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Korea Electric - Areva Deal

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Bloomberg
Korea Electric, Areva Sign Uranium-Mining Agreement (Update3)
February 07, 2010, 03:44 AM EST
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(Adds latest quarterly earnings in eighth paragraph.)
By Saeromi Shin
Feb. 7 (Bloomberg) -- Korea Electric Power Corp., supplier of almost all of the country’s electricity, said it signed a partnership agreement on uranium mining with Areva SA.
The deal follows the utility’s purchase of a 10 percent stake in the Imouraren uranium mine in Niger, the Seoul-based company also known as Kepco said in an e-mailed statement today. Korea Electric and unit Korea Hydro & Nuclear Power Co. said on Dec. 10 they would buy shares in a unit of Paris- based Areva, the world’s biggest maker of reactors, which owns the mine.
South Korea, which operates 20 nuclear power plants, plans to add eight more by 2016 as Asia’s fourth-largest oil importer seeks to reduce its dependence on crude. Kepco said it aims to secure as much as half of its uranium needs by developing mines overseas by 2020, and to buy more stakes in African and Central Asian producers this year.
“It’s the right move as Kepco tries to reduce the impact of changes in raw material prices,” said Joo Ick Chan, an analyst at Eugene Investment & Securities Co. who rates the stock “buy” with a share-price forecast of 60,000 won.
Korea Electric is also seeking to boost exports of nuclear plants, Joo said. Uranium is a raw material used to make fuel for nuclear reactors.
Nuclear Plant Deals
The utility is in discussions with at least five countries to build nuclear-power plants after leading a group that won a $20 billion order from the United Arab Emirates in December, Chung Kun Mo, an adviser to state-run Kepco, said last month.
Korea Electric fell 1.3 percent to 39,000 won on Feb. 5. The stock has climbed 14 percent this year, compared with a 6.9 percent drop in the benchmark Kospi index.
Kepco narrowed its loss in the latest quarter after economic recovery in Korea spurred sales, natural gas costs declined and the government let it raise prices. The utility last week reported a net loss of 366.4 billion won ($315 million) for the three months ended Dec. 31, compared with its record quarterly deficit of 2.16 trillion won a year earlier.
Korea Electric said it expects the partnership with Areva to lead to participation in future uranium projects with the French nuclear power company.
TCI