Candu Might Cango

Blogger's Note: Who knew Toshiba and G.E. were/are nuclear giants?! I didn't.

OTTAWA — The federal government is now expected to sell its entire stake in the Candu reactor division of Atomic Energy of Canada Ltd., a move that could have profound implications for Canada's nuclear industry and billions of dollars in plant refurbishments across the country.


When the government announced in December that it was formally inviting bids for the Candu division, federal officials said Ottawa was open to a range of investment options, including a 100 per cent takeover. A spokesperson at Natural Resources Canada says that remains the government's official position.


But stakeholders who have been briefed by investment bank Rothschild, which is overseeing the bidding process, have been told the government has now decided to unload its entire stake.


"We had always been led to believe . . . that this would be some form of public-private partnership with some government control," said Michael Ivanco, vice-president of the Society of Professional Engineers and Associates, a union that represents AECL engineers and scientists.


Without the government retaining at least some ownership, it's difficult to see how the Candu technology will survive, said Ivanco. Companies such as French-owned AREVA have expressed interest in acquiring the division, but it's more likely they would look to sell their own reactors, rather than continue to develop next-generation Candu technology.


"It's quite likely that it would die. I can't imagine a scenario a 100 per cent private Canadian player can compete with the big players in this game," said Ivanco.


The government first revealed last summer that it planned to split AECL and sell off the Candu division. The sale will not affect AECL's Chalk River, Ont., labs, which produce medical isotopes.


The government concluded the division was simply too small to compete with global nuclear giants such as AREVA, Toshiba and General Electric.


Some industry insiders argue that government involvement is key to building a globally competitive nuclear technology firm. They point to companies such as AREVA, which is majority owned by the French government, and AtomEnergoProm, which is controlled by Russia.


"The nuclear industry is very big, it's very strategic, and it's very long term. And typically, you find some government backstopping that activity," said Neil Alexander, president of the Organization of Candu Industries, which represents firms that supply Candu reactors in Canada and abroad.


The government has pumped $434 million into the development of next-generation Candu reactors since 2003. However, it appears the government has grown weary of bankrolling AECL, which has received $1.74 billion in public funding since 2006.


The Candu division lost $331 million in its last fiscal year, even after receiving $124 million in parliamentary appropriations.


A 100 per cent private takeover would make things interesting for several big nuclear-plant refurbishments, since the Candu division includes the group that manages those projects. In Canada, AECL has been contracted to repair the Bruce Power A plant in Ontario, the Gentilly-2 in Quebec, and the Point Lepreau in New Brunswick.


Neither the government nor Rothschild would comment on the bidding process. But sources say Rothschild has developed a short list of bidders and has opened a "data room" with confidential financial information for the bidders.


The Conservatives recently introduced legislative amendments that would give cabinet the authority to sell part or all of AECL without seeking further parliamentary approval. The changes were included in a bill that implements budget measures, meaning the opposition couldn't block the move without triggering an election.


Unless the government falls in the next few weeks, the bill should pass before the House breaks for the summer on June 9. Alexander says his organization is concerned the government is trying to push through the sale without adequate consultation.


"Yeah, it has to be done quickly, but they need to understand the issues, and they need to find the right partners to allow the industry to sustain itself," he said.