THE PRIVATIZATION OF ATOMIC ENERGY OF CANADA – HARPER’S GIFT TO SNC-LAVALIN!

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In 2009, the Harper government started the process of the privatization of Atomic Energy of Canada Limited (AECL).  Joe Oliver, Minister of Natural Resources at the time, stated that it was time the government “got out of the business of subsidizing nuclear reactor sales and servicing.”  The government insisted that AECL was a serious financial risk for “the Canadian taxpayer”.  They even produced statistics to show that it had cost the government $1.2 billion over the past several years in subsidies.  According to government releases at the time, AECL also faced, “major cost overruns at key projects in recent years,” and it would be difficult to find a buyer.

Apparently, the dire financial forecasts of the Harper government did not scare SNC-Lavalin. In June 2011 AECL was sold to SNC-Lavalin for $15 million dollars.  Not only did SNC-Lavalin pay a fraction of the value of AECL, which many experts described as a fire sale price, the government also gave SNC-Lavalin $75 million to complete development of a new reactor called Enhanced CANDU 6.  In announcing the sale, Joe Oliver tried to justify the low sale price by claiming that “the government will have an opportunity to get royalties down the road because it’s keeping intellectual property rights.”  In fact the intellectual property rights would last fifteen years and the potential earnings for the government were estimated to be $285 million over that time.

One only has to contrast the sale price of $15 million with the yearly earnings of AECL which were approximately $500 million at the time.  Even if the considerable assets built up by AECL are not taken into account, it is the height of hypocrisy to deny that this was a gift by the Harper government to SNC-Lavalin.

Another condition of the sale was that the government would assumed all the financial responsibilities related to two ongoing projects; one at Point Lepreau in New Brunswick and the other at Bruce Power Station in Ontario, which were being refurbished but were three years behind schedule and $2 billion over budget. SNC-Lavalin got everything they wanted—a publicly funded and developed crown corporation with great physical, technological and human assets, and one of the leading companies of its kind in the world, with minimum risk for SNC-Lavalin.

The union for AECL workers condemned the sale.  Michael Ivanco, vice-president of the Society of Professional Engineers and Associates stated that the sale would result in a “hollowed out company,” and could cost thousands more jobs among the corporation’s suppliers.  “It may contribute to brain drain not seen since the Avro Arrow, as engineers, scientists and others evaluate their long term careers with the company,” Mr. Ivanco declared.  “We are shocked and angry that the Harper government conducted this sale behind closed doors without any input from the Canadian public or Parliament.  They jammed legislation through the budget that gave cabinet the right to make decisions instead of Parliament and now we see the results,” he concluded.  The union also pointed out that close to 800 jobs were in jeopardy when SNC-Lavalin takes over.

Less than six weeks after the sale announcement the Financial Post of August 25, 2011 carried this brief statement:

“Candu Energy Inc., a subsidiary of SNC-Lavalin Nuclear Inc., and Atomic Energy of Canada Ltd. have agreed to a $440-million deal with Argentina’s nuclear operator to refurbish a Candu reactor at the Embalse Nuclear Generating Station.

“AECL will begin work on the deal, with Nucleoelectrica Argentina Sociedad Anonima SA (NASA), with direct support from SNC-Lavalin until the sale of AECL’s Candu reactor division to Candu Energy closes.  After that, Candu will take over the rest of the contract.

“AECL and SNC-Lavalin will provide key technologies and tools as well as engineering and supply for plant upgrades. NASA will oversee onsite work.

“The retubing and refurbishment is expected to extend the reactor’s life by 25 to 30 years.  It began operation in January 1984 and produces 648 megawatts.

“This contract is a good example of the opportunities that lie ahead for Candu,” Patrick Lamarre, executive vice-president with SNC-Lavalin Group Inc., said in a release. “We look forward to expanding our cooperation with the Argentinian nuclear industry, not only for this refurbishment project but for future nuclear projects in Argentina, elsewhere in South America and in the global market.”

