China’s Uranium Binge

  Nov 12, 2013   in CEO Blog

China Nuclear Energy nov 4China displaced Germany as the world’s top exporter in 2009, exporting almost $1 trillion in goods in that year. However, the country’s need for energy to fuel its export economy has resulted in heavy dependency on fossil fuels, particularly oil. To tackle the increasing requirement for clean energy and to reduce reliance on energy supplies that are vulnerable to disruption, China has embarked on a massive nuclear energy program .Securing enough uranium to feed these plants has become a top concern for Chinese planners.

Supply Bottlenecks

Unfortunately for China, it ranks only 12th globally in Uranium resources. Since domestic production of uranium cannot meet demand, China has cast its net far and wide—from Kazakhstan to Zimbabwe—to meet its needs.

Imports have tripled, with state-owned China National Nuclear Corporation and China Guangdong Nuclear Power Holdings Corporation tying-up long-term uranium supply contracts. Both have signed long-term supply contracts with Canada’s Cameco Corporation for in excess of 20 million pounds each of uranium concentrate.

As the world’s second largest supplier of uranium, this is a great opportunity for the Canadian uranium industry to establish a strong presence in the Chinese market. It will of course face stiff competition from countries like Kazakhstan (ranked first in world supply) but in my opinion Canada has two unbeatable assets – the Athabasca Basin and Canadian infrastructure. 

Buy Canadian

The Chinese have made no secret of their interest in Canada as a preferred source of uranium. The Athabasca Basin has the highest uranium grades in the world and uranium has been mined there for over 40 years. It has high-tech mills with capacity, a huge base of highly skilled miners and strong political support at every level of government. Earlier, Canadian PM Stephen Harper led the way by negotiating a Canada-China Nuclear Agreement, building on a 1994 agreement between the two countries for cooperation in the nuclear power sector. The first of many shipments of Canadian uranium was delivered to China only a few weeks ago. Confidence in the agreement is high: Saskatchewan premier Brad Wall expects uranium exports from Canada to touch $3 billion over the next decade.

It is estimated that China will require about 100ktU of Uranium up to 2020. Current annual domestic production in China is only around 1500tU. Not just Cameco, but other Canadian uranium producers and exploration companies could also become major beneficiaries of China’s nuclear expansion plans. The pressure for another Canadian “uranium rush” is building.

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Ted O’Connor, Azincourt Uranium CEO