July 6, 2011
Feds sell AECL Candu
by Terry Myers
Don't worry, be happy.
That was the message MP Cheryl Gallant was sending out last week
following the federal government's announcement that it has sold Atomic
Energy of Canada's Candu reactor business to Canadian engineering giant
SNC Lavalin Group Inc.
Minister of Natural Resources Joe Oliver announced the sale last
Wednesday.
"The Candu commercial reactor business will benefit greatly from SNC
Lavalin's entrepreneurial capacity and global scale," said Oliver.
"The transaction will place Candu technology in proven, competent hands
to be serviced and deployed in Canada and abroad, meeting energy needs
and stimulating a supply chain located largely in Canada."
Under the agreement, to be completed later this fall, a new subsidiary
of SNC Lavalin, Candu Energy, will take over AECL Candu's three
“business lines” - services to the existing fleet of Candu reactors,
life-extension projects, and reactor new build projects.
SNC Lavalin will pay $15 million for the business, while the federal
government will underwrite any existing life extension projects, such
as those at Point Lepreau and the Bruce nuclear station, and will
contribute up to $75 million towards the completion of the design for
the Enhanced Candu (EC6) reactor.
The federal government will retain ownership of the “intellectual
property” in Candu reactor technology and receive royalties under an
exclusive licence to the new Candu Energy.
The government said that, based on “assumptions and analysis validated
by external financial advisors,” from these royalties as well as from
the sale of its inventory of heavy water, the government could realize
a net present value in amount of about $285 million.
“The transaction is part of a necessary restructuring amid challenging
domestic and international developments and is consistent with the
overall government approach to fiscal responsibility.
“It is a critical step to strengthen Canada's nuclear industry while
reducing taxpayers' exposure to nuclear commercial risks,” the
government announcement said.
Patrick Lamarre, executive vice-president of SNC Lavalin, said the
privatization of AECL is an important turning point to allow for a new
competitive business model, following years of challenges faced by
AECL, and is an endeavour to keep alive the Canadian nuclear industry.
“This acquisition will require concerted and coordinated effort on the
part of all stakeholders to work together.
“We will strive to make it a success both for the people who have built
it, and for our shareholders,” Lamarre said.
Gallant welcomed news of the sale, saying she is pleased that the
“Canadian nuclear legacy will remain in Canadian hands.”
“The people of Canada will retain ownership of all Candu intellectual
property, while providing an exclusive licence to Candu Energy to grow
its business,” she said.
Gallant said the sale also clears the way for the government to focus
on the future of the Chalk River Laboratories.
“Since we became government, I have supported the investment of
hundreds of millions of dollars into AECL for its future success,” she
said.
“Now that this announcement has been made, it is time to move forward.
“I believe there is a bright future for the nuclear industry in Canada
and I look ahead to working with our government to realize that future.”
Gallant said AECL's nuclear laboratories will continue to provide
services to the new Candu Energy on a commercial basis under a new
five-year agreement.
Those services could include shielded facilities, reactor chemistry and
systems engineering.
“The federal government has adopted many elements developed by our
local Chalk River Employees Ad Hoc TaskforcE (CREATE) committee for a
national laboratory.
“CREATE was formed at my direction by a group of current and former
employees to help me champion the cause of revitalizing Chalk River
Laboratories (CRL) after years of cutbacks by the former government.
“It is important to note CRL is not part of this sale,” she said.
The CREATE group also welcomed news of the sale, at least to the extent
that it allows the government to move forward on Chalk River.
“CREATE recognizes that the sale of the commercial division of AECL
signals the next step in the government of Canada's plan for the
restructuring of AECL to ensure its long-term success and prosperity.
“Now, the focus can turn to the Chalk River Laboratories. The process
of reviewing its structure, capabilities, and mission can begin," said
CREATE spokesman Gord Tapp.
CREATE is urging the federal government to turn the Chalk River labs
into a new “national laboratory” that would become Canada's “premier
nuclear science and technology facility.”
“The focus at CRL needs to be directed outward across Canada in order
to contribute to the public good by nurturing and performing
high-priority research and innovation in materials science, medical
isotopes, reactor safety and safeguards, energy alternatives, and waste
management, all of which contribute to the environment, to clean
energy, and to the safety, security, and health of all Canadians,” Tapp
said.
The federal government originally announced its plan to restructure
AECL by splitting the company in two back at the end of May 2009.
That move followed an 18-month review of AECL's corporate structure
that found the company is too small and too limited to compete with
other major firms in the world's nuclear power market.
The review recommended that AECL be split down the middle.
The Candu Reactor Division would be opened up to potential global
“partners,” while the Research and Technology Division, which includes
the Chalk River labs, would remain in government hands, but contracted
out to be operated by the private sector.
The government review said that a “government owned/company operated”
model for Chalk River would “best serve the government's policy
objectives.”
“Continued public ownership would enable the government to maintain
control and direction of the programs and policy work at CRL, while
private sector involvement could sharpen focus and drive innovation.”
As for how long it will take to complete a new model for Chalk River,
the head of AECL's nuclear laboratories said last fall it could be “a
journey of years.”
Dr. Robert Walker told outgoing members of Renfrew County council that,
among the questions that need to be answered are not only how the new
mission of the labs will be defined, but what is the appropriate level
of government support and the right balance of private investment.
“These are complex issues. They will take time to resolve,” Walker said.
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