The future of Atomic Energy Canada Limited (AECL), a crown corporation, is in a state of flux according to a series of terrific news reports by the Globe & Mail. The newspaper reports that the government of Canada has put a "for sale" sign out on the nuclear energy organization which has been in business as a state-owned entity since 1952. Before the government can complete the sale of all or part of AECL it must finish the design and regulatory certification of AECL's new ACR1000 nuclear reactor. If it doesn't then AECL will find itself behind the eight-ball.
Is the "For Sale" sign out or not?According to the Globe & Mail in a report published Feb 25, the Harper government wants to sell all or at least a majority interest in shares to other nuclear energy firms including Areva, General Electric, and SNC-Lavin Group. To do that they must have something to sell and the top item on the shelf is AECL's new ACR1000 reactor. The Chalk River plant is likely to remain in government hands.
Until last Fall the Canadian Nuclear Safety Commission (CNSC) was refusing to review the reactor's design because there were no sales contracts in place. Then the Harper government got an opportunity dropped in its lap that open the door to removing that obstacle. It is complicated, but the firing of Linda Keen, then director of the agency, over the closure of AECL's isotope reactor at Chalk River, also ended the agency's obstruction of the design process.What happened at Chalk River is that AECL told the regulators it has completed the installation of secondary emergency pumps and electrical systems for the aging reactor complex. In fact the work was only partially complete. When Keen found out she took action to close the rector and also set off an international crisis over the supply of short-lived medical isotopes worldwide.
The Harper government, which had not been consulted before Keen took action, fired her and also rammed through a parliamentary action that reopened the reactor and restored the supply of medical isotopes. In mid-February this year AECL's new CEO Hugh MacDiarmid told the Harper government CNSC and AECL were now on track to complete the ACR1000 reactor design and its regulatory approval process.
The actions come just in time with reactor sales pending in Canada at Ontario and New Brunswick provinces and a deal with the Russians for export of nuclear technologies. Steve Alpin, a Canadian energy analyst, thinks the South Korean nuclear establishment could give AECL a run for its money for these reactor projects. AECL is not deterred by this competitive threat and says the first ACR1000 is expected to be built and operational in Canada by 2014.
- Status quo - keep AECL as a crown corporation and spend funds up to half a billion annually to support it
- Sell it - offer a majority stake to investors globally
- Public/Private deal - sell shares to raise capital to build reactors in Canada and for export.
Not everyone thinks any of these scenarios are worth doing. Environmental group like Greenpeace are quoted by the newspaper as calling AECL a "money sucking black hole," and it that isn't hostile enough for you there is also the competitive issue of whether AECL can sell its CANDU heavy water design in a world of PWRs.Competition for Chalk River's market share
At the University of Missouri, one of the largest university research reactors in the U.S., Ralph Butler, the director, is taking dead aim at AECL's reactor. According to news reports published in the Globe & Mail Feb 26, a $40 million expansion is planned for the Missouri reactor to position it as the premier supplier of medical isotopes to the U.S. market. Currently, Nordian has 65% of the U.S. market with isotopes produced at Chalk River.Butler told the newspaper the "painful experience" of Chalk River's shutdown last November was an object lesson in the need for a reliable U.S. supply of molybdenum-99 and other isotopes. If he can complete the financing and regulatory approvals, Butler plans to produce enough product to supply 50% of the U.S. market which would chew up all but 15% of Chalk River's U.S. market share. The U.S. medical community is reportedly behind him. Last Fall the National Academy of Sciences issued a report that said the U.S. must have its own facilities to create critical isotopes.
So what is AECL's future?Chalk River is a specialty reactor and its future isn't going to substantially influence AECL's position as a government-owned entity or as a stand-alone corporation owned and operated by a consortium of international investors. The most likely scenario for AECL is that the government will offer shares to investors to raise capital and provide support for exports. The government will likely continue to own at least a minority share of the organization and provide funds for R&D to enhance reactor technologies. The growth in the market for new reactors worldwide supports this scenario. If AECL can makes sales in Ontario and New Brunswick for the new ACR1000 twin units, its export potential will likely also be realized over the long term.