Canada's nuclear power play

This major contract is to be awarded in March and three rivals are in the running: Atomic Energy of Canada Limited (AECL), which is 100% owned by Ottawa, Toshiba (formerly the nuclear division of Westinghouse) and Areva, the world's biggest nuclear company, 90% owned by France.

All three are in the process of responding to a Request for Proposals from Infrastructure Ontario and the decision-making is supposed to be based on technology, price, track record and safety - not politics.

But nuclear power is very political. AECL has built all of Canada's reactors so far and many feel it should get the nod because it's Canadian and really needs this contract. This is not unusual. All 59 reactors in France were built by Areva.

My own bias is that whatever happens, Canada must remain a nuclear industry player. I know nothing about the technology but I do know that Canadians deserve to have two policy goals met: a) creation of nuclear power that is the most efficient and safe in the world and b) participation in the world's nuclear industry by Canadians.

Since the 1950s, AECL has built 29 reactors worldwide and 14 reactors in Canada (12 in Ontario). Its designs have been incorporated into other reactors and it also produces valuable byproducts such as radioisotopes used in medical diagnostic procedures and cancer treatments, with a 60% worldwide market share.

Areva has become the world's largest nuclear player. It has built 98 plants worldwide, has two under construction and three more ordered and provides 20% of all nuclear power generated in the United States.

It is also vertically integrated and involved in uranium mining, processing and waste management. So why has France's national corporation done so much better than AECL?

One reason is that AECL cannot get leverage from its government, like U. S., Japanese or French players do, by promising and delivering geopolitical and other offsets to customer-countries.

But what Canada can do now is leverage the fact that Ontario is going to buy $15-billion worth of nuclear technology, plus possibly more in the oil sands. Canadians should want their industry to prosper as well as to get the cheapest and safest power for the future. There are currently 435 reactors worldwide and another 100 to be built within a decade or so. Canada should get a slice of this industrial activity.

Best solution is a joint venture, or a publicly listed merged entity, so I asked both AECL and world giant Areva about this idea.

Areva Canada President Armand Laferrere said in a telephone interview: "Canada should protect the industry, rather than the [AECL] technology, and pick a solution which will give more jobs to Canadians. We do a lot of joint ventures, with Mitsubishi, in the U. S., in China. We are very flexible in adapting to local markets."

AECL's CEO, Hugh MacDiarmid, when asked about a partnership, said: "Our mandate at AECL is to be a top-tier global competitor in the nuclear business and we believe we have the knowledge and skills to do that. We believe we can compete with the best in the world."