Natural Resources Committee on June 10th, 2008

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

So there are essentially two ways of solving this problem: one, get the predictions to fit the reality, or two, change it from a positive to a negative coefficient.

[John Waddington]

That's correct.

[The Chair, Conservative, Leon Benoit]

Time for a very short question, Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

As a quick follow-up, how long in the future could the NRU run safely, in your opinion, Mr. Waddington? Could it continually be upgraded and redesigned? Is it like a Model T Ford, where we could just keep dropping in a new engine or motor and have it work indefinitely?

[John Waddington]

Yes, you can run it for quite some mileage. You know, the safety systems were upgraded in 2005 to meet modern standards.

My understanding is that this morning CNSC and AECL were discussing what might be done to extend the life of the NRU reactor. My understanding is that the CNSC would follow the same route it follows in extending the lives of power reactors.

As you're probably aware, reactors around the world are having their lives extended from the current phase of 40 years up to 60 years. There is a formal process, which is followed around the world by many regulators, for doing that.

In essence, you step back and do what is called an integrated safety review. The CNSC has documents out that tell licensees how this needs to be done. The licensee has to basically do a detailed assessment of the status of that reactor, how it meets modern standards, and what would be needed to extend its life for, in the case of power reactors, 20 years. I would imagine that the same process can be followed for the NRU.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go now to the official opposition.

Mr. Boshcoff, you have up to five minutes.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Thank you, Mr. Chair. I will be sharing my time with the member for Brant.

The type of question I'm going to be asked will be about redundancy or even continuance of supply. I wonder if new and improved technologies that were being developed as a cross between Chalk River or MAPLE, utilizing that barrel-sized reactor, could be developed. And how long would it take for financing approval, design, and construction?

Are there any obvious sites in the country besides Chalk River that have all the factors, such as water, power supply, existing medical and research capabilities, and transportation linkages? Would MDS itself be interested, seeing as it's already in the business and has innumerable connections, esoteric experience, and market development? Would you yourselves be interested in partnering, or would you just want to have a monopoly in production if such was the case?

You've already invested $350 million. Do you have any proprietary rights to any of that knowledge? And could it be applied to another option, say, in the future?

I have just one quick question after that. Has disposal of spent material at Chalk River or MAPLE been a serious factor in any decision to conclude this?

[Steve West]

Part of your question is about the technicalities of operating reactors, and I would probably say that we are not the experts, so I'm not sure I can fully answer all of that.

In terms of what it takes to produce medical isotopes and our role in that, there's a lot of infrastructure required, clearly. We would be very open to looking at all options to ensure continuity of supply--let me state that--although we do have a contract with AECL, which we alluded to.

There are many requirements in terms of production, processing, safety, regulation, and logistics. This business has always had, I think, barriers to entry, and we don't have exclusivity in the market. What we do have, though, is a lot of know-how that we've built up over the years. I think it's very difficult to duplicate, frankly, and probably that's one of the reasons we are a great Canadian success story. We do have a lot of embedded knowledge. I assume that AECL also has a lot of embedded knowledge that it might be able to share.

When it comes to long-term supply and when it comes to the needs of patients and supplying our customers, I think we have to look at those options, and we're prepared to do so. It's not intuitive to me today what those options are. And it's not obvious to us that there are any other options today other than completing the MAPLE reactor. I want to be very clear about that.

[Ken Boshcoff, Liberal, Thunder Bay—Rainy River, ON]

Would you visualize a series of smaller sites around the country, or some that could produce the redundancy or actually produce more that could actually help the world address the problems that isotopes are capable of solving?

[Steve West]

We have not considered that. This is fresh new news for us. My instincts tell me that the answer to that question, though, is probably not. That doesn't sound like a very feasible way to go about doing this business.

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. St. Amand, you have 30 seconds, so 15 seconds for the question.

[Lloyd St. Amand, Liberal, Brant, ON]

Gentlemen, you're pretty moderate fellows. I was very surprised when I heard that AECL was not continuing with the MAPLE project. I don't have a dollar invested. I can only imagine your shock at being told on May 16 that MAPLE was history.

By that point, you had been involved in a series of meetings with AECL. There was nothing in any of those meetings that caused you to believe that the project, even though it had troubles, was going to be totally scuttled. It almost seems to me as though on May 16 the decision to get out of the MAPLE reactor business was imposed upon AECL and that the decision was then conveyed to you.

Is that a fair read or not?

[Steve West]

That is close. I received a phone call at around 7:45, and the announcement was made at 8:30. It was a total surprise. We had never had any discussions around the notion that this project would not be completed.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Thank you, Mr. St. Amand.

We go now to Madame DeBellefeuille from the Bloc.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you very much, Mr. Chairman.

