Nuclear Fuel Cycle Royal Commission Tentative Findings

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NUCLEAR FUEL CYCLEROYAL COMMISSIONTENTATIVE FINDINGSNUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS1

NUCLEAR FUEL CYCLEROYAL COMMISSIONTENTATIVE FINDINGSFebruary 2016Adelaide, South Australia Nuclear Fuel Cycle Royal Commission

CONTENTSOverview2The energy future4Exploration, extraction and milling5Further processing and manufacture8Electricity generation11Management, storage anddisposal of waste15Social and community consent21Land, heritage and respecting rights22Risks and challenges23References29Guidelines for your response41Tentative Findings response coversheet 42

OVERVIEWThe Tentative Findings of the Nuclear Fuel Cycle RoyalCommission are an interim step in the Commission’s processbefore the completion of its report in May 2016. They reflectthe Commission’s current thinking on the issues it considersto be important and the most cogent evidence relevant tothem. They do not contain recommendations.In the Tentative Findings, the Commission has notaddressed every issue raised in the writtensubmissions and oral evidence, nor has it identifiedthe submissions it has expressly accepted or rejected.They are shared with the community as part of theCommission’s commitment to conducting an open processwith access to the written submissions, oral evidence andmaterial it considers to be significant.South Australia can safely increase its participation innuclear activities and, by doing so, significantly improvethe economic welfare of the South Australian community.Comment is sought on the Tentative Findings to betterinform and refine the Commission’s thinking before itfinalises its findings and makes recommendations.For details on how to comment go to www.nuclearrc.sa.gov.au or see page 41. The closing time for responsesto the Tentative Findings is 5pm 18 March 2016.ABOUT THE COMMISSIONKEY TENTATIVE FINDINGSCommunity consent would be essential to the successfuldevelopment of any nuclear fuel cycle activities.The management of the social, environmental, safety andfinancial risks of participation in these activities is notbeyond South Australians.Long-term political decision-making, with bipartisan supportat both state and federal government levels, would be aprerequisite to achieving progress.The Commission was established by the South AustralianGovernment on 19 March 2015 to undertake an independentand comprehensive investigation into the potential forincreasing South Australia’s participation in the nuclear fuelcycle, specifically in four areas of activity:Any development would require sophisticated planningand consent-based decision-making, acknowledging theparticular interests and experiences of regional, remote andAboriginal communities. expanded exploration, extraction and milling of mineralscontaining radioactive materialsAn expansion of uranium mining has the potential tobe economically beneficial. However, it is not the mostsignificant opportunity. the further processing of minerals and the processingand manufacture of materials containing radioactive andnuclear substances the use of nuclear fuels for electricity generation the establishment of facilities for the storage and disposalof radioactive and nuclear waste.The Commission’s task is to identify, from credible andreliable sources, relevant facts as to this potential, and theassociated risks and opportunities for the South Australiancommunity, economy and environment. Its role is to provideconsidered advice to government to inform decision-making,not to conduct a poll on whether such activities should occur.The Commission has approached this task by gatheringinformation through written submissions, evidence ofwitnesses at its public sessions, and its own research,both in Australia and overseas. To further inform itsthinking, the Commission engaged organisations withthe expertise and experience to undertake detailedassessments of the commercial viability and economicimpacts of potential nuclear activities. The Tentative Findingsdraw together the major elements of that information.2NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGSEXPLORATION, EXTRACTION AND MILLINGFURTHER PROCESSING AND MANUFACTUREIn an already oversupplied and uncertain market, therewould be no opportunity for the commercial development offurther uranium processing capabilities in South Australia inthe next decade. However, fuel leasing, which links uraniumprocessing with its eventual return for disposal, is more likelyto be commercially attractive, creating additional employmentand technology-transfer opportunities.ELECTRICITY GENERATIONTaking account of future demand and anticipated costsof nuclear power under the existing electricity marketstructure, it would not be commercially viable to generateelectricity from a nuclear power plant in South Australia inthe foreseeable future.However, Australia’s electricity system will require low-carbongeneration sources to meet future global emissions reductiontargets. Nuclear power may be necessary, along with otherlow-carbon generation technologies. It would be wise to plannow to ensure that nuclear power would be available should itbe required.

