The federal government has started its hunt for a private company to run Atomic Energy of Canada's nuclear laboratory at Chalk River.

Natural Resources Minister Joe Oliver told the Canadian Nuclear Association conference in Ottawa that it's the next step in the government's review of the how the 56-year old facility will be run.

"We are not selling or closing the Chalk River nuclear laboratories," Oliver said."The new model aims to bring private sector rigour and efficiency to the management of the laboratories."

Oliver says the government will spend two years looking for a company to manage and operate the Chalk River labs, which right now produce much of the world's medical isotopes. The Conservatives originally announced the government was planning to move towards a public-private partnership three years ago. It's now officially starting the search.

But the new private manager of the government-owned facility won't be looking after isotope production. The licence for the Chalk River National Research Universal reactor (NRU) runs out in 2016.

Instead, the government also announced it will spend $25 million for further research into commercially produced medical isotopes without using enriched uranium and to have the production done somewhere else.

The money will go towards three separate organizations: the University of Alberta, TRIUMF in British Columbia and Prairie Isotope Production Enterprise in Manitoba that are now researching ways to commercially produce the isotopes.

Controversy over shutdowns

Using the Chalk River reactor to produce the istopes became controversial in 2007 when routine repairs to the NRU reactor were extended for safety reasons and caused world-wide shortages of the istopes that are used in diagnostic tests for cancer and heart disease.

The NRU was again shut down in 2009 because of a leak, causing further shortages. It was reopened in 2010.

The Conservative government decided to move isotope production away from the aging reactor.

"That technology has been proven, what needs to be established is the commercialization of the production of a larger amount that will be commercially available and we are encouraged by the process so far," Oliver said.

That leaves the job of running Chalk River's nuclear research lab. Oliver says the lab will focus on research into nuclear safety issues, the effects of radiation on humans and the environment as well as providing support to Canada's fleet of CANDU nuclear reactors. Right now that support has been provided for free, but the government expects that to change to a full-cost recovery from the owners of those reactors.

Oliver hopes all this will cut the costs of running Chalk River, although he couldn't say by how much.

"We don't have a precise number for the savings that would result from moving to a government-owned commercial-managed process," he said. "We know historically the private sector is often better at managing individual enterprises than the Government of Canada."

But the hunt for a private company willing to take on the challenges of running Chalk River might easier said than done.

In a recent performance review, AECL received two grades of "below expectations." The review showed more signs of age and corrosion at the reactor site — indications the reactor could start leaking again in the future.