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Cameco strikes uranium supply deals with China
Brenda Bouw
RTGAM






VancouverCalgary - Canada will become a major supplier of uranium to China after Saskatchewan-based Cameco Corp. secured long-term agreements with the Asian superpower to help feed its fast-growing fleet of nuclear reactors.

Cameco says two separate agreements it signed with Chinese corporations, among the lengthiest uranium deals ever struck by China, will help the country meet its aggressive goal of increasing nuclear capacity for electricity generation from about nine gigawatts to as much as 160 GW by 2030.

The uranium pacts were part of a series of resource sector deals signed between China and Canadian companies late this week, alongside a visit to Ottawa by Chinese President Hu Jintao.

The Chinese leader pledged to double his country's trade with Canada to $60-billion by 2015, as China looks to procure more resources to supply its rapidly expanding economy.

"This is a very important region from any supplier's perspective," Jerry Grandey, chief executive officer of Saskatoon-based Cameco, said in an interview Friday.

Cameco's deals with China will help the uranium company reach its goal of doubling production to more than 40 million pounds per year by 2018.

Cameco said it will supply about 23 million pounds of uranium concentrate by 2020 to a division of China National Nuclear Corp., the country's largest nuclear generator with seven operating reactors and 10 more under construction.

Cameco also struck a non-binding agreement with China Guangdong Nuclear Power Holding Co. Ltd. to negotiate long-term uranium purchase agreements and potentially enter into joint development agreements for uranium resources.

"This is a commodity that is a relationship business," Mr. Grandey said.

The Cameco-China deal could help prop up uranium prices, which have been flat at just above $40 (U.S.) per pound since the start of the year. Prices have been steadily dropping since hitting a peak of almost $140 in mid-2007.

"Although there is no quantifiable financial impact on Cameco, we believe these announcements may be a sign that China is becoming more active in the uranium market, which would be a positive catalyst for uranium prices," Scotia Capital said in a research note Friday.

Chinese and Canadian business leaders signed 11 agreements in total this week, five of them new, ahead of the G8 and G20 summits in Ontario.

On Thursday, China National Petroleum Corp. and Encana Corp. negotiated a joint venture to develop the Canadian company's shale gas properties in northern British Columbia.

Other resource deals include: Yunnan Chihong Zinc & Germanium Co. Ltd.'s purchase of a 50-per-cent interest in the Selwyn Project, an undeveloped Yukon zinc and lead mine; and engineering firm Hatch Ltd.'s agreement to co-operate on potash mines with Zhongchuan International Mining Holding Ltd.

On Friday, Ottawa approved the sale announced in April of a minority ownership in the Syncrude oil sands operations to Chinese petroleum company Sinopec.

"I am pleased to note that the Canada-China relationship on energy and natural resources is deepening, with important commercial agreements being signed," Natural Resources Minister Christian Paradis said in a statement.

Mr. Paradis was joined by International Trade Minister Peter Van Loan and two important Chinese dignitaries - Commerce Minister Chen Deming and Zhang Ping, chair of the Chinese National Development and Reform Commission - at the Thursday signing, which was announced Friday.

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