MANAGEMENT, STORAGE AND DISPOSAL OF WASTEThe storage and disposal of used nuclear fuel in SouthAustralia is likely to deliver substantial economic benefits tothe South Australian community. An integrated storage anddisposal facility would be commercially viable and the storagefacility could be operational in the late 2020s.To deliver long-term benefits to future generations of SouthAustralians, a special arrangement such as a state wealthfund should be established to accumulate and equitablyshare the profits from the storage and disposal of waste.EnrichmentConversionFor natural uranium fuelsFuel fabricationRecycleMillingPower plantReprocessingMiningElectricityintegrated STORAGE AND DISPOSAL facilityFigure 1: The nuclear fuel cycle.Adapted image courtesy of the Department of the Prime Minister and Cabinet, Australian Government.NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS3

THE ENERGY FUTURE1. The energy sector in Australia and elsewhereis undergoing transformation as a result of newtechnologies, changes to traditional supply and demandcharacteristics, and a desire to reduce carbon emissions.This transformation presents opportunities, and needs tobe guided by stable medium-to long-term governmentpolicies that encourage appropriate and timelyinvestment. Such policies must be based on evidence,not opinion or emotion.12. The extent of the opportunities for future SouthAustralian participation in the global markets for uraniumore and other nuclear fuel cycle services is highlydependent on the policies and decisions of all nationsas to:a. global policy measures adopted to address climatechange, and the speed of the implementation ofactions to transition to low-carbon energy generationb. the suitability of nuclear power as an energy generationoption for local conditionsc. the extent and pace of the installation of any newnuclear power plants.23. The Paris Agreement negotiated at the 2015 UnitedNations Climate Change Conference3:a. calls for signatories to adopt policies that aim tolimit any rise of the global average temperature to‘well below 2 C’ above pre-industrial levels and‘to pursue efforts to limit the temperature increaseto 1.5 C’ above pre-industrial levelsb. permits countries to identify their own measuresfor reducing greenhouse gas emissionsc. does not identify a mechanism for determiningindividual countries’ share of reductions.4. The global abatement commitments made before theParis conference in 2015 will not achieve the ‘well below2 C’ target. Significant additional action will be required.The slower the abatement action taken now to effect thistransformation, the greater the action that will need tobe taken later, and the greater its costs and impact onthe global and local economy.45. In addition to other measures such as energy efficiencyand demand management, it will be necessary tosignificantly transform Australia’s energy sector to meetthe widely accepted global target of zero energy sectoremissions by 2050. That will be necessary to supportpathways to decarbonise other economic sectors suchas transport.54NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS6. The Australian Government does not plan to formallyreview its current and any further carbon abatementcommitments before 2017.67. Nuclear power is presently, and will remain in theforeseeable future, a low-carbon energy generationtechnology. A recent peer-reviewed meta-analysis oflifecycle modelling undertaken by the National RenewableEnergy Laboratory in the United States, which was usedby the Intergovernmental Panel on Climate Change(IPCC), concludes that nuclear power has greenhousegas emissions equivalent to other low-emissiontechnologies such as wind, solar photovoltaics (PV) andconcentrated solar thermal. Each of these technologieshas greatly lower emissions than gas, and significantlylower again than coal. Other significant studies andreports undertaken on a full lifecycle basis also show thatnuclear, wind and solar are low-carbon technologies. 78. In Australia, the ability for nuclear power to contributeto emissions reductions before 2030 is affectedsignificantly by the long lead time to make new capacityoperational. Should only modest progress be achievedin emissions reductions before 2030, as appears likelybased on current achievements, more rapid action wouldneed to be taken to reach a net zero emissions targetfrom energy generation by 2050.89. The politics concerning global efforts to reduce emissionsare fluid. It would be wise to plan now for a contingencyin which external pressure is applied to Australia to morerapidly decarbonise. Action taken now to settle policyfor the delivery and operation of nuclear power wouldenable it to potentially contribute to a reduction in carbonemissions. While it is not clear whether nuclear powerwould be the best choice for Australia beyond 2030,it is important that it not be precluded as an option.9

