MONTREAL—Candu Energy Inc., a division of SNC-Lavalin Group Inc., has signed a framework joint venture agreement in China that could lead to construction of nuclear power plants that use recycled uranium, a move one executive called a potential “game-changer” for the business.
The framework deal with China National Nuclear Corp. (CNNC) was signed in Beijing during Prime Minister Stephen Harper’s state visit to China.
The company expects to finalize the agreement within six months.
The joint venture follows a supportive recommendation last week from a Chinese expert review panel on Advanced Fuel Candu Reactor (AFCR) technology and a memorandum of understanding signed between Natural Resources Canada (NRCan) and the China National Energy Administration (CNEA) to collaborate on civilian nuclear energy.
It includes the development and export of advanced fuel reactors.
Each AFCR can use the spent fuel from four light water reactors, creating a large potential market, Candu said.
China operates 22 nuclear power reactors, including two Candu 6 reactors at Qinshan that have been in commercial operation for more than a decade.
The country has 26 reactors under construction and others have been proposed.
The world’s second-largest economy expects to have a network of some 300 nuclear plants in service by about 2040.
“The ability to complement roughly four light water reactors with one Candu reactor assures really strong nuclear engineering, highly skilled jobs back here in Canada, but also some key manufacturing opportunities in Canada as well,” Candu CEO Preston Swafford said in an interview.
At a potential cost of $5.5- to $7 billion each, the Chinese reactors would generate substantial revenues for Candu.
The first reactor wouldn’t likely be in service for eight to 10 years, but would require years of initial design and development.
Testing in China and Canada has confirmed the Candu reactors will burn both spent uranium and thorium, a more widely abundant radioactive chemical element.
Establishing Candu as an alternative fuel burner would be a “game-changer” for the company, added Ala Alizadeh, senior vice-president of marketing and business development.
It opens the doors to opportunities in markets like Britain, France, Japan and Russia, where thousands of tonnes of recovered uranium are in storage.
The ability to burn thorium is also attractive to countries like Malaysia.
However, the plentiful supply of natural uranium in Canada, whose price has been falling since the Japanese nuclear meltdown, limits the potential construction of an AFCR plant in Canada, said Swafford.
The federal government also stands to earn millions of dollars in royalties as part of its deal to sell Atomic Energy of Canada Ltd. (AECL) to SNC-Lavalin in 2011 for $15 million.
Maxim Sytchev of Dundee Capital Markets said the construction of new nuclear plants is promising for SNC-Lavalin but difficult to forecast because of the long lead times and uncertainty in signing contracts.
However, he said the work is all “upside” since nobody assumed when SNC-Lavalin acquired AECL a few years ago that Candu would do much more than refurbish existing nuclear power plants.
“It’s going to take years before anything realistically is going to come from that,” he said. “I think people should be tempering their expectations.”