AECL sued over reactor cancellation

Thursday, 10 July 2008

Global life sciences company MDS has launched proceedings including a $1.6 billion compensation claim against Atomic Energy of Canada Ltd (AECL) over the abandonment of work on two radioisotope production reactors.

 

The Cerenkov glow as seen during MAPLE commissioning. Sadly, the units never saw commercial operation

"We have had to resort to taking these steps to protect the interests of patients, the nuclear medicine community, our shareholders and our customers," said Stephen DeFalco, MDS president and CEO. "We are disappointed that AECL and the Government decided to abandon the MAPLE project without establishing a clear plan for the long-term supply of critical medical isotopes."

 

MDS is the parent company of MDS Nordion, which buys AECL's output of radioisotopes for processing into medical isotopes before distribution to radiopharmaceutical companies. In 1996, MDS contracted with AECL for the design, development and construction of two new reactors and a processing facility - the MAPLE project - which was intended to eventually replace AECL's National Research Universal (NRU) reactor. The two MAPLE units (the acronym stands for Multipurpose Applied Physics Lattice Experiment) were due to start operation in 2000 and were to be the world's first reactors dedicated exclusively to medical isotope production.

 

Construction of the two 10 MW MAPLE reactors at AECL's Chalk River site was completed and the units went critical in 2000 and 2003 respectively, but major technical problems were encountered during commissioning. In May this year, AECL announced that it was discontinuing work on the project as it was no longer feasible to complete commissioning and start-up.

 

By 2005 MDS had seen its investment in the project more than double from initial plans to over $350 million. Following a mediation process a new contract was drawn up, with AECL assuming ownership of the facilities and responsibility for all costs associated with completing the project. AECL was to bring the reactors into service from 2008 and provide MDS with a 40-year supply of isotopes. MDS says it is now seeking an order to compel AECL to fulfil its contractual obligations under this agreement. At the same time it has filed a court claim for $1.6 billion in damages against AECL, for negligence and breach of contract, and against the government of Canada, for inducing breach of contract and for interference with economic relations.

MDS "not consulted"

 

MDS says that AECL and the Canadian government announced their decision to discontinue the MAPLE project without prior notice or consultation with MDS. According to the company, AECL had up to that point consistently maintained that it intended to complete the MAPLE project.

 

Although AECL has said that the current supply of medical isotopes from NRU will not be affected, MDS says that even if NRU's operating licence is extended, long term supply issues have not been adequately addressed.

 

In response, AECL said it would be defending both the arbitration and the civil action. "AECL believes that it has met and continues to meet its obligations under its agreements with MDS Nordion," a company statement said.

 

NRU first entered service in 1957 and is currently licensed to operate until October 2011. Supplies of nuclear medicine in Canada and beyond were thrown into crisis when licensing issues controversially forced the reactor to shut down for ten days at the end of 2007.