EXPLORATION, EXTRACTION AND MILLINGThe activity under consideration is expansion of the currentlevel of exploration, extraction and milling of mineralscontaining radioactive materials in South Australia.to contain features to avoid structural collapse andlimit seepage potential, and to provide for monitoringto control seepage, and capping at closureb. the handling of ores containing radioactive minerals,both extracted uranium and its waste products—humanexposure is controlled through ventilation, automatedprocesses, protective equipment, engineered barriersand employee monitoringWHAT ARE THE RISKS?10. Exploration activities for all minerals are most commonlyundertaken by remote geophysical methods and poselow environmental risks. Where drilling occurs, if properlyapplied, the current administrative and regulatoryprocesses are sufficient to manage the environmentaland other risks. There are always risks of non-compliancewith licence requirements, and this has occurred inthe past.10c. the generation of dust—monitored and controlled bythe use of filtration systems and wetting dry surfacesd. the access of wildlife to acidified tailings—managed bythe use of audio and light deterrents, and fencing11. Mining and milling activities for all minerals pose risksto human health and the environment, which need tobe managed. If expanded, uranium mining and millingactivities in South Australia would create similar risksto those arising from current uranium mining activities.In the case of expanded underground operations bytoday’s method (see Figure 2), the risks and theircurrent mitigation measures are11:e. the extraction and use of water to support mineralprocessing—modelled before commencing activities andmonitored over time to ensure extraction is sustainable.Some of the environmental effects identified in currentand former mines elsewhere in Australia are morechallenging than in the arid conditions of South Australia.In parts of South Australia, such as Radium Hill, theuranium ore contains few sulphides. Sulphides createconditions that allow uranium to migrate throughthe environment.a. the production of mine wastes, most significantlytailings, which are deposited in engineered containmentdams—they are licensed under state law and requiredOutcropOverburdenAditVeinDriftAir shaftHanging wallRaiseFootwallinzeShaftWStopeSumpFigure 2: The underground uranium mining method, which is used at the Olympic Dam mine.Image courtesy of Department of State Development, Government of South Australia.NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS5

12. In the case of in-situ leach (ISL) mining (see Figure 3)in South Australia, activities are presently conducted inaquifers, which, because of their natural salinity and radoncontent, have no human or stock use. The risks of ISLmining and their primary means of management are:12a. the potential for contamination of non-target aquifersthrough acid solution migration—modelled beforeextraction starts and monitored at the points ofinjection and extraction, and at nearby monitoring wellsb. the production of solid and liquid wastes—the solidwaste is stored in purpose-built containment facilitiesand the liquid waste disposed of in the target aquifers,where it naturally attenuates over the long termc. the handling of radioactive materials, both extracteduranium and its waste products—human exposure islimited, and is monitored and controlled using protectiveequipment, engineered barriers and automated processes.13. The lessons that have emerged from the state-owneduranium mine at Radium Hill, which closed in 1961,and the associated treatment works at Port Pirie havebeen incorporated into current regulatory frameworks,which require13:a. the environmental consequences of mining activitiesto be addressed in the establishment and operation ofmines and associated facilitiesb. the planned decommissioning and rehabilitation of minesites to minimise ongoing risks to the environmentc. the separation of facilities from sensitive environments,such as adjoining estuaries and population centresd. an independent environmental regulator to monitorand enforce compliance with those requirements inaccordance with internationally accepted standards.14. The risk of post decommissioning impacts fromexploration and mining is addressed by a regulatorholding a financial security or bond in the amount of theestimated cost of remediation. The value of the bond isusually adjusted over the mine’s operational life.An exception to this practice is the state’s largestmining project, Olympic Dam. Although there is provisionfor closure costs in the company’s internal accounts,the mine has been permitted by special legislation tooperate without a separate financial security being heldby government.14Uranium extraction columnsYellowcake dryingand packagingKEYInjection wellExtraction wellUranium recovery columnsMonitor wellExtraction filtersEvaporation pondsWell houseTrunk linesProductionmonitor wellShoestringsands, claysand gravelsOverlyingmonitor wellProductionmonitor wellUraniumFigure 3: The in-situ leach uranium mining method, which is used at the Beverley and Four Mile mines.Image courtesy of Heathgate Resources.6NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGSScreened intervalInjected solutionUranium enrichedsolution

