China's U-move 'first of many'
URANIUM experts are tipping more Chinese investment in the Australian uranium sector.
The predictions come after a move by China Guangdong Nuclear Power Corporation to secure a majority stake in Perth-based uranium explorer Energy Metals.
High-profile nuclear power advocate Ziggy Switkowski described the move as "the first step of many".
In a deal that has won the support of the Energy Metals board and 40 per cent shareholder Jindalee Resources, state-owned CGNPC is seeking to acquire 70 per cent of Energy Metals through an off-market takeover bid.
It is offering to pay $1.02 a share, which represents a 60 per cent premium to the average stock price over the past three months.
The $80 million bid requires approval from the Australian Foreign Investment Review Board and is conditional on the bidder receiving minimum acceptances of 50.1 per cent.
Dr Switkowski, who is chairman of the Australian Nuclear Science and Technology Organisation, believes more investment is inevitable in Australian uranium industry by Chinese nuclear players.
"There will be more nuclear power used over the next several decades and we're on the way to 1000 reactors, so there will be demand for uranium," he said.
"It is not a surprise that nuclear countries are going to want to have equity in our mines and our operations. With China moving in that direction today, I think it's just the first step of many."
Energy Metals is a uranium exploration company with a portfolio of eight projects in the Northern Territory and Western Australia.
Its most valuable asset is the Bigrlyi mine in NT which is earmarked to enter production within the next three years.
Energy Metals' chairman Oscar Aamodt said the CGNPC deal would help development of the company's mining assets.
"The board believes that CGNPC's financial resources, technical expertise and strategic intent to develop its uranium resource portfolio will greatly assist Energy Metals in its transition from explorer to developer and producer," Mr Aamodt said.
The deal continues a frenetic year of activity in the uranium industry in which a string of foreign investors have poured billions of dollars into mines around the country.
Global demand for uranium is soaring as new-generation nuclear power plants are commissioned in emerging economies such as China, India and Brazil and mature economies such as Japan.
The owners of these plants are moving in advance to secure long-term supply of the nuclear feedstock.
CGNPC, which is one of China's largest diversified electricity generators, operates four nuclear reactors and has another five under development.
Japanese electricity companies, which have 13 nuclear plants under construction, also are aggressively moving on uranium assets around the world. Last year Mitsubishi was a member of the consortium which paid $518 million to Rio Tinto for the Kintyre uranium deposit in WA.
In a speech to the Committee for Economic Development of Australia, Dr Switkowski yesterday urged decision makers to consider nuclear power in their efforts to reduce greenhouse emissions.
"I'm not aware of any other country that accepts it needs to reduce greenhouse emissions that has rejected nuclear power as part of its future energy mix," he said.
"We have to provide for the next generation of clean baseload energy and the only way to go is nuclear power."