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