ARE THE ACTIVITIES FEASIBLE?15. Given the detailed knowledge of uranium deposits inSouth Australia, the similarity of geological characteristicsin the north of the state, and what is known about thedevelopment of mineral systems, there are good reasonsfor concluding that new commercial uranium deposits canbe found in the state.1516. The barriers to the successful exploration for thoseuranium deposits—barriers that are shared with otherminerals—include16:a. the extent and thickness of cover over the state’smineral-bearing rockb. the cost of drilling activitiesc. the low probability of success in drilling in greenfieldlocationsd. the absence of data from drilling in significant parts ofthe statee. the lack of widespread application of new sensingtechnologyf. the lack of an integrated pre-competitive datasetcontaining information from related drilling and sensingactivitiesg. t o a lesser extent, the mineral’s current market price.17. The South Australian Government’s Plan for AcceleratingExploration (PACE) has led to increased investment inmining exploration. However, exploration expenditureis cyclical. When the mineral exploration industry hasinvested in projects during less favourable economicconditions (with the support of government), it has beenbetter placed to take advantage of subsequent recoveriesin the markets for those commodities.17IN WHAT CIRCUMSTANCES ARE THE ACTIVITIES VIABLE?18. The significant barriers to the viability of new uraniummine developments in South Australia are18:a. the current low price of uranium and uncertaintyabout the timing of any price increasesb. the costs of identifying new depositsc. the requirements for regulatory approval of newuranium mining activities from state mining andenvironmental regulators and the federal environmentalregulator. Although the approvals processes at thestate and federal government levels have a commonpurpose, they are separate, have different timeframes,require different information, and can result in differingconditions being imposed on the same activity. Thishas increased the anticipated costs of, and timeframesfor, regulatory approval for a new uranium mine.19. Increases in the uranium price in the short term areunlikely given existing inventories. While the low pricehas restrained greenfield exploration, recent commercialdecisions in Australia do not give a clear indication ofthe future prospects of the uranium industry. While ToroEnergy is preparing to start operation of a new minein Western Australia, ERA has decided not to expandits output at its operations in the Northern Territory,and the Honeymoon Mine is in care and maintenance.BHP Billiton’s decision not to expand Olympic Dam isprincipally related to copper, the mine’s main output.1920. South Australian uranium production in 2014/15 wasvalued at about 346.5 million, with associated royaltiesof 15.9 million. South Australia could in the short termreturn to full capacity production levels of about 5000tonnes. Increasing output beyond those levels wouldrequire further investment in new production capacity.Additional in-situ leach mining, although able to beestablished more quickly than underground mining,would have only a modest impact. It is unclear at this timewhether new methods of ore treatment at Olympic Damwould result in additional output.2021. Even if production could be increased to meet veryoptimistic demand forecasts under strong climate actionpolicies (such as those forecast by the InternationalEnergy Agency), the value of production in South Australiaby 2030 and associated royalties, while significant inthemselves, are small in terms of the state’s total revenues.Considering the value of uranium once it is processed intoa fuel, South Australia could derive greater value from itsextraction if it were able to process uranium into a fuelsource, as explained in Tentative Findings 96-102.2122. Energy generation technologies that use thorium as a fuelcomponent are not presently commercial, nor expectedto be in the foreseeable future. Further, with the low priceof uranium and its broad acceptance as the fuel sourcefor the most dominant type of nuclear reactor, there isno commercial incentive to develop thorium as a fuel.Although South Australia possesses numerous thoriumdeposits, it does not have a competitive advantage in thatresource as it does with uranium.22See also Social and community consent, page 21; Land,heritage and respecting rights, page 22; and Risks andchallenges, page 23.NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS7

