Mr. Chair, I would like to say a few words about the global demand. We are going to focus on molybdenum and technetium.
The global demand is calculated to be about 40 million doses per year. The distribution is on page 5. You can see that the biggest user is the United States, with about 44% of the total, followed by Europe, 22%, then Japan, 14%, with the rest of the world at 16%. Canada uses 4% of the isotopes; later, we will be able to compare that figure to our share of the supply.
Let us talk about the growth in world demand. You see on page 6 that we expect a growth in world demand for this product, a product that is rare now. Demand will continue to increase as the use in present markets intensifies and as new markets start to use nuclear medicine.
Although it is a mature market, we expect that the United States will continue to lead the world demand. There are a number of key factors, but the growth is mainly because of the aging population and the increasing prevalence of heart ailments. Demand will probably increase in Asian, South American and Middle Eastern markets as new diagnostic tools are put in place.
We'll now turn to the supply side of the market on page 7. Much has been said about this over the last number of days. Moly-99 tends to be produced in nuclear research reactors—not nuclear power reactors, but smaller research reactors. There are approximately 250 such reactors around the globe, but there are only a handful that produce moly-99 in any reasonable quantity. Indeed, 95% of the moly-99 produced for export markets comes from five government-owned multi-purpose research reactors. They are the AECL's National Research Universal, which we call the NRU reactor, in Chalk River, Canada; the BR2 reactor in Belgium; the HFR reactor at Petten in the Netherlands; the OSIRIS reactor in France; and the SAFARI reactor in South Africa. There are several other smaller reactors that provide some supplies to regional or domestic markets, but not enough to really influence the global market.
The five reactors working together, or working with regular outages, can succeed in supplying the global market in the necessary quantities. However, the NRU is one of the largest, with the reactor in the Netherlands, producing roughly 30%, sometimes 40% of the global supply, and when such a reactor is down there will be an impact on global supply. Indeed, it's worth reminding ourselves that not so long ago, toward the end of the summer up to early 2009, the HFR reactor of the Netherlands was down. During that period, the NRU at Chalk River ramped up production considerably such that there was virtually no noticeable impact on Canadian demand. Now, of course, we're facing a different situation.
The slide on page 8 shows you a bit of the supply chain and how the isotopes make their way from a reactor to the patients.
First, uranium targets—we call them targets, but they're essentially bundles that go into a reactor—are irradiated. That means they're subject to the neutron beam of the reactor in the research reactor. Then, after some days in the reactor, these targets are processed. The moly-99, which is derived from this process, is extracted and it is purified. It is then incorporated into technetium-99m generators, and that is the product that is shipped to hospitals and radiopharmacies, where it's used in conjunction with drugs that allow the targeting of the radioactive materials that decay very rapidly in the body. The drugs allow targeting that to specific processes or tissues in the body.
The various steps in this process can take place at different locations and different countries, and we'll go through that. What is important is that this radioactive material decays very rapidly. The moly-99 that is produced in the reactors has a half-life of about 66 hours. That means that very quickly, if it is not shipped to the appropriate manufacturer, the product decays and is not as useful at the end of the chain. Similarly, the technetium generator that is shipped to the hospital has a limited useful life that's estimated in the range of 10 to 14 days. The longer one waits, the less effective that generator is.
This is an industry—and we'll go through the supply chain—that cannot stockpile material. It is operating every time in real time, and it has to work very efficiently at moving product through the different steps of the supply chain into the end demand. These products, of course, are subject to both nuclear and medical regulations that are necessary for producing, transporting, using the products, and approving new products, with the intent of ensuring health and safety. The various steps of the supply chain also involve costs and economic risks and rewards. Those are very critical to understanding the full complexity of the supply chain today and incentives for new or replacement technologies for the future.
The chart on page 9 depicts the global supply chain, including the reactor operators, the processors, and the technetium generators, and it shows how the process flows from left to right. If one looks at the top of the page, you'll see that the target irradiation occurs at the NRU in Chalk River for that element of the chain.
The molybdenum-99 is extracted in processing facilities at Chalk River, in what are called hot cells, or areas isolated with concrete to allow very sophisticated manipulation of radioactive material. This material is then shipped to MDS Nordion in Kanata. Nordion, you will recall, was spun out of AECL in the early 1990s. Nordion purifies the product. Importantly, it then exports this product to a number of customers in Japan and in the United States—mostly in the United States, to Lantheus, a technetium generator.
I'll come back then to show the flows of supply from Canada.
The other reactors essentially function the same way, going either through Covidien AG or the IRE, both in Europe—which can actually take supply from a number of reactors—and the South African reactor funnels the material through NTP Radioisotopes, also in South Africa, and it is shipped to different parts of the world.
Of course, the geographic alignment between reactors and processors stems from the constraints in shipping and the decay time of moly-99. While there is crossover between these chains, there is not perfect substitutability of product. It is not a trivial matter of taking something that comes out of the SAFARI reactor to be processed, for example, by Covidien in Europe, or going through MDS Nordion in Kanata. These products are not all substitutable.
If we look at the flows on page 10 as regards Canadian supply, it's important to understand again that the product from the NRU does not go directly to hospitals or clinics. It goes through a number of steps, first, through MDS Nordion in Kanata, as I just mentioned, which ships a portion of it to the rest of the world—and the largest portion to the United States, to Lantheus, and also, in some cases, to other customers in the United States—and it is only a relatively small portion that comes back into Canada. We indicated that the NRU supplies roughly 30% to 40% of global demand. It consumes roughly 4% of global supply. That means the bulk of the production of the NRU is actually exported; it is exported and in fact re-imported, because there is no technetium manufacturer in Canada.
