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The Qinshan nuclear power plant in Hyian, China. Candu Energy, a former Canadian Crown corporation, is in joint-venture talks with Chinese state-owned atomic power firm to develop reactors that burn recycled uranium.

Jean Chrétien was in a good mood when he came to Shanghai in late 1996 to sell two Candu reactors. He kidded around with Li Peng, the then-Chinese premier, going so far as to try to place a red pompon on the head of the famously dour leader. Mr. Chrétien promised a future filled with more multibillion-dollar sales of Canadian nuclear technology to China. "I hope we will have many more Candus built in this great country of yours," he said then.

For the nearly two decades that followed, that optimism bore no fruit.

Now, however, Candu Energy – divorced from the federal government and in the hands of SNC-Lavalin Group Inc. – says it is working toward a deal that could see it partner with a Chinese nuclear giant to build new reactors, both in China and abroad.

By June, 2015, Candu hopes to finalize a joint-venture deal with China National Nuclear Corp., the massive state-owned atomic power and weapons company, "to develop global opportunities" for its advanced fuel reactor. The two sides signed an initial broad-strokes memorandum of understanding during the visit of Prime Minister Stephen Harper to Beijing this weekend.

In the past week, a technical committee led by CNNC also gave its approval to the technology Candu intends to use, classifying it as a third-generation nuclear system that can meet post-Fukushima safety requirements.

If Candu can complete the deal with CNNC – and much remains to be worked out – it will mark perhaps the brighest hope for a company that Ottawa sold for $15-million, and which has shed some 200 jobs since entering private hands.

"The whole premise of this joint venture is that we're going to be built into the whole energy scheme of China, specifically, but also globally," said Candu chief executive Preston Swafford in an interview in Beijing on Sunday. "There's a lot of exciting things [happening] for Candu that I don't think any of us would have recognized five years ago."

The joint venture would be the first between a foreign company and the Chinese nuclear giant to cover development of a technology; competitors such as Westinghouse and Areva have typically signed more limited deals that cover, for example, engineering or equipment supply. Candu has agreed to provide some of its intellectual property, while CNNC will further invest in the technology.

The deal covers a Candu reactor that can be used to burn both recycled uranium and fuel derived from thorium, a more common radioactive element that China has in large quantities. Recycled uranium has already been used to generate electricity through other types of reactors, before being reprocessed into a form that can be used in Candu's reactors, which can operate with less potent fuel.

Candu says one of its reactors can be built to burn fuel recycled from four existing units. China operates 22 reactors – the most of any country – and is building another 26. Candu has yet to run an entire reactor on recycled uranium, although it has run numerous tests and is modifying its reactors in China for that purpose. It expects to begin "full core conversion" to recycled fuel in late 2015. If that is successful, it opens the door to the potential for multiple installations in China.

Candu envisions "not just a single project, but a program, potentially, in China," said Ala Alizadeh, senior vice-president of marketing and business development for Candu.

Using Canadian technology to burn recycled uranium is "a very viable alternative," and in China "there is indeed significant opportunity to build more Candus," said Hugh MacDiarmid, the former chief executive of Atomic Energy of Canada Ltd., which once ran the Candu program.

Still, he cautioned, nothing in the world of nuclear energy moves quickly. He first began talks in China about using recycled uranium seven or eight years ago. The decision to build Candu reactors is likely to lean heavily on the priority Chinese leadership places on using recycled uranium, which could help lessen dependence on imported fuel.

"If they continue to be very concerned about their ability to have a secure supply of uranium, then all of a sudden this program will go up the priorities," Mr. MacDiarmid said. "Because basically, you're going to be running the reactor off the spent fuel stream of other reactors, so you're not consuming any new uranium."

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