Within months of the sale of AECL, SNC-Lavalin won another lucrative contract for its Candu Energy Inc. subsidiary.  On March 1, 2012 CBC News reported:

“Engineering firms SNC-Lavalin and Aecon* have teamed up on a $600 million contract from the Ontario government to refurbish the Darlington nuclear power generating station. Ontario Power Generation or OPG, the agency responsible for maintaining Ontario’s power grid, announced the contract on Thursday. The job consists of eventually upgrading all four reactors at the Darlington facility. The first phase of the contract involves planning how to remove 480 pressure and calandria tubes, along with 960 feeder pipes that run at the reactors.  Phase two will be putting the plan into action. The four reactors at Darlington have reached roughly half of their useful life, and the upgrade could give them several more decades of power generating potential.

“Darlington now powers one out of every five homes in the province, but OPG wants to expand capacity at the site that could eventually see all four reactors putting out more than 5,500 megawatts of power — far and away the province’s largest single power source.

“The Darlington reactors are Candu technology, originally made by Atomic Energy of Canada Ltd., which SNC-Lavalin bought from the federal government last year. As soon as that deal was signed, SNC-Lavalin signed another deal to refurbish another Candu reactor, in Argentina.

“The company is now waiting on another Ontario contract to possibly build two new Candu reactors elsewhere in Ontario.  There’s no word when that decision will be made.

“Work at Darlington is expected to begin in 2016 and create about 6,000 jobs, OPG said in a release.”

In short, within months of the sale of AECL to SNC Lavalin for $15 million, the company that the Harper government claimed was a burden for “the Canadian taxpayer”, and would require hundreds of millions of dollars of government subsidies was able to acquire $1 billion worth of contracts.

The privatization of AECL is a clear example of the role of the Harper government in the service of monopoly corporations.  The outright gift to SNC-Lavalin of one of the most valuable public assets in Canada is another massive transfer of public assets to the private sector.

The privatization of AECL is damaging for the national economy now and in the future.  It has resulted in the loss of close to one thousand jobs and the potential loss of thousands of jobs in the future.  It has taken a very important technology, the secure development of nuclear energy out of the public domain and handed it to a monopoly corporation which will take advantage of the needs of the whole society for electrical energy.  Nuclear energy clearly impacts on the health, safety and well-being of all Canadians and must never be allowed to be the private domain of a monopoly corporation whose only interest is the making of maximum profit.  The Harper government has even chosen to ignore the fact that SNC-Lavalin has been embroiled in allegations and findings of irregular payments to public officials, misconduct, corruption and bribery in projects in Canada and other parts of the world.

This is a government that is on a destructive path and must be stopped!  Working people and all Canadians must organize to deprive the Harper government of the political and economic power to make such decisions which endanger the health, safety and well-being of the people.

*note – Aecon is Canada’s largest publicly traded construction company.  According to Wikipedia it is involved in many infrastructure projects in Canada as well as internationally. It produces its own construction products like asphalt and the infrastructure segment provides engineering services to both private contractors and municipalities. Its last couple of acquisitions has given it a strong position as a developer, operator and constructor at Canada’s oil sands project.

For Your Information

Atomic Energy of Canada Limited (AECL) is a Crown Corporation founded in 1952 with a mandate to develop nuclear energy technology.  AECL developed the CANDU reactor technology in the 1950s and until its sale to SNC-Lavalin in 2011, was also the vendor of CANDU technology which it had exported worldwide.  Throughout the 1960-2000 period, AECL built CANDU facilities in India, South Korea, Argentina, Romania and the People’s Republic of China.

In addition, AECL manufactures nuclear medicine radioisotopes for supply to MDS Nordion* in Ottawa and is the world’s largest supplier of Molybdenum-99 for diagnostic tests and Cobalt-60 for cancer therapy. The government continues to own the Chalk River Laboratories which produce the medical isotopes but Harper has clearly indicated that he intends to take the Canadian government “out of the business of medical isotope production.”  There is no doubt that the government is presently conducting secret negotiations to sell the Chalk River Laboratories and the National Research Universal Reactor (NRU) which is located there.

The October 16, 2013 issue of North Renfrew Times reported that the federal government had announced that it had initiated the process of contracting out the management of the Chalk River facilities under a “government-owned, contractor-operated model.” The article pointed out that the process was ongoing and that further announcements were expected shortly.

The contracting out of the Nuclear Laboratories at Chalk River, the last part of the Crown Corporation that remains, is characterized by the government as the restructuring of AECL.  But it is clear that the intention of the Harper government is more than just a restructuring.

