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2011/58

Ministerial Statement by
the Honourable Joe Oliver, Minister of Natural Resources
on CANDU Transaction

Toronto, Ontario
June 29, 2011

Check against delivery


The Government of Canada is pleased to announce today that an agreement has been reached with SNC-Lavalin Group Inc. under which the Canadian engineering firm will acquire the CANDU Reactor Division of Atomic Energy of Canada Limited (AECL).

This agreement puts CANDU on a path to a brighter future in the hands of a world-leading Canadian business.

It will unleash the potential of CANDU technology to help meet the Canadian and global demand for emissions-free energy.

This agreement marks a major step forward in the AECL restructuring process launched by our Government to strengthen the nuclear industry in Canada.

Throughout this process, our efforts have been guided by three objectives.

  1. to ensure safe, reliable and economic options to address Canada's energy and environmental needs;
  2. to control costs to the Government while maximizing the return on the Government's investment in nuclear energy; and
  3. to position Canada's nuclear industry and its workforce to seize domestic and global opportunities.

In May 2009, after an exhaustive Review of AECL, the Government concluded that the CANDU Reactor Division needed strategic investors to competitively access new opportunities at home and abroad while reducing the financial risks carried by taxpayers.

The Review found that AECL under its current structure was unable to fully achieve Canada’s nuclear policy objectives and was limited in its ability to be a world player. The Government has determined that the corporation cannot succeed and cannot continue under a Crown ownership structure.

Cost over-runs have contributed to total funding requirements for the CANDU Reactor Division of about $1.2 billion over the past five years.

This cannot continue given our Government’s commitment to fiscal responsibility.

On December 17, 2009, our Government invited investors to submit proposals for AECL’s commercial CANDU Reactor Division.

The process has been conducted in an open, rigorous and diligent fashion.  It has been complex.  It involved three successive rounds of investor offers and due diligence, followed by exclusive negotiations conducted by experienced government and private sector experts.

At the conclusion of this process, the only viable solution for the CANDU technology and its workers is the successful and rapid conclusion of the transaction announced today.

SNC-Lavalin is a world class organization that is well equipped to carry the CANDU technology forward.

A Canadian company with projects in 100 countries worldwide, SNC-Lavalin has both the local base and global reach to help CANDU seize domestic and global opportunities.

Further, SNC-Lavalin has been in the construction and project management side of the nuclear business for decades and worked with AECL in successful CANDU projects.

This transaction means that SNC-Lavalin, together with its new subsidiary, CANDU Energy, will be able to bring to market more attractive end-to-end solutions.

This deal will position the new privately owned CANDU Energy to service and deploy the CANDU technology in Canada and abroad, meeting energy needs and stimulating a supply chain of 150 enterprises located largely in Canada, and revitalizing an industry that employs 30 thousand people in high quality jobs.  

The agreement means that CANDU Energy will take over the CANDU Reactor Division’s three business lines: services to the existing fleet, life-extension projects, and reactor new builds.

The Government of Canada will retain ownership of all CANDU intellectual property, while providing an exclusive license to CANDU Energy to grow its business. This means that in addition to an upfront payment of $15 million, there is an opportunity for Canadian taxpayers to benefit from royalties on future sales of reactors, future life extension projects, and certain products and services.

This is a necessary step to strengthen Canada’s nuclear industry while reducing taxpayers’ exposure to nuclear commercial risks.

It is a sound proposition for the Government of Canada following years of commercial losses by AECL and a difficult global environment after the Fukushima nuclear incident.

This agreement will insure the protection of approximately 1,200 employees and contractors who will transition from AECL to CANDU Energy at the closing of the transaction.

It will require a process of adjustment. But it provides a stronger foundation for the future than any alternative course of action.

Adjustment for the remaining workforce will be carried out in a transparent and sensitive manner, and employees' rights and entitlements will be fully respected.

The transaction does not affect the employees of the Nuclear Laboratories Division. That division will work with the new company as supplier of its R&D and other critical services under a term agreement. The Government is also reviewing the Nuclear Laboratories to ensure that they continue to provide value to Canadians in the future.

Canadians can be assured that this transaction in no way diminishes Canada’s commitment to safety and security in the nuclear sector.

The Government of Canada will continue its role in maintaining safety, security, and environmental stewardship in all aspects of the nuclear industry.

Canada’s nuclear regulator, the Canadian Nuclear Safety Commission, will continue to oversee all parts of the nuclear industry.

In closing, I want to emphasize, this is the best deal in a difficult domestic and international environment. It does preserve the CANDU business, which has been in a challenging situation, and allows Canadians to benefit from its future success.

Thank you. I welcome your questions.