July 8, 2009 / 3:25 PM / 8 years ago

Canada sees isotope reactor off line till late '09

TORONTO (Reuters) - Atomic Energy of Canada Ltd said on Wednesday it expects its troubled Chalk River nuclear reactor, which produces a third of the world's medical isotope supply, to be off line until late 2009.

The aging reactor has been out of operation since May 17 because of a heavy water leak. Government-owned AECL had originally estimated it would be back in action after three months.

AECL officials said during a conference call on Wednesday that the best repair method would be determined in the next few weeks. The agency said it would then be able to provide a more definitive timetable for a restart.

It said it expects the repair and restart phases to take at least four months.

"It was really only in the last week that all of the threads came together and it became apparent that the timeframe would be longer than the previous guidance," AECL President and Chief Executive Hugh MacDiarmid told a media briefing.

"That was really what drove us to make this announcement, despite the fact that we do not have the precision of guidance with respect to the outage duration."

Chalk River, in eastern Ontario, produces most of the isotopes distributed by MDS Nordion, a subsidiary of Canadian health sciences company MDS Inc.

The unexpected shutdown of the 52-year-old reactor has sent hospitals in Canada and the United States scrambling to find replacement sources of medical isotopes, which have a short shelf life.

A medical isotope is a very small quantity of radioactive material used to perform nuclear medicine imaging tests. Isotopes are mixed with different solutions and injected into patients, where they give off energy read by a special camera.

Chalk River is one of only a few nuclear reactors able to produce the isotopes, and health experts have warned that the other facilities do not have the capacity needed to make up for the lost Canadian production.

MDS said last month that it was in talks with the Moscow-based Karpov Institute of Physical Chemistry to supply isotopes as it scrambles to cope with the prolonged shutdown of the Chalk River reactor.

The company again called on the Canadian government on Wednesday to restart the Maples nuclear project, which Ottawa shelved last year citing cost overruns and technical problems. That shutdown prompted MDS to file a C$1.6 billion ($1.5 billion) claim against AECL and the federal government.

The company, whose shares have dropped more than 60 percent in the past year on disappointing results and the isotope concerns, also reiterated that it would take an earnings hit of about US$4 million for each month the Chalk River reactor was out of commission.

MDS shares were down 2.6 percent at C$6.06 on the Toronto Stock Exchange.

Desjardins Securities analyst Maher Yaghi said a prolonged shutdown would have far-reaching consequences.

"We maintain that there is the continued risk that this service interruption could last even longer," the Montreal-based analyst said in a note.

"Should the disruption persist beyond February or March 2010, the risk of MDS breaching certain debt covenants would increase if the company's other divisions ... continue to report weak results," Yaghi said.

($1=$1.17 Canadian)

Reporting by Scott Anderson; editing by Rob Wilson

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