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SNC-Lavalin spokesman Harold Fortin said: “This wind-down of CDI does not reduce our capacity, ability or commitment to grow our U.S. [Department of Energy] decommissioning and waste management business.”Paul Chiasson/The Canadian Press

Canadian engineering company SNC-Lavalin Group Inc. SNC-T and U.S. energy technology specialist Holtec International are breaking off a four-year-old joint venture that works on cleaning up and dismantling nuclear plants in the United States after an unspecified dispute.

Officials from both companies confirmed independently to The Globe and Mail that they’re disbanding the venture, known as Comprehensive Decommissioning International LLC. The firms are now negotiating separation terms.

When Camden, N.J.-based CDI was launched in 2018, the partners framed it as a major business opportunity and touted their vision to become “the leading decommissioning contractor” in the United States. They estimated the market to be worth more than US$14-billion over 10 years.

The dissolution of CDI now raises questions about how SNC-Lavalin intends to replace that revenue and profit opportunity in a sector key to its future growth. After its takeover of Atomic Energy of Canada’s Candu reactor business a decade ago, the Montreal engineering company is one of the world’s top nuclear reactor vendors and also refurbishes and upgrades them to extend their lifespans.

CDI has won four commercial multiyear contracts, including a deal finalized in 2020 to decommission, demolish and clean up the Pilgrim nuclear power station in Plymouth, Mass. Their exact value has not been disclosed but SNC-Lavalin says they are not material to the overall business.

In an investor presentation last September, SNC-Lavalin shared information showing the company had an adjusted backlog of nuclear work worth $6-billion at the end of the June, 2021, including its estimated share of joint venture revenue over the life of the contracts. A significant percentage of that backlog was for work on nuclear decommissioning and waste management.

SNC-Lavalin spokesman Harold Fortin said: “This wind-down of CDI does not reduce our capacity, ability or commitment to grow our U.S. [Department of Energy] decommissioning and waste management business.”

Late last year, the company announced that a separate joint venture partnership with Westinghouse Government Services and Fluor Federal Services won a 14-month extension to continue operating the depleted uranium hexafluoride conversion facilities at the Department of Energy’s Paducah gaseous diffusion plant in Kentucky and the Portsmouth gaseous diffusion facility in Ohio.

CDI was originally mandated to be the general contractor for Holtec’s HDI decommissioning unit, which has a licence from the U.S. Nuclear Regulatory Commission to withdraw from service several nuclear power sites. Holtec controls CDI through HDI while SNC-Lavalin owns a minority stake in the venture.

Last December, HDI exercised its “termination for convenience” rights under a the contractor agreement with CDI and took over the work the joint venture was previously doing, said Holtec spokesman Joseph Delmar. He said termination of the joint venture was “precipitated by a private dispute” between the owners of CDI. He declined to comment further.

Trade publication RadWaste Monitor first reported HDI’s move.

The nature of the disagreement between Holtec and SNC wasn’t immediately known but Mr. Fortin said it is not related to any ethics and compliance issues that have dogged SNC for the past decade. In 2015, the RCMP charged SNC with violating Canada’s Corruption of Foreign Public Officials Act in relation to its business dealings in Libya. The company later struck a deal with prosecutors in which its construction division pleaded guilty to one charge of fraud.

Last year, two SNC-Lavalin units and two of its former executives were charged in relation to a long-standing police probe into bribes paid on a $128-million contract for the refurbishment of Montreal’s Jacques Cartier Bridge. The company is now in talks with the Quebec chief prosecutor’s office to hammer out the terms of a deferred prosecution agreement, which would allow it to avoid a trial in exchange for paying a fine and agreeing to third-party monitoring.

SNC-Lavalin reports fourth-quarter and year-end results this week.

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