CALGARY(Dow Jones)--Canadasaid Thursday it will allow the sale to Chinaof uranium yellowcake for use in nuclear-energy generation, a move that clears the way for Canadian producers to compete with China'scurrent suppliers in Kazakhstan, Australiaand Russia.
"This agreement will help Canadian uranium companies to substantially increase exports to {C}China{C}, the world's fastest growing market for these products," Prime Minister Stephen Harpersaid in a release, during a trip to Beijing. "It will generate jobs here at home while contributing to the use of clean, reliable energy in {C}China{C}."
The deal was one of several trade pacts signed between Chinaand Canadian governments and companies during the trip. Harper has said that opening new markets in Asiafor Canada'senergy and mining resources is a top priority.
His government has ratcheted up those efforts after the Obama administration rejected for now a crude-oil pipeline that would transport oil from Albertato the U.S. Currently, almost all of Canada'soil exports go to the U.S.
In addition to oil, Canadahas lots of uranium. It produces about a fifth of the world's uranium every year and exports more than 80% of its production, according to the World Nuclear Association.
It's now the world's second largest exporter, after Kazakhstan, and ahead of Australia. Canadacurrently sends most of its exports to the U.S., Europeand Japan.
But the Chinese market--one of the fastest growing in the world--has long been closed to Canadian producers. In 1976, Canadabarred exports of uranium and nuclear reactors to certain countries after Indiaused a Canadian-made nuclear reactor to construct its first nuclear bomb.
Yellowcake, a concentrated uranium powder, is used to make fuel rods for nuclear reactors. It can also be used to make weapons. As part of the pact with Canada, Chinaagreed to use any imported uranium only for peaceful civilian purposes.
The pact cheered uranium producers here. Cameco Corp.(CCJ), the world's largest uranium producer, based in Saskatoon, Sask., said it could start delivering 52 million pounds of yellowcake worth up to $3 billionto Chinathis spring.
Speaking on the phone from Shenzhen, China, CamecoChief Executive Tim Gitzelsaid he was "delighted" with the agreement between Chinaand Canada.
-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@ dowjones.com