Natural Resources Canada
June 29, 2011 16:50 ET
Government of Canada and SNC-Lavalin Group Reach Agreement on AECL CANDU Reactor Division
OTTAWA, ONTARIO--(Marketwire - June 29, 2011) - The Government of Canada has reached an agreement with SNC-Lavalin Group Inc. under which the Canadian engineering firm will acquire the CANDU Reactor Division of Atomic Energy of Canada Limited (AECL).
Under the terms of the agreement, SNC-Lavalin, through its wholly owned subsidiary CANDU Energy, will take over the CANDU Reactor Division's three business lines: services to the existing fleet, life-extension projects and reactor new builds.
"The CANDU commercial reactor business will benefit greatly from SNC-Lavalin's entrepreneurial capacity and global scale," said the Honourable Joe Oliver, Minister of Natural Resources. "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."
"As one of the world's largest engineering/construction firms with offices in over 35 countries worldwide, we're looking forward to developing new business opportunities using CANDU's renowned technology on projects around the globe," said Pierre Duhaime, President and CEO, SNC-Lavalin Group Inc. "We're also very happy to welcome the new employees this acquisition will bring to our ranks, and to work together to realize our vision for this industry."
The Government of Canada will retain ownership of all CANDU intellectual property, while providing an exclusive licence to CANDU Energy to grow its business. In addition to an upfront payment of $15 million from SNC-Lavalin, this will create an opportunity for Canadian taxpayers to benefit from royalties on future sales of reactors, future life-extension projects and certain products and services.
The transaction is part of a necessary restructuring amid challenging domestic and international developments and is consistent with the overall Government approach to fiscal responsibility. It is a critical step to strengthen Canada's nuclear industry while reducing taxpayers' exposure to nuclear commercial risks.
It's expected that approximately 1,200 jobs will be protected at the closing of the transaction.
The Government of Canada will continue its role in maintaining safety, security and environmental stewardship in all aspects of the nuclear industry. Canada's nuclear regulator, the Canadian Nuclear Safety Commission, will continue to oversee all parts of the entire nuclear industry in this country.
FOR BROADCAST USE:
The Canadian engineering firm SNC-Lavalin will acquire the CANDU Reactor Division of Atomic Energy of Canada Limited under an agreement with the Government of Canada. The transaction will strengthen Canada's nuclear industry while reducing taxpayers' exposure to nuclear commercial risks.
The following media backgrounders are available at www.nrcan.gc.ca/media:
a) The Transaction Agreements
b) Government Funding for AECL Commercial Activities
c) Nuclear Safety and the Divestiture of AECL's CANDU Reactor
NRCan's news releases and backgrounders are available at www.nrcan.gc.ca/media.
AECL sale puts Ontario jobs at risk, critics warn
Published 20 minutes agoEmailPrint
Rss ArticleJohn Spears and Rob Ferguson
Atomic Energy of Canada’s Candu reactor division will be sold to SNC-Lavalinin a deal a union leader says puts up to 800 high-paying jobs at risk.
And the sale has left the Ontario government complaining that the province isn’t getting the same support for its energy sector that other province receive.
The union representing engineers and other professionals at AECL said the deal will chop about 40 per cent of the division’s staff, most working at AECL’s Sheridan Park labs and offices in Mississauga.
SNC-Lavalin will pay $15 million to the federal government for the part of AECL that makes electricity generators, natural resources minister Joe Oliver announced Wednesday.
SNC-Lavalin will also pay royalties to Ottawa on sales of future reactors and other work that Oliver said have a net present value of $285 million.
The government retains formal ownership of Candu technology under the deal, set to close in October. AECL’s medical isotope business is not part of the deal.
Oliver said the deal is a good one for the government because AECL has sucked huge amounts of money out of the federal treasury.
“Cost over-runs have contributed to total funding requirement of the Candu reactor division of about $1.2 billion over the past five years,” Oliver said. “This cannot continue, given our government’s commitment to fiscal responsibility.”
Oliver said under new ownership the company will “seize both domestic and global opportunities.”
Oliver said the deal protects 1,200 jobs. But Michael Ivanco, vice president of the Society of Professional Engineers and Associates, said that leaves about 800 high-paying jobs at risk.
“Some of these will be engineers and scientists and technologists,” Ivanco.
Ivanco said he welcomes the fact that a private company wants to invest in AECL. The society has said a private partner would bring better management skills to the company.
But he questioned the federal government’s decision to sell its entire stake.
“Our competition are giants,” he said.
France has just announced a huge new investment in its nuclear sector to reinforce safety in the wake of the Fukushima disaster, he said: “Our government’s walking away.”
“It’s 100 per essential” to have government backing on nuclear projects when making sales to foreign buyers, he said.
Patrick Lamarre, who heads SNC-Lavalin’s nuclear division, said the company is confident that it can forge ahead with new sales, both at home – where Ontario is in the market for two or more new reactors at its Darlington site – and abroad.
“About 50 per cent of our revenues are for projects completed internationally,” he said.
“We always stand behind our products, and we’ve been in business for 100 years,” Lamarre said.
“We’ve done mega-projects around the world, and foreign governments have been very happy to work with SNC-Lavalin.”
Oliver made it clear that while the federal government is obliged to support AECL projects currently under way, SNC-Lavalin will bear the liability for cost over-runs on all projects going forward.
That irked Ontario energy minister Brad Duguid, who hopes to buy two new reactors and maybe as many as four, for Darlington.
“The federal government appears to be on a track of potentially selling AECL and selling out jobs in Ontario,” said Duguid.
Duguid said he wants federal guarantees for Ontario’s plans to build new reactors at Darlington.
“I’m a little disappointed that I've heard no commitments at this point from the federal government when it comes to assistance...backstopping some of the risks involved in these purchases,” Duguid added, noting the feds have helped Newfoundland and western provinces on energy projects.
“Ontario families deserve the same treatment as families in Newfoundland.”
While Duguid said his first preference would be to strike a deal with SNC Lavalin over other vendors, that depends on getting a “fair deal” for the province.
The anti-nuclear group Greenpeace said the AECL sale is good news for taxpayers because the end of federal subsidies will expose the full cost of nuclear power.
“It’s the best day for green energy since the sun first started to shine,” said Shawn-Patrick Stensil.
“At $15 million, it’s only three times what HMV sold for earlier this week. Greenpeace could have bought AECL and shut it down for that price.”
The deal also won high marks from the Organization of Candu Industries, whose members are suppliers for the Candu reactors.
“We are delighted that a leading Canadian engineering firm is taking over the leadership and management of AECL’s commercial reactor division,” said OCI President Ron Oberth.