You'll see that the end-use in the United States is at least 10 times greater than in Canada, at about 5,500 in terms of the units we've used here. The U.S. is itself supplied roughly 50% by the NRU—that is, 50% through this chain—and about 50% from other reactors globally.
We are all very keenly aware of the fact that the NRU is 50 years old. What is perhaps striking is that the other research reactors in the world that produce isotopes are essentially of similar vintage, between 42 and 47 years old. Of course, that means the costs of servicing these reactors go up—and, yes, their vulnerability also goes up—and there are also some licensing issues. As you know, the NRU is licensed by the CNSC to operate under its current licence to October 2011—and I'll come back to the work being done to extend that licence. The reactor in the Netherlands, for example, was given a one-year licence to operate in March of this year, after an extended outage it experienced.
Page 12 looks at some of the projects or proposals currently in the pipeline that could supply molybdenum-99 to the global market. The most immediate are on the left-hand side, but in fact even those are the only two that can actually produce within the next months.
The Australian reactor, called OPAL, which has been in construction basically for the last 10 years, is now commissioned to produce and to export molybdenum-99, and discussions are in place for export of that product to North America, including on the regulatory side, in both Australia as well as in Canada, with regard to the actual regulation of the health product.
Argentina has a reactor that it has been using to supply essentially to domestic and South American markets. It may supply some, albeit in modest quantities, to the North American market.
In the United States, the University of Missouri research reactor, also an older reactor, may potentially be brought onstream to produce molybdenum-99, but that is a project at this time and not a specific commitment.
The only new research reactor that is really being constructed at this time is the Jules Horowitz reactor in France, and it is expected to come onstream in roughly 2015.
There are other projects that are essentially at the conceptual stage at this time, and one would count at least five years before they come to maturity. Then there are some projects that may supply some local markets and therefore be of limited capacity or use for the global market at this time.
The proposals that have been discussed in the Canadian context include the McMaster nuclear reactor, which is also a reactor that is 50 years old and is experimental. It's a research reactor at McMaster University that has produced isotopes in the 1970s under different conditions. It has put forward a proposal to produce moly-99, and there has been engagement with McMaster to see how that could be done. But our analysis to date, the analysis of experts from AECL and from the CNSC, is that this could not be done in the short term.
UBC has also put forward a different concept, using an accelerator-based process to produce moly-99 using photo-fission. That has also been noticed as a potential process internationally, as one that merits further investigation, but again not one that is mature enough to produce at this time.
The Canadian Neutron Centre is essentially a proposal for a new research reactor in Canada, and that has been assisted by the National Research Council and would be a multi-purpose research reactor, not only producing medical isotopes.
There are, of course, additional private and public sector proposals out there. Certainly, we suspect we will have some discussion about the MAPLE reactors, which turned out to be not capable of producing and are not licensed at this time. That project was terminated in May of 2008.
The Province of Saskatchewan has indicated it is also interested in discussing with the Government of Canada possible arrangements for a research reactor and, eventually, the production of isotopes.
Perhaps I won't go through the list on page 14, Mr. Chair, not wanting to take too much of the committee's time. But the criteria that one would have to look at, looking at these various solutions, includes the technical feasibility, the readiness, the technological risks associated with the projects, and the ability to expand the technology to commercial scale.
There is business implementation and risks. The investments are very significant. Obviously, if they were to replicate in any way the production levels of the NRU, it would have to count on access to the export market for a large share of its production. This means that market has to evolve in a way that is reasonably predictable, and there has to be some ability to integrate with an existing supply chain. It does not suffice to have a reactor; you actually need to be able to work with a supply chain.
The timeliness of the solution, whether the project could be ready in five years or more, or less.... Regulatory issues have to be addressed, including the ability to handle and control nuclear materials and waste management. The United States, for example, Mr. Chair, has made it very clear that with regard to long-term solutions--not short-term, but long-term solutions--they want those reactors to function on low-enriched uranium in order to control the risk of nuclear proliferation. Currently, the NRU and most other of the reactors that produce are actually using highly enriched uranium, and this is something that the United States in particular, and indeed the international community, would want to phase out over time.
Where there are other broader benefits to Canadians, quite apart from the health care benefit, which is obvious, are the benefits to the medical industry or to the nuclear industry, and so forth.
The next steps in regard to key priorities in trying to address this challenge are threefold. It's also on the demand side, and my colleague from Health Canada may add to that later in the questions.
First of all, it remains a priority to put the NRU back into service and to extend the licence of the NRU. That is the best way right now of ensuring that there's something like the production of the NRU that comes back on stream, and obviously AECL is working very hard at ensuring that can be done as quickly as possible on a safe and reliable basis. It means as well that the work has to continue to extend the licence of the NRU. Funding was provided for that last year, reallocating from budget moneys of 2008. Budget 2009 provided funding again this year for AECL to pursue this work with the CNSC.
The second thing is international engagement so that we secure the best possible capacity out of existing capacity, that we achieve the best possible supply and the best use of that supply globally. That means, for us, engaging multilaterally, engaging bilaterally with the different producing countries, and also engaging with the United States.
Thirdly, the minister outlined last week the establishment of an expert review panel to go over the different proposals I mentioned earlier against the kind of criteria I've laid out.
I hope this is helpful. I'm more than happy to take questions from the committee.
