Feds keep lid on AECL sale report

Natural Resources Minister Lisa Raitt announced last spring that the government was prepared to break up AECL, a Crown corporation, into two parts.

One part would include the business responsible for selling and building CANDU reactors, the large powerful machines that provide electricity at plants in New Brunswick, Quebec and Ontario. The government signaled its intention to a seek a private sector partner to buy all or part of the CANDU business.

The other part would cover AECL's research function, centred around the Chalk River Laboratory in eastern Ontario, home to the National Research Universal (NRU) reactor. The NRU, the world's oldest reactor, is currently shut down and undergoing lengthy and costly repairs. But as recently as the summer of 2008, it was producing nearly the entire world's supply of medical isotopes, used to help diagnose and treat cancer and other diseases. The government has no plans to sell that research unit, although Raitt said she hoped to hire a private sector partner to manage that business.

Raitt commissioned investment bankers N.M. Rothschild and Sons Ltd. last spring to provide some recommendations on how to proceed with that restructuring.

An industry source, who works for a private sector competitor of AECL's power business, said the Rothschild review was a difficult one, mostly because there appeared to be little appetite in the private sector to invest in AECL's CANDU technology. That lack of interest is partly a result of the economic downturn — which has made it more difficult for companies to find investment capital — but it is also partly due to the fact that the CANDU technology is largely seen as a niche product with a worldwide market share of less than five per cent.

Although the federal government has sunk billions of tax dollars into AECL over more than 50 years, the industry source said Ottawa would be lucky to receive $300 million in any sale of the business.

The likely list of bidders for AECL is a short one and includes Areva Group, Westinghouse Electric Co., General Electric, and Montreal-based SNC-Lavalin.

Raitt issued a brief statement saying it had received the report and had started its own review. At the same time she hired Rothschild, Raitt also named David Leith, a former deputy chairman at CIBC World Markets, as her adviser on the restructuring.

Raitt said the Rothschild report would not be made public "due to commercial confidentiality considerations."

"Our commitment to move forward with the restructuring of AECL remains very much at the heart of our nuclear agenda," Raitt said.