FURTHER PROCESSING AND MANUFACTUREThe activity under consideration is the further processingof minerals, and the processing and manufacturing ofmaterials containing radioactive and nuclear substances(but not for, or from, military uses) including conversion,enrichment, fabrication or reprocessing in South Australia.WHAT ARE THE RISKS?23. For conversion, enrichment and fuel fabrication facilities,the most significant environmental and safety risksare posed by toxic, corrosive and potentially explosivechemicals, rather than the radioactivity of the materialsinvolved. All hazardous materials used and produced inthese processes would have to be carefully managed;however, many of these chemicals are already used andsafely managed by Australian industry.2324. In conversion and enrichment facilities, uraniumhexafluoride is a toxic, volatile solid, and is harmful ifdirectly inhaled. If it is exposed to water vapour in the airit forms a corrosive chemical. Other corrosive, flammableand explosive chemicals used throughout theseprocesses present further safety and environmental risks.Containment barriers in these facilities are important tomanage these risks and prevent any chemical releasesinto the environment. Should these barriers be damagedor breached, there is a risk of chemical release anddamage to the surrounding environment.2425. If inhaled or ingested, airborne low-level radioactivematerials also present health risks to workers in furtherprocessing facilities. These risks are managed by usingprotective clothing for workers, monitoringand containment, and ventilation and air filtering.2526. The risk of significant releases of radioactive materialsinto the environment during normal operation atconversion, enrichment and fuel fabrication facilities islow. Radioactive releases during an accident are possible,but the radiological consequences would be expectedto be limited due to the low radiotoxicity of the uraniumcompounds involved.2627. Conversion, enrichment and fuel fabrication processes(see Figure 4) produce chemical and radioactive wastes.Techniques exist to minimise the hazardous materials inthe waste produced during these processes, such asby filtering or ‘scrubbing’ gaseous discharges, andrecovering and reusing chemicals in liquid discharges.In the enrichment process, depleted uranium tails area byproduct of the manufacturing process. These tailsare produced in large volumes and require storage andsecurity.278NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGSARE THE ACTIVITIES FEASIBLE?28. There is no technical impediment to providing conversion,enrichment or fuel fabrication services in Australia.The technology associated with chemical processingor manufacturing is transferrable. South Australia hasthe skills base to provide processing services. Thedevelopment of any services is impeded by a legislativeframework that prohibits these activities. A regulatorystructure would need to be developed to provide fortheir licensing.28IN WHAT CIRCUMSTANCES ARE THE ACTIVITIES VIABLE?29. At present, the market for uranium conversion andenrichment services is oversupplied. The amount ofoversupply is in contention, mainly because of themanner in which the industry operates. Although some ofthe oversupply arises from secondary sources that willeventually diminish, excess capacity in the conversionmarket is about 28 per cent, and for enrichment thefigure is about 25 per cent. There is also a sizeablesurplus in global fuel fabrication capacity. This hasdepressed current prices, most evidently in pricesfor enrichment, which at December 2015 were at anhistorical low of US 60 per separative work unit (SWU),whereas the average price between 2005 and 2013 wasjust above US 140 SWU.2930. To inform consideration of their viability, a high-levelfinancial analysis of processing services was undertakenon a range of technologies, development costs andcombinations of services. The analysis shows30:a. There are some limited circumstances in which astandalone conversion facility in South Australia couldbe viable. While a wet conversion facility is marginallyunviable in many scenarios, it is not ruled out.It would be viable if the price for conversion serviceswas greater than its long-term average of US 16 perkilogram of uranium (current spot prices are abouthalf that). At the long-term average price, it would beviable if the cost of capital was lower than the 10 percent used in the analysis. A dry conversion facility ispotentially viable under a range of scenarios, although itis used commercially in only one facility internationally.b. A centrifuge enrichment facility is not, on balance,likely to be viable in South Australia as a standaloneactivity, or in combination with conversion. In a rangeof future scenarios, a facility utilising gas centrifugetechnology would not be viable even if prices revertto their long-term historical average of US 140SWU by 2030. Private investment has not led to

