Uranium - the Sino-Aussie linkPublished by MAC on 2009-11-02
China doesn't have enough uranium resources to feed its nuclear ambitions. It's therefore looking for mining opportunities overseas, and targeting Australia in particular.
At the same time, according to one commentator, Australian companies are using proceeds from Chinese investment to buy into uranium projects in Africa and the Kyrgyz Republic.
Hebei Mining stake in Australian uranium producer approved
Interfax China Metals & Mining
30 October 2009
State-owned Hebei Mining has received Australian government approval to take a 14.9 percent stake in Australian uranium explorer Raisama Ltd., state media reported on Oct. 26.
Raisama plans to launch its initial public offering (IPO) within a fortnight to raise AUD 12 million ($11 million) to start exploring sites in Western Australia and the Kyrgyz Republic, according to the Xinhua news agency. Australia's Foreign Investment Review Board approved the acquisition on Oct. 25.
Chinese acquisitions of overseas uranium reserves is necessary because China does not currently produce enough uranium to meet the demand of its nuclear power expansion plan, a uranium expert who wished to remain anonymous told Interfax. The acquisition might also be driven by the Hebei Provincial government, which controls Hebei Mining, in an effort to secure uranium for the province's own nuclear power expansion.
However, the expert questioned whether Australian uranium assets are the best choice.
"Several Chinese companies, such as China Guangdong Nuclear Power Holding Co. Ltd. (CGNPC) and Sinosteel Corp., have invested in Australian uranium assets, but it turned out that these assets could not easily turn a profit."
Many Chinese companies could not exploit these assets because the development costs were too high, the expert said.
"Sinosteel has already acknowledged that it was too expensive to develop the Crocker Well Uranium Deposit," he said.
Because of high development costs and a time-consuming approval process, Australian companies are now selling their uranium assets to Chinese companies and using the proceeds to invest in uranium projects in Africa and the Kyrgyz Republic, where the costs are lower and the projects have better exploration potential, the expert said.
He added that Chinese companies still have no perfect way to control risk when investing in overseas uranium assets and a lack of experts in the field is also a problem.