[cdn-nucl-l] AECL says Hitachi, SNC keen to invest

["Adam McLean" <adam.mclean@utoronto.ca>]

Posted in the Globe and Mail on April 23, 2003 and at:
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20030423/RAEC
L//?query=AECL

Adam

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AECL says Hitachi, SNC keen to invest
Lobbies Chrétien for federal funds

By STEVEN CHASE
Wednesday, April 23, 2003 - Page B1 

OTTAWA -- Hitachi Ltd. and SNC-Lavalin Group Inc. are both keen to invest in
Atomic Energy of Canada Ltd., the Crown corporation's chairman has told
Prime Minister Jean Chrétien in a letter lobbying for an extra $170-million
in federal subsidies to shore up development of new Candu reactor
technology.

"Hitachi has already proposed . . . that it take a minority equity position
for $100-million in a proposed AECL commercial subsidary," Raymond Frenette
wrote Mr. Chrétien in a March 19 letter obtained by The Globe and Mail.

"SNC-Lavalin is also very interested in investing in AECL, as are other
world-class Canadian firms," he wrote to Mr. Chrétien, who has been an
ardent supporter of Canada's nuclear reactor program during his time as
Prime Minister.

Mr. Frenette warned that AECL could lose private sector partners -- and
business -- if Ottawa doesn't confirm it will pony up the additional cash to
help finish readying its Advanced Candu Reactor (ACR) for market.

"The consequence could be foreclosure of investment in AECL, and therefore
AECL's ability to launch ACR with partners in the next few years," he wrote
in the letter.

"Specifically, the proposed $100-million investment by Hitachi in AECL could
be lost and the ACR program harmed . . . Hitachi's proposed investment is
based on the government committing sufficient funding to ACR."

Natural Resources Minister Herb Dhaliwal last month struck a panel to
examine whether AECL, which builds nuclear reactors, should find private
sector partners to market its advanced reactor technology through jointly
owned ventures.

Mr. Frenette wrote the Prime Minister that AECL believes a key cabinet
committee already gave a thumb's up last December to a $220-million package
that would help ready ACR technology for market.

"As you know, Mr. Dhaliwal secured approval in principle from [the cabinet
committee on economic union] last December for $220-million over four years
to develop and prelicense ACR in Canada and the U.S.," Mr. Frenette wrote.

"This was a real vote of confidence in AECL and the turnaround of the
corporation's fortunes," he wrote.

The federal cash AECL seeks is above and beyond current taxpayer funding for
the Crown corporation, which amounts to about $100-million a year.

But AECL is concerned that only $50-million of this $220-million package was
set aside in federal government spending plans so far, Mr. Frenette wrote.

"Multiyear government support is needed to maintain market confidence in the
[ACR] and attract strategic investment partners," Mr. Frenette said.

"AECL respectfully requests your assistance to secure authorization of the
remainder of the funding needed to make Canada's Advanced Candu Reactor the
foremost contender in the coming wave of new nuclear plant orders
worldwide."

Sales of new reactors by AECL have been relatively slow.

A deal in January this year to build a Candu reactor in Romania was the
first new reactor sale since 1997.

It has sold seven reactors since 1991.

Mr. Frenette warned Mr. Chrétien that AECL's future prospects in the United
States could be jeopardized if Ottawa doesn't confirm it will advance the
extra cash to develop its new reactor technology.

He said the U.S. Department of Energy is expected to announce funding this
fall for U.S. utilities to review AECL's ACR as one of "only two viable
nuclear power options" -- a big potential market.

"AECL will need to be able to indicate to [the Department of Energy] and
U.S. customers that it can deliver, hence the need for confirmation of [the
$170-million] in incremental funding," Mr. Frenette wrote.

AECL spokesman Marc Kealey said the corporation is "pleased with the level
of support we received from our shareholder" but wants to ensure Ottawa's
commitment to the extra ACR funding is cemented in place even beyond Mr.
Chrétien's retirement in February, 2004.

He said AECL wants to "ensure that in light of any changes that could take
place, that we want to make sure that people know that we're still looking
for" a full commitment.

Asked to elaborate, Mr. Kealey pointed out "this Prime Minister's going to
change; he told us he's leaving next February so we just want to make sure
that everybody who's involved in decision making knows that there's a
four-year commitment to this."

Mr. Frenette in his letter tried to appeal to Mr. Chrétien's support for the
Kyoto Protocol to cut global warming, which Canada has signed, by pointing
out that nuclear reactors, which emit few greenhouse gases, could be a
"major clean-air Kyoto solution."