TORONTO (Reuters) - Canada will likely split its government-owned nuclear technology corporation into two separate units, the natural resources minister said on Friday, as Ottawa looks for ways to revamp the 50-year-old Atomic Energy of Canada Ltd.
The federal government has engaged investment bankers N.M. Rothschild & Sons to develop a restructuring plan for AECL, and is scheduled to report back to Natural Resources Minister Lisa Raitt in the fall. David Leith, formerly of CIBC World Markets, will also advise the minister and work with Rothschild.
The two are looking at the best way to overhaul AECL’s operations, which include its Candu nuclear reactor division and its research division, which includes the beleaguered Chalk River facility, which makes much of the world’s medical isotope supply.
But Raitt indicated on Friday she is leaning toward the breakup of the two units.
“It’s quite likely. When we outlined restructuring plans in May of this year, we indicated that that’s where we are looking at. AECL needs to focus on the one aspect of their commercial side, the selling of nuclear reactors. But equally important is the Chalk River labs side,” she told reporters following a speech in Toronto.
“The two are intertwined and we are respectful of that ... but the two entities should be separated, appropriate partners found in both cases in order for both to flourish, and that’s what we are looking for,” she said.
She tempered her comments, however, by noting that no decision would be made until she had seen the whole report.
“We are taking a very pragmatic approach to it, but a very thoughtful approach to it as well,” she said.
Earlier this year, Raitt said Ottawa was mulling selling part of AECL to a big international company or forging some kind of alliance to promote the technology on a global scale.
The government could seek corporate partnerships, such as their taking an equity stake in AECL’s Candu nuclear reactor division, merging with the division, or forming joint ventures on specific projects.
Some experts are not sure that a breakup of AECL’s key units would be wise, however.
“It’s hard to believe it would necessarily be a good thing,” Michael Ivanco, vice-president of the Society of Professional Engineers and Associates, told Reuters on the sidelines of Raitt’s speech.
“It seems to be it’s a given that that sort of severance will happen. I just don’t know how clean that can possibly be,” Ivanco said.
AECL has come under intense scrutiny in recent months after its aging Chalk River nuclear facility, which supplies a third of the world’s medical isotopes, was shut down in May because of a small leak of heavy water.
AECL said the Chalk River reactor will not be operational until early 2010, creating a world-wide shortage of the isotopes, which are used to perform medical imaging tests and have a short shelf life.
Raitt also criticized Ontario for suspending its multibillion-dollar plan to build two new power reactors because of concerns about the future of AECL, the favored bidder, as well as worries about cost overruns.
At the time, AECL was the only bidder to meet Ontario’s requirements for building the two reactors by 2018 at its Darlington nuclear station, east of Toronto.
“To keep us in a standby, ready position I don’t think is fair in terms of decision-making,” Raitt said.
“Time is of the essence in terms of this industry.”
Reporting by Scott Anderson; editing by Rob Wilson