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 September 16, 2009
Uranium resource competition heats up
    Publisher: U3O8.biz
    Author: Melissa Pistilli

 

A look at India's latest agreements with uranium-rich nations around the globe and China's swooping up of yet another uranium miner paints a telling picture of the frantic race to secure long-term supplies for a new generation of nuclear power plants.

Both India and China have plans to aggressively ramp up their nuclear power generation over the coming decades, and the domestic supplies of both Asian nations are insufficient to meet demand.

At present, China has 11 operating reactors, 16 in the works and 35 others planned over the next decade. The Asian nation is seeking to expand its nuclear capacity from the current 9 GW to 86 GW by 2020. To do this, it will need to rely on imports of foreign uranium as its domestic supply doesn't even come close; hence, its aggressive campaign as of late to acquire uranium mines around the world.

India has 17 operating reactors, six under construction and an additional 23 expected to begin production over the next decade. By 2030, the country may be producing as much as 60,000 megawatts of nuclear energy, according to government figures.

The uranium produced from India's Jaduguda mines in Jharkhand is not enough to satisfy even current demands and attempts to access uranium from other known Indian ore bodies are still in the early exploration phase.

India's Global Uranium Plays

Since the three-decade long ban on uranium exports to India was lifted in September of last year, energy-hungry India has been making uranium and nuclear agreements with Russia, France, Kazakhstan, Niger, Namibia and the US. Negotiations with Canada and Brazil are on the table as well.

It's reported that India's state-run Nuclear Power Corp is planning to spend over $1.2 billion to purchase equity in foreign uranium mines.

India and Mongolia entered into an agreement for civil nuclear cooperation this week that will give India access to Mongolian uranium. In return, Mongolia will receive a US$25 million loan from India.

According to the World Nuclear Association, Mongolia has about 62,000 tonnes of recoverable uranium reserves. Of course, India is competing with China, Russia and Western miners for a piece of that pie.

Last week, the former Soviet Union nation of Tajikistan agreed to let India explore the known uranium deposits within its borders. India faces competition from Russia and China who are already exploring for uranium in Tajikistan.

Earlier this month, India signed a nuclear cooperation agreement with the world's fourth largest producer of uranium, Namibia. Under the agreement, the African nation will supply uranium to India in return for help building nuclear power plants. But, the agreement doesn't allow India to explore for uranium.

Russia, France and China are also working out uranium deals with African nations such as Namibia and equally uranium-rich Niger.

Canadian Giant Eyes Indian Market

India and Canada are now hammering out a nuclear cooperation agreement that is expected to be completed within the next six months, says George Assie, Cameco Corp's senior vice-president of marketing and business development.

Cameco announced recently that it is planning to open a marketing office in India next month.

A nuclear cooperation agreement would be mutually beneficial to India, Canada and Cameco. Canada was the world's largest uranium producer in 2008. Cameco is the world's biggest publicly traded uranium company and the world's second-largest producer, accounting for 15 per cent of global uranium production for 2008.

The Canadian company is anticipating a tripling in demand for uranium from India over the next 15 years. "We expect India to be the fastest growing market in the world after China and it is a market where we expect to conduct significant business," said Assie.

Cameco's India office will be headed by Chaitanyamoy Ganguly, who has held senior positions at the IAEA and India's Department of Atomic Energy.

For now, Cameco "isn't allowed to conduct any business" in India until the nuclear cooperation agreement with Canada is signed, said Rob Gereghty, Cameco manager of External Communications.

China's Uranium Strategy

Rather than forming agreements with uranium producing nations, China's uranium supply securing strategy involves buying stakes in uranium mining firms.

The latest acquisition was made by state-owned China Guangdong Nuclear Power Corporation (CGNPH), which has offered Energy Metals Ltd US$71.6 million for a 70 per cent stake in the Australian uranium explorer.

Energy Metals management and 40 per cent shareholder Jindalee Resources have recommended shareholders accept the offer, which is equivalent to a 60 per cent premium over the average stock price of the last three month.

"The board believes that CGNPC's financial resources, technical expertise and strategic intent to develop its uranium resource portfolio will greatly assist Energy Metals in its transition from explorer to developer and producer," said Energy Metals' chairman Oscar Aamodt.

The firm has eight projects in the Northern Territory and Western Australia. Its most important project is the Bigrlyi mine (54 per cent Energy Metals and 42 per cent Paladin Energy), which is in a scoping study phase and expected to commence production within three years.

Australia has become a hunting ground for China as it looks to grab up any available resources it can, especially uranium.

But while the Australian government's refusal to enter into uranium trade agreements with India may keep out one big energy-starved competitor, China still faces resource acquisition competition from another Asian nation, Japan, whose electricity companies are also aggressively picking up global uranium assets. Remember the $518 million deal with Rio Tinto for its Kintyre uranium deposit in Western Australia last year and the joint venture agreement between Mega Uranium this year.

 
 

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