SNC-Lavalin Group Inc. has struck an agreement in principle for a joint venture with two major Chinese companies to build a new generation of nuclear reactors.

Montreal-based SNC said on Thursday it will join forces with state-owned atomic power and weapons company China National Nuclear Corp. and manufacturing giant Shanghai Electric Group Co. Ltd. to design, market and build the Advanced Fuel Candu reactor (AFCR).

The joint venture is the first between a foreign company and the Chinese nuclear giant involving the development of new technology.

SNC bought Candu from Ottawa for $15-million in 2011.

The new reactors will use recycled fuel from China’s existing reactors.

“The market potential for AFCR technology in China is considerable,” SNC said in a news release.

Each new AFCR reactor can use recycled-fuel from four light-water units to generate six million megawatt-hours of additional carbon-free electricity without needing any new natural uranium fuel, the company says.

The joint venture is expected to establish two design centres – one in Canada and one in China – to complete the new technology.

Signing of the agreement is “a great endorsement of our expertise and CANDU nuclear technology from the largest nuclear market in the world,” SNC-Lavalin Power president Sandy Taylor said.