Natural Resources Committee on Dec. 13th, 2016

[Mark Lesinski]

That's a great question.

This is our first full year in the contract right now. One of the deliverables that we had in our schedule of work this year was to put together the strategy going forward as to how we're going to actually realize that vision we talked about. A big part of that is how we're going to be building. We mentioned in there that another mission is capital projects. Right now, we're in the midst of putting together an integrated, coherent strategy not only on how we improve processes, not only on how we clean up liabilities, but also on what we're going to be doing going forward and on what facilities we need.

Coming from that, there are a number of buildings that we believe fit our capabilities and what our niche is in the nuclear industry going forward, building upon what we've done in the past. There are a number of facilities that we're looking at. One of them that is very prominent is our hot cells. We're looking at what we can do to refurbish what we have to at least bridge the gap. The fact of the matter is that one of the skill sets we have that's second to none in the world is our ability to take irradiated material and do an examination that will just boggle your mind when you see the things that we can look at. In order for us to continue that into the future and to continue to support the industry, we need to look at that first. There are other pieces, as well, such as nuclear fuels manufacturing and innovation centres. That would be so that we can do more collaboration with other companies and bring them in so we can have incubators there. We could move into other markets in the area and have spin-offs from the site, as well. There's a whole series of activities that we're looking at from that injection of capital spending.

[Marc Serré, Liberal, Nickel Belt, ON]

Obviously, we have France, Japan, India, and the U.S, but in about 45 seconds, I want to get your thoughts on China and the emerging nuclear industry there as a competitor to us or as a partner. What are your thoughts on that?

[Mark Lesinski]

That is a delicate—I think the word is delicate—balance. I think that would ring true with you, as well.

There is no doubt that they're going to roar ahead. Any of you who have gone into Beijing realize that they had better do something. I think that they're going to march ahead with or without us. We have to be smart on how we connect with them so that they don't get too much of our technology and that we still maintain a foothold. That's why I really encourage the government to consider that we get ahead in SMRs. I didn't mention China, but I listened to a presentation when we were in Vienna, and China is proposing by 2030. I think it's important for us to get a step ahead, and I think we can. As fast as China can be, we can beat that.

[The Chair, Liberal, James Maloney]

Thank you.

Ms. Stubbs.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you both for being here.

I want to start with a quick question about funding. I understand that $800 million was earmarked by the previous government and then announced subsequently in the 2016 budget.

Can you give us a sense of what the ratio is between your public income and your private income, in terms of funding initiatives?

[Mark Lesinski]

Right now, I will struggle to give you exact ratios.

I can tell you that, obviously, the amount of external commercial funds that we're getting in revenue right now is dropping because we're not making “molly” anymore. That obviously took a bit of a dip in how much external cash we're getting in. We are targeting to get over $150 million or $160 million from commercial revenues in the next 10 years. We exceeded our target this year by 50%, so we've had a great year. We've had a great year right out of the blocks in providing some more revenue to offset how much money we need from the purse.

In the long term, there still will be a balance between the federal government and the commercial revenues because we're a national nuclear lab and are here with a number of technologies and capabilities that support the federal government in answering questions on things like biological research, the effects of low levels of radiation, waste treatment, etc. As for exactly how that will be in the future, we have projections, but we won't know until we get further into some of the new missions that we're going after right now.

[Shannon Stubbs, Conservative, Lakeland, AB]

Beyond that $800 million, have there been any recent additional investments in other infrastructure and new programs to support?

[Mark Lesinski]

Regarding the $800 million, we're looking at our spend profile and how we're going to spend it. We were trying to do it in the first five years, but the bottom line is we have to do it smartly. We're not going to rush ahead and try to spend it in five years and build something we don't need. The reality is it will probably take us six, seven, or eight years to spend that appropriately.

Just to get a good functional specification for a complicated facility like a hot cell will take us a few years to put the proper case together and make sure what we're putting together is the right thing for many decades to come.

That money is earmarked and we'll spend it over the coming years. There are no new funds that we're aware of right now to spend more.

