* Not a replacement for elderly NRU reactor
* Still believes Canada's Maple project should proceed
* Pricing in Russian deal may yield lower margins
By Solarina Ho
TORONTO, Sept 27 A deal with Russia's Rosatom
is expected to provide MDS Nordion MDS.TO with a key medical
isotope for at least the next 10 years, but the move is not
intended as a permanent replacement for supplies from an aging
Canadian reactor, the company said on Monday.
MDS, one of the world's largest providers of medical
isotopes -- used in cancer testing and other procedures --
spoke with analysts on Monday after signing a framework
agreement last week with Rosatom State Corp, a state-owned
Both MDS and the global medical community took a severe hit
after a shutdown at Atomic Energy of Canada Ltd's (AECL) aging
reactor in Chalk River, Ontario, which lasted more than a year,
cutting off a major source of medical isotopes.
MDS's exclusive deal with Rosatom's Isotope unit, the first
to bring additional supplies of the key isotope molybdenum-99
(Mo-99) to market since the shutdown, aims to cushion the
impact of any more disruptions at Chalk River's National
Research Universal (NRU) reactor. [ID:nSGE68M0EZ]
The NRU is one of the few reactors in the world that
produces commercial quantities of Mo-99. Rosatom's Isotope aims
to join those ranks and hopes to eventually supply about 20
percent of the Mo-99 market.
Mo-99, the most prominent isotope used in nuclear medicine,
is the parent isotope for technetium-99m, used in roughly 80
percent of nuclear medicine procedures. Applications include
diagnosing heart disease or detecting hard-to-find cancers.
Rosatom will allocate three reactors for Mo-99 production,
the newest being 27 years old, said MDS. However, the deal
should not be seen as a replacement for for a Canadian
supplier, the company said.
"We want to be very clear this does not replace NRU, it
does not replace Maple and this does not diminish our interest
in seeing Maple project completed for long term supply," Chief
Executive Steve West said during a conference call on Monday
The Maple project is based on a 1996 agreement between MDS
and AECL to build two nuclear reactors and a processing
facility intended to replace NRU. MDS has been in arbitration
with AECL after the operator and the Canadian government
abandoned the Maple project.
At 53, NRU is the world's oldest reactor and is widely
expected to be decommissioned by 2016. When in full operation,
the operation in eastern Ontario provides about 35 to 40
percent of the world's medical isotopes and roughly 50 percent
of those used in North America.
MDS also said during the call that the pricing in its
contract with Rosatom Isotope could yield lower margins
compared with other sources, but noted that it would not be as
affected by capital investments in processing or reactor
Despite lingering uncertainty about the isotope market
following the shutdown of the NRU reactor, MDS believes it is
likely the market price of Mo-99 will continue to rise.
"There's still a lot of concern about the overall supply
capacity in the long term and so I think we just have to see
how that unfolds," said West. Future supply agreements for
other isotopes with the Russian producer are also possible, he
MDS shares were closed down 16 Canadian cents, or 1.5
percent, at C$10.53 on Monday on the Toronto Stock Exchange.
(Reporting by Solarina Ho; editing by Rob Wilson)