China is becoming more active on the uranium front, with a state-owned nuclear giant eyeing international uranium projects after acquiring a share in French nuclear firm Areva.
Wang Ying, CEO of China National Nuclear’s subsidiary CNNC International, said the company is interested in buying large, low-cost uranium assets in Canada, Kazakhstan and Australia to help meet demand driven by China’s expanding nuclear power program, South China Morning Post reported.
Outlining the investment criteria, Ying said the project should have at least 30,000 tonnes of uranium resource (78 million lb. uranium oxide), with a cash production cost of no higher than US$25 per lb., and total production costs of no more than US$45 per lb.
Ying said the next five years would be a good time for an acquisition, as the market absorbs the surplus following Japan’s Fukushima nuclear disaster in March 2011. After the incident, Japan took all of its reactors offline. The country has 43 operable reactors that could come back online. So far, it has given a final safety approval to two reactors, with restart beginning as early as July.
Meanwhile China has 26 operating reactors, another 24 reactors under construction and more set for construction, according to the World Nuclear Association. China aims to increase its nuclear capacity to 58 gigawatts by 2020, up from 17 gigawatts in 2014.
Ying’s comments follow news that CNNC and China General Power Group (CGN) supposedly bought an undisclosed interest in Areva, Cantor Fitzgerald analyst Rob Chang notes. CNNC and CGN are already partners with Areva, owned 87% by the French government, which “was open to having its Chinese partners take stakes in the company,” Chang says.
Chang writes that “these two actions point to a China that is still very much on the acquisition path in the uranium space. Companies with uranium assets that fit or are close to fitting into CNNC’s criteria should be of particular interest.”
In Canada, Chang says these assets include Fission Uranium’s (TSX: FCU) Patterson Lake South project, Cameco’s (TSX: CCO; NYSE: CCJ) jointly held Millennium deposit, UEX’s (TSX: UEX) Shea Creek joint-venture project and Rio Tinto’s (NYSE: RIO; LSE: RIO) Roughrider deposit.
So far, the Roughrider deposit has both the resource size and low costs, while the Patterson Lake South and Shea Creek deposits have the size, but still need to work out costs. The Millennium deposit falls slightly short in size but costs are likely within range, Chang says. All four projects are in Saskatchewan’s prospective Athabasca basin.
Other Canadian projects that could grab CNNC’s interest over five years include Denison Mines’ (TSX: DML; NYSE-MKT: DNN) Wheeler River joint-venture project, NexGen Energy’s (TSXV: NXE) Arrow deposit, Kivalliq Energy’s (TSXV: KIV; US-OTC: KVLQF) Angilak deposit and Areva’s Midwest project, Chang says.
Canada is the world’s second-largest uranium producer, after Kazakhstan. Cameco and Areva Resources Canada are Canada’s biggest uranium miners, and are partners at McArthur River in Saskatchewan — the world’s largest uranium mine.