Settlement deal over MAPLE cancellation

21 August 2013

Atomic Energy of Canada Ltd (AECL) has reached a settlement with Nordion over its decision in 2008 to abandon the two MAPLE isotope production reactors before they began operation.

In May 2008, AECL decided to cancel two MAPLE reactors at Chalk River Laboratories after spending $680 million on the project. Although the reactors went critical in 2000 and 2003 respectively, major technical problems during commissioning led to AECL's decision to abandon the project. Healthcare company MDS had contracted AECL to build the reactors in 1996 under an agreement known as the Isotope Production Facilities Agreement (IPFA), and by 2005 had seen its investment in the project reach over $350 million. AECL's decision to drop the project prompted MDS, the parent of Canadian life sciences company MDS Nordion (now Nordion), to launch legal proceedings against AECL.

Supply agreement

In addition to the settlement agreement, AECL and Nordion have amended and restated a non-exclusive agreement under which AECL will supply medical isotopes from the NRU reactor to Nordion until the end of October 2016. Starting in 2014, the percentage of revenue share that AECL receives from Nordion each year will increase throughout the term of the isotope supply. In addition, AECL has agreed to continue to provide Nordion with waste disposal services until the end of October 2026.

A Canadian tribunal said in September 2012 that Nordion did not have a case for arbitration against AECL as it had signed an interim and long-term supply agreement with AECL in 2006, the terms of which stated that Nordion could not make a claim against AECL if it decided to cancel the MAPLE facilities. The arbitrators also dismissed AECL's counterclaim against Nordion, which claimed damages for breach of contract in the amount of $250 million and other relief.

The two companies have now announced that they have settled "lengthy litigation and arbitration proceedings" concerning the cancellation of the project. Under the terms of the settlement agreement, Nordion will receive CAD15 million ($14 million) in cash from AECL, while AECL has dropped its claim against Nordion of about CAD47 million ($45 million) for arbitration costs.

Nordion, in turn, has withdrawn its lawsuit against AECL in relation to the IPFA. Both parties have also dropped claims against each other related to this, including Nordion's claim for CAD244 million ($234 million) in damages against AECL and AECL's counterclaim for damages of CAD80 million ($77 million).

The decision to abandon MAPLE has meant the continued operation of the NRU facility, which has been in operation since the 1950s and still produces some 40% of the world's supply of molybdenum-99 (the source of technetium-99 widely used for medical diagnosis) and cobalt-60 (for cancer treatment).

Both companies welcomed the agreement, with Nordion CEO Steve West saying, "This resolution provides greater clarity for Nordion and removes uncertainty and liability around these matters." AECL president and CEO Robert Walker said, "The settlement terms are well aligned with AECL's domestic and international objectives and with our current restructuring process. We are pleased to have these disputes behind us, and we look forward to working with Nordion under our new commercial agreements."

Researched and written
by World Nuclear News