Lavalin in push to pri­va­tize AECL

EN­ERGY

National Post (Latest Edition) - - FINANCIAL POST - BY PAUL WEB­STER

Mon­treal-based en­gi­neer­ing gi­ant SNC-Lavalin is pre­par­ing to push Ottawa to pri­va­tize Atomic En­ergy ofCanada Ltd., the fed­er­ally owned com­pany that de­signs and sells nu­clear re­ac­tors.

“I know that SNC-Lavalin has shown an in­ter­est,” a se­nior private sec­tor nu­clear ex­ec­u­tive con- firmed yes­ter­day af­ter not­ing dis­cus­sion of SNC-Lavalin’s fo­cus on AECL is wide­spread.

The as­ser­tion that SNCLavalin is putting its con­sid­er­able lob­by­ing power in Ottawa be­hind the cause of pri­va­tiz­ing AECL drew a strong en­dorse­ment from Steve La­ciak, an an­a­lyst with the Na­tional Bank of Canada who fol­lows SNCLavalin’s global op­er­a­tions.

Mr. La­ciak said he “wouldn’t be sur­prised” to see SNC-Lavalin make a pub­lic bid to ac­quire AECL ei­ther whole­sale or in parts.

“It’s right up their al­ley,” Mr. La­ciak said af­ter not­ing the com­pany con­verted a ma­jor­ity stake in Canatom, AECL’s main private sec­tor part­ner in build­ing CANDU nu­clear re­ac­tors since 1967, into full own­er­ship in 2004.

Through its stake in Canatom, SNCLavalin has gained 40 years of ex­per­tise build­ing CANDUs in On­tario, New Brunswick, SouthKorea and China, where Canatom over­saw the con­struc­tion of the most re­cently built CANDU re­ac­tors.

In an in­ter­view yes­ter­day, SNCLavalin chief ex­ec­u­tive Jac­ques La­marre said the move to ac­quire Canatom “was a sign we want to put re­sources into the nu­clear in­dus­try. We think it’s a good in­dus­try to be in.”

Ear­lier this year, SNC-Lavalin made an­other de­ci­sive move into AECL’s com­mer­cial do­main by part­ner­ing with AECL, GE Canada, Hi­tachi Canada and Bab­cox and Wil­cox Canada.

As part of what the AECL calls Team CANDU, SNC-Lavalin aims to pro­mote new CANDU re­ac­tor con­struc­tion in On­tario through an ar­range­ment that al­lows AECL to share the fi­nan­cial risks as­so­ci­ated with CANDU con­struc­tion with its private-sec­tor part­ners.

Win­ning new re­ac­tor con­tracts in On­tario — where private-and pub­lic-sec­tor util­i­ties are study­ing plans for new re­ac­tor con­tracts — is cru­cial to the fu­ture of AECL, Mr. La­marre said.

Andrew Kuske, an en­ergy in­dus­try an­a­lyst with UBS, said an AECL sale would make sense within the pat­tern of in­dus­try con­sol­i­da­tion.

GE Nu­clear re­cently an­nounced a deal with Hi­tachi Nu­clear that will see the par­ent com­pa­nies be­hind two of SNC-Lavalin’s Team CANDU part­ners al­lied in pur­suit of new re­ac­tor-build­ing con­tracts world­wide.

Mr. Kuske said com­pa­nies in­ter­ested in buy­ing AECL would likely strike a good bar­gain with Ottawa, based on the fact that AECL’s prospects for fu­ture CANDU sales dark­ened dra­mat­i­cally af­ter buy­ers in China and the United States re­jected Cana­dian-made tech­nol­ogy re­cently.

In re­cent years, AECL has suc­ceeded only in win­ning con­tracts to re­fur­bish ex­ist­ing re­ac­tors. Much of that work is be­ing ex­e­cuted with help from SNC-Lavalin.

“There’s ob­vi­ously a very at­trac­tive busi­ness for re­fur­bish­ment” of the more than two dozen CANDU re­ac­tors cur­rently in op­er­a­tion, Mr. Kuske noted be­fore sug­gest­ing that “AECL is not well­po­si­tioned” to win new re­ac­tor sales in the bur­geon­ing world mar­ket.

In Ottawa yes­ter­day, Kath­leen Olsen, spokes­woman for Nat­u­ral Re­sources Min­is­ter Gary Lunn, who holds min­is­te­rial re­spon­si­bil­ity for AECL’s busi­ness af­fairs, said AECL is not for sale.

“I can’t spec­u­late on the fu­ture,” Ms. Olsen said, while not­ingMr. Lunn is now in China try­ing to per­suade Chi­nese of­fi­cials to re­visit a de­ci­sion not to build more CANDUs.

Mr. La­marre said he re­mains op­ti­mistic that CANDU re­ac­tors will re­gain their for­mer favour among re­ac­tor buy­ers in Canada and abroad.

As for the pos­si­bil­ity the gov­ern­ment will in­vite his com­pany to make a bid for AECL, Mr. La­marre said, “We’re al­ways in­ter­ested in ac­qui­si­tions that grow the com­pany, pro­vided the price is right.”

Mean­while, the pres­i­dent of AREVA Canada, a sub­sidiary of the French gov­ern­ment’s gi­ant nu­clear busi­ness, said his com­pany is in­ter­ested in buy­ing AECL.

“We’ve had the­o­ret­i­cal talks inside AREVA about the idea,” said Ar­mand La­fer­rère, who took over AREVA Canada’s op­er­a­tions four months ago.

But Mr. La­fer­rère de­nied re­ports ear­lier this week that AREVA is spear­head­ing an ef­fort to per­suade Ottawa to un­load AECL. “We have not been in­volved in any meet­ing with the fed­eral gov­ern­ment about this,” Mr. La­fer­rère said.

J.P. MOCZULSKI / REUTERS FILE PHOTO

SNC Lavalin CEO Jac­ques La­marre says win­ning new On­tario re­ac­tor con­tracts is cru­cial to the fu­ture of AECL.

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