OTTAWA – Canada said Friday it was scrapping work on a trouble-plagued nuclear reactor project designed to produce medical radioisotopes, but promised to maintain output by continuing to use an older reactor.

Atomic Energy of Canada Limited (AECL) said it was halting work on the two small reactors that make up its proposed MAPLE project because of the expense and the problems experienced.

The 50-year-old National Research Universal (NRU) reactor at the Chalk River facility in eastern Ontario will remain operational, producing the isotopes that are used in medical tests around the world.

Chalk River produces medical isotopes for Canadian health care company MDS Inc and its MDS Nordion division, which is responsible for about half of world supply.

“The decision to discontinue development of the MAPLE reactors will not impact the current supply of medical isotopes as commercial agreements between MDS Nordion and AECL provide for isotope production to continue through (the) NRU and associated facilities in Chalk River,” said AECL.

A shut-down of the NRU reactor late last year caused a shortage of radioisotopes, which are used in cancer tests.

The NRU has a license to operate until Oct. 31, 2011. The government said had asked AECL “to pursue an extension of the NRU operation beyond its current license to ensure the ongoing supply of medical isotopes”.

When injected into the body, the isotopes give off radiation that can be seen by a camera to diagnose cancer, heart disease and other medical conditions. They have a very short shelf-life and cannot be stockpiled.

The two MAPLE reactors – which have cost more than C$500 million ($500 million) to develop – were originally supposed to come on line in 2000.

The decision to scrap the project came as little surprise, since experts have long pointed to what they say are the project's serious design flaws.

“These reactors have never worked and never produced medical isotopes ... the project has long been crippled with both technical and economic impediments, which remained unresolved,” the government said in a statement.

Ottawa said the reactors had failed every one in a series of tests carried out last month.

The government fired the country's main nuclear watchdog in January, saying she had mishandled the affair.

Canadian Nuclear Safety Commissioner Linda Keen had refused to allow the NRU to restart after regular maintenance in November, saying not enough safety systems were working.

MDS Nordion did not immediately return a call seeking comment.

($1-$1 Canadian)

(Reporting by David Ljunggren; editing by Janet Guttsman)