Ottawa sells AECL to SNC-Lavalin
The federal government is selling Atomic Energy of Canada Ltd.’s Candu division for $15 million and future royalties, after pouring billions of dollars into the troubled nuclear company to get it ready for privatization.
Natural Resources Minister Joe Oliver announced the sale to Montreal-based SNC-Lavalin Group Inc. (SNC-T) at a news conference in Toronto on Wednesday afternoon, capping a long-running effort by the Harper government to rid itself of the financially troubled nuclear company.
But Ottawa will retain financial responsibility for AECL’s existing refurbishment contracts, including liability for cost over-runs that have plagued projects at Point Lepreau in New Brunswick, and the Bruce power station in Ontario.
SNC will set up a new Candu division—with 1,200 of the nearly 2,000 workers now employed at AECL commercial—to continue the retooling jobs under a subcontract and pursue new business in reactor sales and servicing.
The privatization deal threatens to spark a political battle between Ontario’s Liberal government and the federal Conservatives.
Premier Dalton McGuinty has urged Ottawa to provide financial support for the province’s planned purchase of two enhanced Candu 6 (EC6) reactors. Without that federal assistance, the McGuinty government fears the cost of the reactors will climb to an unacceptable level, and Ontarians will be left to bear the risk of cost over-runs.
Under the deal with SNC, Ottawa will provide $75 million towards the completion of the EC6’s development. The new reactor is built on the existing Candu 6 platform, but with enhanced safety features. AECL has essentially shelved the development of the larger, more modern, Advanced Candu Reactor 1000, given the lack of orders.
“The Candu commercial reactor business will benefit greatly from SNC-Lavalin’s entrepreneurial capacity and global scale,” Mr. Oliver said in a statement.
SNC outlasted several other bidders in an international auction process that began more than two years ago. But with no international reactor sales on the horizon, and AECL’s refurbishment business encountering frequent setbacks, SNC could drive a hard bargain with a government that was determined to unload the company.
Federal New Democratic Party critic Nathan Cullen slammed the deal as a “firesale,” saying the federal government allowed AECL to wither before selling it for a pittance.
But SNC insists it is buying AECL’s Candu business with growth in mind, not to see it shrink and die.
“With our expertise and experience in the nuclear sector, we believe that Candu Energy will allow us to open new markets and capitalize on existing ones,” Patrick Lamarre, the company’s executive vice-president global power, said in an interview.
AECL is targeting markets such as Jordan—which is now pursuing a purchase—Argentina, Turkey and China. Ottawa will provide backing of the Export Development Canada for international deals, as it does for other export-oriented companies.
Lamarre said he looks forward to partnering with Ontario and Ottawa to revitalizing the nuclear industry.
“Canada is maintaining its status as a nuclear country and they want to keep developing and supporting it,” he said.
The SNC executive said he hopes Ottawa and Ontario can work together to conclude the province’s reactor deal, noting that the federal government has offered loan guarantees to Newfoundland and Labrador for its Lower Churchill hydroelectric project.
“So we have to see how they will establish their dialogue to hopefully join together their policy and their vision around nuclear for the Canadians industry and to recognize the positive impact [an Ontario sale] would have for export afterwards,” he said.
Under the deal, Ottawa will retain AECL’s Chalk River laboratory, which produces medical isotopes.