[Shannon Stubbs, Conservative, Lakeland, AB]

Building on what Marc Serré said, I'm interested in the discussion around SMRs and their application to the oil sands. I represent a riding in northeastern Alberta and, as I'm sure you know, there hasn't been nuclear development in Alberta. I think Bruce Power did try to initiate a project in the Peace Country in 2007, and then ultimately abandoned or didn't proceed with that project, in 2011, I think.

I am curious about how realistic the application of the SMRs or vSMRs are to the oil sands. Do you have any sense of timelines? Is there any interest or any agreements on pilot projects? Where is that in a realistic application of that technology?

[Mark Lesinski]

Like you, there are a lot of people all around the world who are excited about it right now. Some of the countries have now established a program and are figuring out their path going forward. We're at the beginning of that journey right now.

The Canadian Nuclear Association, the other utilities, ourselves, and the parliamentary secretary are all in the midst of talking about how we can put this together and put a road map together and understand where it is and how this fits into it.

How realistic is it? I believe the technology can fit the bill. I'm not an expert on resource extraction, but as I understand it, it all revolves around the energy you need to get out that resource and make the business case.

I believe a vSMR in that location, for both electricity and steam to do the extractions, makes absolute sense. The reality for us to get a reactor online to do that will take us eight or nine years. That's why we have a proposal. Can we beat that? Perhaps, but I don't want to get too optimistic early on and then disappoint.

I think even with those timelines it can make an impact in recovering those resources in the future, but the time is now for us to do that. Otherwise, we will be buying the technology from the U.S., China, the U.K., or someone else.

[Shannon Stubbs, Conservative, Lakeland, AB]

Are any oil sands developers interested to date?

[Mark Lesinski]

Not that I'm aware. We have talked to a few of them.

Did you want to add to that?

[Lou Riccoboni, Vice President, Corporate Affairs, Canadian Nuclear Laboratories]

I believe TransCanada is involved in nuclear as well. As you know, they own a significant share in various sites.

We haven't had any conversations with any oil sands producers. As Mark mentioned, we are in our infancy and haven't come out of the blocks.

We see it as a potential application. We know more questions are to be asked than there are answers, and we'd have to consult and engage with the industry on that front.

[Shannon Stubbs, Conservative, Lakeland, AB]

I invite you to expand either in general or specifically. You talked both about the nuclear supply chain in Canada being the best in the world and then about countries like the U.S., the U.K., and others advancing on the development of SMRs.

I wonder if you have any requests in specific fiscal measures or policy frameworks beyond what you've discussed that would enhance Canada's global competitiveness on this front, both in research and technology development and also maybe in facilitating that transfer between technological development, manufacturing, and commercialization.

[Mark Lesinski]

I think a key element to this is that we follow through on the request to develop a road map that can help us start to align where it is we're going next.

When I came into the industry, you could see there had been a huge and appropriate push on refurbishment. It's great. It makes sense. You need the assets. It's a cost-effective approach to energy going forward. I think it's fantastic, and now it has to be executed. We have to let them get on with it, but where are we going next in the industry?

We're putting a road map together to understand how a vSMR or SMR fits going forward. What do we want to do internally for the country, and what do we want to do externally for export? Now is the time for us to start to figure out those next steps and to make some bold moves, because we need to. We need to do it right away.

I would just say that following through with that would be incredibly important to get a signal that there is support, and it does fit a number of the criteria for innovation, for greenhouse gas emissions reductions, for helping our northern communities, and for quality of life. I think it all fits.

[The Chair, Liberal, James Maloney]

That's where we're going to have to stop as we're out of time.

Gentlemen, thank you very much, both of you, for being here today. It will prove very helpful in our study. We're grateful for your taking the time to join us.

Those were our last witnesses.

On the record, I would like to say thank you to everybody, all the members of the committee, and to wish you all a very happy holiday season. We will see you back here in February.

Don't leave the room after the gavel goes down, because we do have a visitor from out of town we're going to spend some time with.

Thank you very much.

The meeting is adjourned.