Sparton Resources Inc V.SRI

China's Uranium Needs

[mamoth]

The country plans to cut carbon intensity by 40% from 2005 to 2020.

How will it do this? There are really two options, and it is pursuing both – renewable and nuclear.

Renewable energy sources have their limitations, which means nuclear will provide a large portion of China’s new power generation capacity. Already, over half of the new nuclear plants under construction around the world are in China or India.

This means China’s going to be needing a lot of uranium to feed these plants, and the country doesn’t have all that much of the nuclear fuel within its borders.

If the uranium market tightens up over the next decade, as analysts predict, the country is going to need to make its got enough uranium to keep the power flowing.

Last month, China agreed to buy more than 10 000 kg of uranium through the current decade from Canada’s Cameco. But diversity of supply is always an imperative when it comes to sourcing uranium.

This means that China could become integrally involved in financing juniors to get their projects into production in return for offtake agreements.

The country would most likely look for minority shareholdings in these companies, as has been the case with most other corporate activity Chinese mining companies have been involved in beyond their own borders.

But the fact that Russia is about to take control of TSX- and JSE-listed Uranium One may compel China to go for entire companies to secure uranium supplies.

There has been much Chinese investment in the global mining industry over the past three years, but not much of this has been in the uranium space.

China’s demand for energy will continue to grow apace and, as this happens, watch out for big investments coming from that country in uranium miners.

Extract from Mining Weekly