Mr. West, this has more or less been a horror story from the outset. Half a billion dollars were invested in the MAPLE venture—we could actually talk about the MAPLE failure. And yet, you continue to tell us that it would have been in the interest of the government, of taxpayers and of your company to continue to invest in the MAPLE reactor. From what I understand, you do not agree with the government's decision to put an end to the MAPLE project. It is rather surprising that you should maintain this position. It seems obvious to me that this was not a good thing.

[Steve West]

From our perspective, we were relying on the MAPLE reactors. Our business was relying on MAPLE reactors coming on stream. We don't have any other options, and we don't think patients or our customers have any other options. We're talking about over 50% of the world's medical isotopes, and that requires a large facility.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Mr. West, we are talking about a multi-million-dollar investment. Mr. Waddington told us that millions more would have to be invested by your company and by taxpayers in order to make the reactor work. At some point in time, you have to give up. It was a bad deal. Some of the people you were dealing with were perhaps less than honest, but the fact remains that it was a bad deal from the outset.

Mr. Waddington, you are an expert in these matters. You have studied the experience and the review of the independent experts. There was already agreement in 2003 on the explanation that you gave us, which was that it was doomed to failure.

If you had been in the same position as MDS Nordion, would you have signed a contract to continue on with the project in 2006? If I had been in their shoes, I would not have trusted Atomic Energy Canada, under the circumstances. The realizations of 2003 were very serious.

I cannot understand how it came to this. Quite frankly, as a member of Parliament, as a taxpayer and as a citizen, I cannot understand how a company, a government and experts managed to find themselves in this dead-end today, where everyone seems surprised. I cannot conceive of such a thing.

Would you have signed a contract and invested some $300 million more to continue on with the MAPLE reactor study, in the full knowledge that there was little chance of finding a solution?

[Steve West]

First of all, I would just make a correction, if I may, madame. The problem first appeared in 2003 as a result of the commissioning tests. At that point AECL--and indeed, if I had been looking at it in 2003--came to the conclusion that we would go through a process and we would solve this issue. So in 2003 there was absolutely no doubt in AECL's mind, and I think in most observers' minds, that we had a technical problem--a surprise--that, with due diligence and care, we would be able to solve.

I don't think the doubts about the solution really came to the fore until 2006 or 2007, when the test results became more understood. We were getting an understanding of only about half the problem. The full realization that we really were in a difficult spot because we had only been able to identify half the cause came in April of this year.

In answer to your question about what if I had invested $350 million, as a private citizen I don't have that, but as a taxpayer in 2003, I would have thought it was a good investment. Canada has the work on it, has the business.

In 2006 we were looking at the situation. We could see that things weren't going quite as well as they should have been by then, and we thought we should start looking a little further down the road. I guess the full realization came in 2008.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. DeBellefeuille.

We will go now to the government side for up to five minutes.

Ms. Gallant.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

Thank you to the witnesses for appearing here today.

After listening to some of the questions, I hope that one day you will invite members of this committee to tour MDS Nordion, and perhaps even the Chalk River site, for AECL. That would give people a much better idea. I don't think anybody here has ever seen a nuclear reactor.

You have, Mr. Alghabra.

In any case, we could see the whole line from radioisotope production right down to what you do.

In the 2000 election, Chalk River was promised a replacement for the NRU, the Canadian neutron facility. Several of the questions here today referred to a backup source of radioisotopes. How would the construction of that facility—which would have been online right about now, as it would have taken about six or seven years to build—have affected the supply of radioisotopes for your company?

[Steve West]

I guess that would have been another supply source for us, so it would have been a good thing.

We've heard discussions on and off about the CNF, but we've never really been involved as a company in those discussions. It has always been around the notion that this would be a neutron facility for research, and the MAPLE reactors were a facility purely for medical isotopes. There was quite a distinction between them. I don't think we've ever had any discussions about a replacement for NRU for medical isotope production, other than MAPLE.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

We've learned our lesson now that we don't have a single-use reactor built for research purposes.

Mr. West referred to other problems that the MAPLE project encountered prior to 2003. Can you elaborate briefly on what some of those problems were?

[Steve West]

The project ran into some problems, prior to commissioning in 2000, around the shut-off mechanisms for the control rods. They were safety issues, essentially. This was before the coefficient of reactivity issue.

I'm going to ask Mr. Malkoske to comment, because he was there at the time and I wasn't.

[Grant Malkoske]

Prior to 2003 there were issues related to the shut-off rods, the control absorbers. There was a study done by the Canadian Nuclear Safety Commission. One was also done by Atomic Energy of Canada Limited. It took a look at quality assurance issues through the construction of the MAPLE facility. These were some construction issues that were being dealt with at that time.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

Was AECL able to verify the content of the fuel for the MAPLE reactors? I understand it was a different source than for the NRU. Were they able to verify that what they thought they were getting was indeed what they were receiving?