Cameco agrees uranium supply deals with China

25th June 2010 By: Chanel de Bruyn - Creamer Media Senior Deputy Editor Online

JOHANNESBURG ( – TSX- and NYSE-listed Cameco on Thursday signed deals with two Chinese firms that would involve the supply of nuclear fuels and uranium concentrate to the Asian country.

The uranium producer announced that it had signed a long-term uranium concentrate supply deal with the China Nuclear Energy Industry Corporation (CNEIC), which is a subsidiary of the China National Nuclear Corporation (CNNC).

“This is Cameco's first long-term uranium supply agreement with a major Chinese nuclear utility. The agreement indicates clearly that we intend to be very active in the world's fastest-growing uranium market,” Cameco CEO Jerry Grandey said in a statement.

It would sell about 23-million pounds of uranium concentrate to CNEIC between now and 2020.

CNNC is China's largest nuclear generator and operates seven reactors with a 5 100-MW capacity. A further ten reactors with 9 100 MW of capacity was under construction.

Further, Cameco was also negotiating with the China Guangdong Nuclear Power Holding Company (CGNPC) to supply uranium fuel for its growing fleet of nuclear power plants.

The parties signed a nonbinding framework agreement to negotiate long-term uranium purchase agreements and the potential to jointly develop uranium resources.

“The announcement today, moves Cameco one step closer to supplying uranium to one of the fastest-growing nuclear companies in the world. Our plan to double uranium production by 2018, aligns well with China's vigorous reactor construction programme,” Grandey noted.

State-owned CGNPC had already built four nuclear reactors, with a further 20 000 MW of nuclear capacity under construction. The company was planning to further grow its nuclear capacity to 50 000 MW by 2020.

The uranium producer currently sells about 49% of its product to utilities in the US, Canada and Latin America; 30% to European utilities and the remainder to utilities in the Far East.

The company highlighted that China plans to increase its nuclear capacity from the current 9 GW to at least 70 GW by 2020, with a further increase to between 120 GW and 160 GW by 2030.

In a meeting with Canadian Prime Minster Stephen Harper, on Thursday, China’s President Hu Jintao said that the Asian country wanted to double its trade with Canada to $60-billion by 2015. This was expected to include trade in resources.

Cameco, which expected to produce about 21,5-million pounds of uranium this year, plans to increase its output to 40-million pounds a year of uranium by 2018.

Earlier this year, Grandey indicated that about nine-million tons a year of the increased production would come from the company’s share of output from its 50%-owned Cigar Lake project, in Saskatchewan.

Cigar Lake is now expected to begin producing in 2013.

The remainder of the output growth was expected to come from expansions and projects in Kazakhstan, Canada, Australia and the US.