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Atomic Energy of Canada Ltd. suffered another embarrassing setback yesterday as the country's flagship nuclear corporation when it scrapped the development of two Maple isotope-producing reactors after pouring hundreds of millions of dollars into the project.

The federal Crown corporation conducted tests on the reactors this spring and could not find a solution to a design flaw that would make the reactors more prone to a meltdown.

AECL and its private-sector business partner, MDS Nordion Inc., have sunk several hundred million dollars into the development of the Maple reactors, which were meant to secure Canada's dominant position in the market for medical isotopes.

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In the past three years alone, AECL spent more than $200-million as it sought an answer to a vexing problem known as a positive power coefficient of reactivity (PCR). The reactor is supposed to have a negative coefficient of reactivity, meaning the nuclear reaction would slow down if the power in the core increased. Instead, the nuclear reaction increased with additional power, heightening the chances of a meltdown.

In an interview, AECL chief executive Hugh MacDiarmid conceded that cancelling the project was a difficult decision, but said it was made by the company itself, not by the government.

"We are making the right business decision given the circumstances," he said. "This was a difficult choice given the tremendous efforts expended by our people on development of the Maple reactors. Nevertheless, our board of directors and senior management have concluded that it is no longer feasible to complete the commissioning and start-up of the reactors."

He said the Maple project was always a high-risk one, but continued spending on it cannot be justified.

A former executive at Canadian Pacific Railway Ltd., the AECL president was appointed late last year with a mandate to put the corporation on a more commercial footing, as the government considers privatizing it either through an outright sale or the sale of a minority stake.

But AECL has suffered a series of setbacks in its home market and overseas with high-profile disruptions in its isotopes business and a lengthy dry spell in reactor sales.

The problems come as AECL competes with larger international companies to sell several reactors to Ontario.

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MDS Nordion purchases the isotopes from Chalk River, then refines and markets them throughout the world. In a statement yesterday, MDS - which battled AECL over previous delays to the Maple program - said it was not consulted on yesterday's decision and will "evaluate all options and pursue appropriate steps" to protect its shareholders and customers. (The MDS share price dropped 51 cents, or 2.57 per cent, to $19.34 on the Toronto Stock Exchange yesterday.)

Mr. MacDiarmid said AECL will now look to supply the North American medical isotopes market by extending the life of the 50-year-old Chalk River research reactor. The so-called NRU reactor was shut down last November over safety concerns, disrupting supplies of the medically critical isotopes that are used in diagnosing and treating cancer and heart disease.

As a result of the shutdown, the federal government fired regulator Linda Keen, president of the Nuclear Safety Commission, as both the government's outside experts and AECL argued the reactor was operating safely. AECL had failed to finish some safety upgrades ordered by the commission, work that has since been completed.

The federal Auditor-General has estimated it would cost $600-million to refurbish the Chalk River site and bring it to modern standards, including an undisclosed investment in the research reactor itself.

"We will ensure that the NRU reactor continues to perform as reliably as it has to this point," Mr. MacDiarmid said.

In the House of Commons yesterday, opposition MPs said the Maple cancellation is part of a government plan to completely privatize AECL.

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"Will the minister simply admit that this decision would make the privatization of AECL easier?" asked Liberal energy critic Omar Alghabra.

Natural Resources Minister Gary Lunn said the government is reviewing its options for AECL, but defended the corporation's reputation for developing and constructing nuclear reactors.

"I think [the Maple decision]strengthens AECL's future," Mr. Lunn told reporters. "It's about good management and it allows AECL to focus on its core business line, on building power reactors which they've been very successful at."

He noted that AECL's Candus sold to China and South Korea are among the best-performing nuclear reactors in both those countries. However, neither China nor South Korea has included the Canadian company in their plans to build new nuclear plants.

The Maple reactor

April, 1985: Preliminary engineering studies for two Maple research reactors are approved to replace the NRX research reactor that began service at Chalk River in 1947.

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July, 1987: Construction of the prototype reactor is interrupted because of design changes and budget cutbacks.

September, 1989: AECL gives the green light for costs on the construction of the Maple-X reactor. The project is cancelled in 1994.

July, 1996: An agreement is reached for AECL to build two Maple reactors, slated to produce isotopes by 2000.

Feb. 19, 2000: The Maple 1 reactor is declared "critical," meaning that it achieved a nuclear chain reaction. It becomes the first operating Maple reactor in Canada. However, flaws are found: The chain reaction indicates a positive power coefficient when they expected negative. Work stops.

December, 2000: The Canadian Nuclear Safety Commission declares AECL's reactors have major design flaws. Regulators say managers took "shortcuts" to reduce project costs.

February, 2006: AECL pays $25-million to MDS Inc. to take over ownership of the Maple project, and inks a 40-year deal to supply MDS with isotopes.

March, 2007: The CNSC recommends a design change to the core of the Maple reactor.

May 16, 2008: AECL abandons the Maple project after a cost of hundreds of millions of dollars in development.

Susan Krashinsky

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