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Cameco in talks to fuel Chinas power needs
Tuesday, May 05, 2009
China, with ambitious plans to boost the amount of electricity produced from nuclear power, is in talks with Cameco Corp. CCO-T about a potential uranium supply agreement.
The Asian giant has become a significant buyer of the radioactive metal on the spot market as it increases its nuclear power capacity, and has entered talks with Saskatoon-based Cameco, the world's largest uranium producer.
China is actively taking advantage of weak prices to secure supply of the metal used to make nuclear fuel. A spokesman for Cameco confirmed the company is in discussions with Chinese officials about a supply deal. The company also said power utilities, including state-controlled Chinese entities, have accounted for half of recent purchases on the uranium spot market.
""When you talk about utility buying, a good portion of that would have to be attributed to the Chinese. In their case, they are looking to stockpile significant quantities of inventory for the Chinese program,"" George Assie, Cameco's senior vice-president of marketing and business development, said on a conference call.
Chinese demand for uranium could underpin a recovery in spot prices, which have recently hit $44 (U.S.) a pound after plunging to about $40 from a peak of $135 in 2007.
Stockpiling of copper by China has driven a recovery in prices of that metal. Copper has rallied from recent low of $1.25 a pound to above $2.
Cameco spokesman Lyle Krahn said the company is currently in discussions with China regarding a potential uranium supply agreement.
The Asian superpower expects to have 75 gigawatts (a gigawatt is one billion watts) of nuclear power generating capacity by 2030.
That represents just three-quarters of current capacity in the U.S. - the largest nuclear power producer - and only 10 per cent of China's total electricity demand.
""The uranium market potential in China is absolutely huge,"" Mr. Krahn said.
Scotia Capital Inc. China strategist Na Liu said the market is underestimating the speed at which China is adding nuclear capacity.
He is forecasting that China will have total nuclear capacity of 35 gigawatts by 2015 and 75 gigawatts by 2020, up from the 9.068 gigawatts operating today.
China is currently building 20 new nuclear reactors, with approximately one gigawatt of capacity each.
Scotia Capital predicts that by 2020, China will consume 15,700 tonnes of uranium a year.
