Supply Concerns?TOKYO (Nikkei)--Sumitomo Corp. (8053.TO) will work with a Canadian resources
company to develop a U.S. deposit of uranium, a material used as fuel in
nuclear power plants, in a bid to tap growing demand amid concerns over
shortages, The Nikkei reported in its Friday morning edition.
Sumitomo will team up with Strathmore Minerals Corp. to mine and process
uranium from the Roca Honda deposit in the southern U.S. state of New Mexico.
The project is expected to begin production in 2013 and reach a peak annual
output of roughly 1,000 tons, or about 12% of Japan's requirements. The U.S.
holds the fourth-largest uranium reserves in the world.
The partners will establish a company to carry out the project, with
Sumitomo contributing 40% of the capital and Strathmore 60%. The deposit
contains some 14,000 tons of uranium reserves, or 1.7 times Japan's annual
needs.
Sumitomo has agreed to a $1 million lump-sum payment to Strathmore in
exchange for the right to participate in the feasibility study. In addition,
it will later pay 40% of the study's costs as well as the price for concession
rights. Sumitomo plans to buy the project's entire uranium output at market
prices and sell it, mainly to U.S. nuclear power plants. It may also consider
shipments to Japan.
This would be Sumitomo's second uranium project following its mine in
Kazakhstan. Rivals Mitsubishi Corp. (8058.TO) and Mitsui & Co. (8031.TO) are
developing projects in Canada and Russia, respectively.