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A Chinese security personal stands guard at the entrance to the nuclear power plant in Qinshan, in China's Zhejiang province June 10, 2005. SNC-Lavalin Group Inc.’s Candu Energy signed an agreement Thursday, July 24, 2014 with Chinese General Nuclear Power Group to build two reactors in Romania, in a deal that could lead to a host of global infrastructure projects between the Canadian company and the Chinese nuclear industry

REINHARD KRAUSE/REUTERS

SNC-Lavalin Group Inc.'s Candu Energy signed an agreement Thursday with Chinese General Nuclear Power Group to build two reactors in Romania, in a deal that could lead to a host of global infrastructure projects between the Canadian company and the Chinese nuclear industry.

The Chinese firm had signed a letter of intent with Romania's Societatea Nationala Nuclearelectrica last November for construction of Candu units 3 and 4 at Cernavoda, but the two sides have not yet completed a commercial agreement.

In June, the Industrial and Commercial Bank of China agreed to provide $9-billion in financing for the Cernavoda project. Candu Energy is working with Export Development Canada for financing of its portion of the deal.

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At a ceremony in Vancouver, SNC also signed a memorandum of understanding with China National Nuclear Corp. to pursue power generation, mining and nuclear-related environmental projects around the globe. Among those projects is the continuing work in China by SNC and its nuclear subsidiary to develop an advanced-fuel Candu that will burn both recycled uranium and thorium-based fuels.

"These projects have the potential to generate billions of dollars for the Canadian and Chinese economies, while supporting China's growing demand for energy," Preston Swafford, president of the nuclear company, said in an interview from Vancouver, where company officials were meeting with Chinese counterparts to sign the agreements.

China National Nuclear Corp. is also pursuing a contract for a Candu-type reactor in Argentina, a deal in which SNC-Lavalin would also participate and which the former Atomic Energy of Canada Ltd. (AECL) had hoped to land itself.

Mr. Swafford said SNC is not looking to manage projects involving the foreign sales of Candu reactors, which involve multibillion-dollars in financing and significant risks of cost overruns.

The Canadian company owns the intellectual property for the Candu and will participate in design and engineering work on the Romanian project, which Mr. Swafford said could generate the equivalent of 37,000 person-years of employment throughout the nuclear supply chain in this country.

The reactors will be built at the site of two operating Candus built by AECL. It had been pursuing its own reactor sale with Romania, but took a back seat after the federal government sold the commercial part of the business – now known as Candu Energy – to SNC-Lavalin for $15-million in 2011.

The Romanians are looking to purchase 700-megawatt, Candu 6 reactors, the engineering of which will be enhanced to take into account safety measures mandated in the aftermath of Japan's Fukushima disaster. The two existing Candus, which came into service in 1996 and 2007, are the largest source of power in the country, providing nearly 20 per cent of Romania's electricity.

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The Harper government cooled on the nuclear business after bailing out AECL for cost overruns and is less interested in supporting international sales, said John Luxat, a nuclear engineer at McMaster University and former AECL board member.

Mr. Luxat worries that the Chinese will eventually squeeze out their Canadian partners. "I'd be a little cautious because China is very very aggressive, and it could be a matter of time before they start to take the design work."

But Mr. Swafford said the effort on the Advanced Fuel Candu in China could pay enormous dividends once the design is approved by the Chinese nuclear safety commission. The heavy-water Candu has an advantage over other light-water nuclear designs in that it can run on spent fuel from other reactors – reducing both the radioactive waste a nuclear fleet generates and amount of uranium required to run the system.

SNC is hoping that Chinese eventually build one Candu for every four light-water units in their system, which now has 48 reactors either built or under construction.

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