MDS sues AECL, Canada over reactor cancellation

Wed Jul 9, 2008 12:24pm EDT
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By Scott Anderson

TORONTO (Reuters) - MDS Inc said on Wednesday it has filed a C$1.6 billion ($1.58 billion) claim against Atomic Energy of Canada Ltd and the Canadian government for scrapping a reactor project that would have supplied the company with medical isotopes.

MDS, a medical services company, said its claim follows a May decision by the government and AECL to scuttle the Maple nuclear reactor project without giving the company prior notice or offering consultation. MDS sells medical radioisotopes, used in cancer treatment, to hospitals and other health-care providers.

Mississauga, Ontario-based MDS, which also specializes in analytical instruments, molecular imaging and contract research, said it is seeking an order to compel AECL, a government agency with responsibility for nuclear products, to fulfill its 2006 contract to provide a 40-year supply of the isotopes. If not, MDS said it would seek the damages.

"It was our last resort after trying as best we could with conversations to get a resolution here that made some sense," Stephen DeFalco, MDS president and chief executive, said in an interview.

"But we need them to honor their commitment to finish these reactors and to provide 40 years worth of supply. It's very important for our patients and it's very important for our business."

Maher Yaghi, an analyst at Desjardins Securities in Montreal, said the company had to take legal action now to address long-term supply of the isotopes.

"They have to do what they have to do. This is something that you can't wait a long time before you start because you know how the court system works, especially if you are suing the government," Yaghi said.

Natural Resources Minister Gary Lunn said the government would defend itself and AECL against the claim.   Continued...

<p>Natural Resources Minister Gary Lunn stands to speak in the House of Commons on Parliament Hill in Ottawa January 28, 2008. REUTERS/Chris Wattie</p>