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The federal government will announce today a plan to seek buyers for Atomic Energy of Canada Ltd.'s nuclear reactor business, and bring in private-sector management for AECL's problem-plagued Chalk River facility.

After a two-year review of Ottawa's flagship nuclear company, Natural Resources Minister Lisa Raitt will launch a sale process with the aim of finding a major international partner for AECL to help boost global sales of its Candu reactors.

Ms. Raitt's announcement comes almost two weeks after the Ontario government tapped AECL as the lead bidder to build two Advanced Candu Reactors (ACRs), subject to federal commitments to share the risk of cost overruns.

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Ottawa will argue the sale of an ownership stake will strengthen AECL and insist that it remains committed to its Ontario bid, sources familiar with the plan said.

The sale of a minority or majority stake in AECL could bring in billions of dollars.

This as the federal government looks to raise money from asset sales to reduce its soaring deficit. The effort is hampered by depressed real estate prices.

Under the plan, the 60-year-old Crown company will be divided into two companies: the Candu business, which has relied heavily on government subsidies to develop new reactors but has a profitable international service operation, and the National Research Unit at Chalk River, Ont., which produces much of North America's supply of medical isotopes.

The NRU was shut down earlier this month because of leaking radioactive material, sparking a shortage of isotopes used to diagnose and treat cancer and heart diseases.

AECL said yesterday the unit - which had a month-long emergency shutdown in December, 2007 - will be offline for at least three months.

The federal government will maintain its sole ownership of the aged NRU facility, even as it establishes a blue-ribbon panel to assess the potential for new supplies of isotopes from university research reactors.

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It will also seek a private-sector manager for Chalk River, an approach that is used for U.S. nuclear research laboratories such as the one in Oak Ridge, Tenn.

Ottawa faces liabilities worth approximately $7-billion to clean up waste at the Chalk River site.

The Harper government has been increasingly frustrated by AECL's problems and its drain on the federal treasury.

Earlier this year, Finance Minister Jim Flaherty had to provide $100-million for cost overruns for AECL's project to refurbish New Brunswick's Point Lepreau Candu reactor. In the January budget, AECL received $351-million for design work on the ACR reactor and maintenance at Chalk River.

Ms. Raitt is now acting on a report from the National Bank of Canada that recommended Ottawa sell off at least 51-per-cent interest in AECL and find strategic partners in world markets.

The Canadian firm was left out of an industry consolidation that saw Mitsubishi Corp. buy Westinghouse Electric Co.'s nuclear business, General Electric Company merge its nuclear division with Hitachi Ltd., and French-based AREVA PLC team up with various international partners.

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Ottawa has sought expressions of interest from a number of international companies, including AREVA, which has been AECL's main rival in the Ontario bid.

Leading members of AECL's Team Candu group, including Montreal-based engineering firm, SNC-Lavalin Group Inc., and GE, have also expressed interest in taking an equity position in the company.

While Ms. Raitt is expected to express confidence in AECL's technology, the government will not demand a commitment to further Candu technology from would-be buyers.

AECL has more than 100 Canadian suppliers, largely based in Ontario, that support its reactor business, and Neil Alexander, president of the Organization of Candu Industries, has warned that a federal commitment is necessary to protect those manufacturing jobs.

Ottawa will continue to fund research to support AECL's commercial business, and could be left with legacy costs from the firm's need to deal with nuclear waste.

Critics argue AECL's heavy-water technology has little appeal in the global marketplace, noting that the Canadian firm has been shut out of the United States and Britain, two countries that have announced aggressive reactor programs.

However, the company's supporters insist that the Candu-based technology remains a viable option in many smaller markets, and that an expected sale in Ontario would provide a significant boost to AECL's global ambitions.

Editor's Note: The National Research Unit at Chalk River, Ont., was shut down earlier this month after detection of a leak of the heavy water that is used to cool the reactor and moderate reaction, leading to the release of small amounts of tritium, the radioactive form of hydrogen. Inaccurate information appears in the above story.

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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