ConversionEnrichmentChemical reactions transformuranium oxide into UF6(by wet or dry conversion processes)235U component isconcentrated 0.71%Uranium oxideconcentrate (U3O8)UF6 gas cylinderConverted from UF6to UO2Gas centrifugesFabricationFabricated into nuclear fuelUO2 powderUO2 pelletsWet conversionDry conversionThe uranium oxide is pretreated using a solvent extraction process.The uranium oxide is pretreated by heating with hydrogen gas.Pellets into fuel rods/bundle assemblyFigure 4: The conversion, enrichment and fuel fabrication processes.laser enrichment technology being demonstrated ata commercial scale. If laser enrichment technologycan lead to substantially lower capital and operatingcosts, it would have considerable value as a potentialeconomically disruptive technology. However, it wouldrequire significant further private investment, with theassociated commercial risk, to realise that value.c. F uel fabrication facilities could be commerciallyviable, the more profitable being those concernedexclusively with fabricating fuel for light water reactors.Those manufacturing fuel for pressurised heavywater reactors are less profitable, although stillmarginally viable.31. Facilities delivering these services are located in countriesthat have an associated domestic nuclear energy industry.Further, particularly for enrichment and fuel fabrication,there are substantial barriers to entry. In addition to thevertical integration of some incumbents, the long-termcontractual arrangements between customers and serviceproviders deliver significant value to incumbency andexperience.3132. Overall, the financial assessment points to, at best,marginal investment outcomes for facilities based onproven technologies, and a limited range of positiveinvestment outcomes for facilities based on proprietary orunproven technology. Combined with significant barriersto entry, the current market oversupply and the uncertaintyaround future growth of nuclear power generation,there would be no opportunity for the commercialdevelopment of further processing capabilities in SouthAustralia, assuming they were in competition with existingsuppliers. The position could well be different for an existingsupplier seeking to expand its operations. Proximity ofuranium mining would not, by itself, present a competitiveadvantage for conducting processing activities.3233. However, the concept of fuel leasing, which links uraniumprocessing with its eventual return for disposal, discussedat Tentative Findings 96 to 102, may present competitiveadvantages.REPROCESSING3334. The radio-chemical processing of used nuclear fuel,or reprocessing, is presently undertaken in countrieswith domestic nuclear power generation. Reprocessing,which separates fission products to allow the re-use ofsome fuel components, is a technically sophisticatedundertaking with high capital and operational costs.Reprocessing has proven to be a risky technology tointroduce, with two overseas facilities experiencingsignificant operational difficulties. The commercial viabilityof reprocessing has been undercut by the availability andlow cost of uranium.NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS9

35. Without nuclear power generation, a used fuelreprocessing facility would not be needed in SouthAustralia, nor would it be commercially viable. On thatview it is not necessary to address its specificenvironmental and health risks.NUCLEAR MEDICINE3436. Facilities operated by the Australian Nuclear Scienceand Technology Organisation (ANSTO) in Sydney formanufacturing nuclear medicine are presently beingexpanded for the production of radioactive medicalisotopes, most notably the radionuclide 99Mo, which isused for diagnostic imaging. Considering the cost ofthe infrastructure and the nature of the market, theduplication of such facilities in South Australia wouldnot be profitable or cost effective.37. There are opportunities, complementary to ANSTO’sactivities, to make greater use of and expand thecapabilities of the cyclotron and laboratories concernedwith the manufacture of radiopharmaceuticals at theSouth Australian Health and Medical Research Institute(SAHMRI). These opportunities are in the development ofnew techniques for the manufacture of radionuclides formedicine, providing the skilling of Australian and overseastechnicians and conducting research to develop newtherapies. Manufacturing radiopharmaceuticals using acycloctron produces very small quantities of short-livedwastes, which are already managed.See also Social and community consent, page 21; Land,heritage and respecting rights, page 22; and Risks andchallenges, page 23.10NUCLEAR FUEL CYCLE ROYAL COMMISSION TENTATIVE FINDINGS

ELECTRICITY GENERATIONThe activity under consideration is the establishment andoperation of facilities to generate electricity from nuclearfuels in South Australia.and that there would never be a loss of all electricalpower at a plant for more than a short time.38. Nuclear power plants are very complex systems,designed and operated

of nuclear power under the existing electricity market structure, it would not be commercially viable to generate electricity from a nuclear power plant in South Australia in the foreseeable future. However, Australia's electricity system will require low-carbon generation sources to meet future global emissions reduction targets.

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