China National Nuclear Corp Buys 25% Stake in Africa’s Largest Uranium Mine from Australian Uranium Producer
YouTube/shide xu
Beijing will have a more cleaner-burning source of energy with the purchase by the China National Nuclear Corp (CNNC) of the 25 per cent stage in one of Africa's largest uranium mines. CNNC bought the shares of the Langer Heinrich operations in Namibia for $190 million from Australian uranium producer Paladin Energy on Monday.
The agreement would allow CNNC to purchase one-fourth of the mine's output of uranium at spot-market prices. It could result in cheaper rates than those offered in negotiated long-term contracts. CNNC also has the option to purchase more at normal market rates.
The remaining 75 per cent of Langer Heinrich would be retained by Paladin.
The deal is timely as China grapples with pollution and attempts to reduce its heavy reliance on coal for its non-stop growing demand for more energy sources. At present, China relies up to 80 per cent on burning coal for its energy requirements.
China has currently 20 reactors running on the mainland and another 28 being built, which means China has the largest number of new nuclear power plants in the world, said the World Nuclear Association, an industry group.
In a statement released on Monday, Paladin said, "China has ambitious nuclear electrification programs extending for decades into the future ... Obtaining direct access to sufficient global uranium supply is an essential element for China to be able to safeguard and grow this strategically important sector."
The deal would also benefit the Perth, Western Australia-based Paladin through cash infusion since the firm had prolonged period of losses due to the sharp decline in uranium prices since the March 11, 2011 magnitude 9 tremor rocked Japan.
YouTube/CommSecTV
Paladin would use the money to help repay debt, including $300 million convertible bond due in 2015. Paladin logged a $409 million loss for the year through June, widening the $172.8 million loss registered the previous year.
On news of the transaction, shareprices of Paladin went up 0.9 per cent to 56.6 Australian cents at the close of trading in Sydney. It initially went up to as much as 17 per cent when news of the CNNC deal came out.
