FREE ARTICLE PREVIEW: You are enjoying a free sample of exclusive
subscriber content. There is a limit of three free articles per week.

DAILY NEWS Feb 10, 2012 4:58 PM - 0 comments

Canada/China sign landmark uranium deal

TEXT SIZE bigger text smaller text
2012-02-10

A new trade deal allowing exports of Canadian uranium to China is producing cheers from uranium companies across the country. The deal was one of several agreements signed during a visit this week to China by Canadian Prime Minister Stephen Harper.  

Graham Thody, president and chief executive of UEX Corp. (UEX-T), describes the agreement as "probably the most significant advancement to have occurred in the Canadian uranium industry since the beginning of the exploration boom almost a decade ago."

China is poised to become the largest consumer of uranium in order to meet the electrical needs of its growing population, he told The Northern Miner, noting that China has fifteen operating reactors, twenty-five under construction, fifty-two more planned and 150 others proposed.   

Cameco Corp. (CCO-T, CCJ-N), Canada's largest uranium producer, says it can now move ahead with two contracts it signed in 2010 to deliver a total of 52 million pounds of yellowcake to China by 2025. The sales contracts are thought to be worth about $2.5-3 billion. News of the trade agreement on Feb. 9 sent Cameco's shares in Toronto up 1.21% or 28¢ to close at $23.36 per share.

Richard Spencer, president and chief executive of U308 Corp. (UWE-V) says the deal "recognizes Canada and Canadian companies as among the top "go-to" entities for uranium."  

Others describe the deal as a big move forward. "Prime Minister Stephen Harper has just sent a huge message to China that we are eager to work with them and that is very helpful to our cause," says Chris Frostad, president and chief executive of Purepoint Uranium (PTU-V).

But Frostad still hopes the next step will be amending ownership rules in Canada that prohibit foreign companies from owning more than 49% of Canadian uranium mines.

"The deal Harper has signed in Beijing is huge news for a Canadian producer, who has to fill orders for China from other countries but in terms of exploration or the development of resources in Canada there has been a huge reluctance from China and Japan and others until the ownership rules have changed."

Frostad cites Mitsubishi of Japan as an example. The Japanese company acquired a uranium asset in the Athabasca Basin many years ago but has shelved it until the rules on foreign ownership change. The ownership rules also impeded Purepoint Uranium from nailing down a strategic investor in China several years ago. The Chinese entity later invested in an Australian competitor.  

In Frostad's opinion it's only a matter of time before Canada changes the foreign ownership laws. "The prime minister made specific mention that the rule needs to change in his Throne Speech in 2009," he reasons, adding that it is widely held that Rio Tinto (RIO-N, RIO-L) would not have acquired Hathor Exploration (HAT-V) and its Roughrider deposit last year if it had felt the law would not be amended. "I don't think they would have paid $650 million for it if they thought they'd have to divest half of it," he says.

The Chinese market has been closed to Canadian producers of uranium for decades and the country sends most of its exports of U308 to the United States, Europe and Japan.



© 1915 - 2014 The Northern Miner. All Rights Reserved.

Related News
TSX drops, Sept. 8-12
Strike notice prompts closure of Cameco's McArthur River
Cameco puts Cigar Lake on ice
Related Press Releases
First Uranium Concentrate Produced from Ore Mined at Cigar Lake
McArthur River and Key Lake Workers Accept Contract Offer
Purepoint Uranium Group Inc. Announces Rights Offering
 



Horizontal ruler
Horizontal Ruler

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Northern Miner has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *



* mandatory fields