The Office of the Minister of Natural Resources explained the restructuring as follows:  “Under the new management model, the Laboratories will focus on three key objectives:

  • Managing its radioactive waste and decommissioning responsibilities accumulated during the more than 60 years of nuclear research and development at Chalk River and at Whiteshell Laboratories.
  • Ensuring that Canada’s world-class nuclear science and technology capabilities and knowledge continue to support the federal government in its nuclear roles and responsibilities — from health protection and public safety to security and environmental protection.
  • Providing access to industry to address its need for in-depth nuclear science and technology expertise.  This will include ongoing access to the Laboratories, at fair market rates that ensure cost recovery, for owners and operators of CANDU reactors as well as the CANDU and broader nuclear supply chain in Canada.”

It is not accidental that the Harper government has sold AECL to SNC-Lavalin at this time and is handing over the valuable technology and the expertise of the scientists and engineers at the Chalk River facility to serve private interests who intend to make enormous profits through the exploitation of nuclear technology.

It is a well-known fact the government of Ontario is about to make a decision about what to do with the Darlington Nuclear Power Plant.  It was considering the option of building two new nuclear reactors or proceeding with the plans to refurbish the existing reactors.

There is also discussion taking place among the political and economic elite on the issue of the Pickering Nuclear Power Plant. The Economic Club of Canada has scheduled a meeting in Toronto on November 22, 2013. The topic for discussion is “The Case for New Nuclear: The Need to Begin Now to Replace the Pickering Nuclear Plant Due to Close in 2020.”

The bottom line is that many of the CANDU reactors in Ontario and elsewhere need to be refurbished or replaced.  In either case, thanks to the timely intervention of the Harper government, SNC-Lavalin and its friends in the construction industry stand to make billions of dollars of profit for years to come.

*note: MDS Nordion- In 1991, AECL decided to spin off its medical isotope production business under the name Nordion International Inc. The unit was sold to MDS Health Group and now operates in Ottawa under the name MDS Nordion.

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On the author:  Louis Lang is a retired lifetime member of the CUPW and a former Ottawa local president.  While in retirement, he often writes on issues affecting postal workers and workers in general.

COMMENTARY

This article by Louis Lang clearly shows how the Harper Conservatives are selling the country’s most valuable assets at fire sale prices, transferring them to the private sector so that it can in turn reap huge profits for themselves and their stakeholders.  When the Harperites were laying the ground work for the privatization of Atomic Energy of Canada Limited, they openly condemned the company as “dysfunctional” and a $30 billion “sinkhole” of public funding.  They also accused AECL of being a “burden for the Canadian taxpayer”.

In the case of Canada Post Corporation, the Harperites are using the very same logic to single it out and demand that it must show a profit year after year and provide the government with dividends or face privatization.  They have warned Canada Post that it must not turn to the government for public funding and subsidies or become a “burden for the Canadian taxpayers”.   “All options are on the table”, they keep on repeating.

Just recently, the Harperites have refused to extend a further letter of credit to Canada Post so that the Crown Corporation can start making special payments of $100 million per month out of its operating budget to cover the solvency deficit of the pension plan, a decision which will force Canada Post into a severe operating crisis in the months to come.   From that, a situation will arise where the Harperites will also be condemning the post office as part of laying down the ground work for its privatization.

Postal workers must shift this pressure that the Harper government is currently trying to place on them and the union in order to extort further wage and contract concessions back to the CEO of Canada Post Corporation and the Harper government and force them to render accounts for all the years they allowed Canada Post to take pension holidays when it was profitable, thus greatly contributing to the pension plan solvency deficit.

We must demand accountability and wage a resolute struggle against the attempts of the Harper government to gut the public post office and put it out for sale.   The Canadian post office is a tremendous public asset, a crucial Canadian infrastructure and one which belongs to the Canadian people.  We must not allow the Conservatives to transfer it to private interests as they have done with AECL which now is bringing billions of dollars to the private coffers of SNC-Lavallin and their business partners.

Wage and contract concessions are not solutions!

Canada Post must meet its obligations to the pension fund!

The Canadian government must guarantee the solvability of the pension plan!

In Solidarity,
Danielle Desormeaux
hoffddesormeaux@gmail.com

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Feel free to add to the discussion.