The federal government announced Wednesday it is selling the Candu reactor business of Atomic Energy of Canada Ltd. to Montreal-based engineering firm SNC-Lavalin.
Natural Resources Minister Joe Oliver announced the sale at an afternoon news conference in Toronto, pegging the deal's price tag at about $15 million. According to Oliver, the government will retain intellectual property rights, which could generate more money in future royalties.
News of the sale came as no surprise after two days of published reports predicted a deal was imminent. The government has been trying to privatize the commercial reactor business of AECL for the past two years.
"The Candu commercial reactor business will benefit greatly from SNC-Lavalin's entrepreneurial capacity and global scale," Oliver told reporters.
"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."
The Montreal firm was the sole bidder for the cash-strapped Crown corporation, which has drained federal coffers of billions of dollars in subsidies, including about $1 billion in the past two years.
SNC-Lavalin will establish a new division, called CANDU Energy, which will be home to its newly acquired nuclear reactor sales, servicing and building divisions. About 1,200 AECL employees will make the move to Candu Energy, leaving about 800 other jobs in question.
"This acquisition will require concerted and co-ordinated effort on the part of all stakeholders to work together," said Patrick Lamarre, executive vice-president of global power operations for SNC-Lavalin.
"We will strive to make it a success both for the people who have built it, and for our shareholders."
Under the deal, the federal government retains AECL's research division, which includes the reactor at Chalk River, Ont. that produces medical isotopes used in screening tests for cancer and other ailments.
A shutdown at that facility in 2009 led to a global shortage of isotopes that worried Canadians and embarrassed the government.
In retaining CANDU intellectual property, the government will provide SNC with an exclusive license to the technology. Oliver said royalties from the arrangement could hit $285 million over the course of about 15 years.
The government will also be required to pay up to $75 million to develop AECL's enhanced CANDU 6 reactors. SNC will pay the remaining 30 per cent of the cost.
The sale could also have significant impacts on two provinces. AECL had put in a bid to build two new nuclear reactors in Ontario. However, Ontario's Finance Minister, Dwight Duncan, said the province likely won't make a decision until after the election on Oct. 6.
Ontario has asked the federal government to underwrite possible cost overruns of the new reactors, a request Ottawa has denied.
"That wasn't part of this deal and I have no comment on that at this time," Oliver said Wednesday.
In New Brunswick, provincial officials have been seeking Ottawa's help with about $1 billion in cost overruns at its Point Lepreau nuclear plant, which is being refurbished by AECL. The deal announced Wednesday leaves the federal government responsible for overruns at five ongoing projects, including the Point Lepreau refurbishment.
With files from The Canadian Press
