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BHP Billiton to Supply China with Uranium Resources Sep 25, 2008

BEIJING, September 25, SinoCast -- BHP Billiton Ltd. (NYSE: BHP), a global mining giant, decided to offer uranium resources in the following decades to China.

BHP Billiton Chief Executive Officer Marius Kloppers said that the company would make full use of the Chinese market with booming nuclear power generation business.

The global giant has had the world's biggest uranium mine in Olympic Dam in South Australia. It is working on a two-year prefeasibility study about expansion of Olympic Dam, and is predicted to start open-pit operations in addition to the current underground assets, citing a statement on its Web site.

For the moment, BHP Billiton is exporting uranium resources not to China but to such countries as the UK, France, Sweden, and the US. It has not signed any uranium ore supply contract with China yet.

But its way towards the country's nuclear power generation market has been paved by a cooperation agreement between China and Australia. The two states signed the agreement in April 2006 to join forces in the uranium resources field.

Under the agreement, China would annually import uranium ore of 10,000 tons worth roughly AUD 600 million to AUD 700 million from Australia, which ranks second by uranium export around the globe and first worldwide with 41 percent of the world's total reserves.

In recent years, the Chinese government has been encouraging nuclear power generation projects. In 2008 alone, approved and to-be-approved projects had a total installed capacity of 70 million kilowatts.

Last year, the government agreed to build nuke stations in 13 selected sites, which are respectively situated in Zhejiang, Guangdong, Jiangsu, Shandong, Liaoning, Fujian, and Guangxi and can accommodate nuclear power generation sets with installed capacity of 59.46 million kilowatts.

In other words, nuclear power plants under construction or to be constructed will have a total installed capacity of 130 million kilowatts. Certainly, they will need a large amount of uranium ore.

The big pie has attracted domestic companies as well as foreign rivals. In June 2008, China National Nuclear Corp. (CNNC), a large-scale state-owned nuclear electricity and fuel producer, joined hands with the southwestern region of Xinjiang to exploit uranium and beryllium resources and boost nuclear technology application.

With a view to further promoting the local nuclear industry, the company promised to inject more capital and expertise in local projects. In return, it would enjoy preferential policies concerning land utilization and layout, infrastructure construction, and talent training.

The next month, CNNC and the government of Qinghai, Northwest China, entered into a framework agreement on exploitation of local uranium resources.

CNNC is expected to offer the province overall expertise and services concerning uranium prospecting and exploitation, mine construction, as well as marketing of uranium products.