bloomberg article-china uranium investment

Australia `Confident' of China Uranium Export Pact (Update1)
March 13 (Bloomberg) -- Australia, which has the world's largest known uranium reserves, is likely soon to sign an agreement with China allowing the sale of the fuel for use in power generation in Asia's biggest energy user.

``Both sides are satisfied with the results of the negotiations and are confident of a successful outcome in the near future,'' a spokeswoman for the Department of Foreign Affairs and Trade said today in Canberra. Talks began in January on safeguards to ensure any Australian uranium supplied to China is only used for peaceful purposes.

Shares of uranium companies rose as an accord may enable miners such as BHP Billiton and Rio Tinto Group to export the ore to China, which plans to boost nuclear energy fourfold by 2020. Chinese companies may invest as much as A$10 billion ($7.3 billion) in Australia to secure raw material supplies.

``China wants to ensure it can get a reliable source of supply,'' said John Wilson, an analyst at Resource Capital Research in Sydney. ``If the agreement goes through, you'll likely to see Chinese investments.''

Shares of Paladin Resources Ltd., an Australian uranium explorer, jumped as much 23 cents, or 6.3 percent, to A$3.89 on the Australian Stock Exchange and traded at A$3.84 at 12:20 p.m. Sydney time. Shares of Energy Metals Ltd., another explorer, rose as much as 4.9 percent to A$1.50. Shares of Compass Resources NL rose as much as 8.6 percent to A$1.64. BHP shares rose as much as 2.4 percent and Rio shares rose as much as 3.4 percent.

``It's important for the companies to have deals in place since the cost of exploration is high,'' said Atul Lele, who helps manage $250 million at White Funds Ltd., in Sydney.

`China Safeguards'

China had agreed to safeguards sought by the Australian government, the Australian Financial Review said today, citing officials in Beijing that it didn't identify. An agreement could be signed when China's Premier Wen Jiabao visits Australia next month, the newspaper said.

China plans to build 28 power plants to meet rising demand for energy, according to the World Nuclear Association.

Australia has 19 nuclear agreements covering 36 countries and its uranium exports account for two percent of total world electricity production. Australia has 41 percent of global uranium reserves though it meets only 21 percent of demand, according to government figures, partly due to mining bans.

Cameco Corp., the world's largest uranium supplier, last August said the value of Australian uranium exports to China could reach hundreds of millions of Australian dollars.

Uranium last year gained 76 percent, beating all but one of the 19 commodities in the Reuters/Jefferies CRB Index. Only sugar jumped more.

Uranium is poised to climb 27 percent to $50 a pound in the next six months because a shortage of supply, said Jean-Francois Tardif, who has put 8.4 percent of his C$300 million ($259 million) Toronto-based, Sprott Opportunities Hedge Fund LP into uranium.