with other oil companies; we have interacted with Solvay, and of course the steelmakers. There are really a number of entrepreneurs that need a lot of energy that are getting excited about nuclear. And I think this is where we are going to play a relevant role in the next few years to build opportunities that are going beyond electricity production.

Adam Smith [00:42:46] Yeah, it's exciting right now in the industry. You can really feel the tailwinds pushing at your back with this. It's just more announcements of countries increasing their threshold for nuclear within their energy generation mix. And you have all the SMR companies or even some of the gigawatt scale manufacturers making all these announcements about where they're building these plants, how many they're going to build, all the decarbonization benefits that you receive from it. So, it's definitely a very exciting time in the industry.

Adam Smith [00:43:20] Well, we're almost out of time here. Do you have any last thoughts or messages that you'd like to leave with our listeners?

Stefano Buono [00:43:29] No, I think just another testimony from Europe. Even the European Union is changing, a little bit, their mind. We had an announcement of the European Investment Bank coming back to invest into nuclear. We have a lot of interest with the European Commission to support the development of nuclear.

Stefano Buono [00:43:51] And we have the G7 in Italy this year. Italy is a country that left nuclear in '87 after the accident of Chernobyl. It is back on track with the idea of supporting nuclear. And nuclear is on the agenda of the G7. This Sunday, we are going to have the first announcement being made. We are hosting an event for the G7, all of the nuclear industry, including of course, the American industry as present. And we are making a common declaration on Sunday that will be signed by four ministries as well. Very happy, so stay tuned for the text of this declaration.

Adam Smith [00:44:40] I look forward to that announcement. Stefano, thank you for coming on the show.

Stefano Buono [00:44:45] Thank you very much for hosting me.

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