newr korea news article

Korea Electric May Bid for Stake in Extract Resources (Update2)
March 19, 2010, 1:03 AM EDT

By Shinhye Kang

March 19 (Bloomberg) -- Korea Electric Power Corp. and state-run Korea Resources Corp. may make a joint bid for a stake in Extract Resources Ltd., an Australian explorer that owns a uranium mine in Namibia, to obtain supplies of the nuclear fuel.

Were interested in the Rossing South mine in Namibia owned by Extract, Chang Joo Ok, vice president of Korea Electric Power and head of its overseas energy development team, said in an interview in Seoul yesterday. But pricing is the most important factor. Cho Hye Won, a spokeswoman at Korea Resources, declined to comment.

Extract Resources rose 11 percent in Sydney today after more than doubling over the past year as investors bet countries will increasingly turn to nuclear power. South Korea is aiming to add eight more atomic power plants by 2016 and export 80 reactors by 2030. Korea Electric emerged as a rival to General Electric Co. and Areva SA after beating them in December to a $20 billion order to build reactors in the United Arab Emirates.

Korea Electrics efforts to buy overseas uranium assets will allow it to avoid volatile changes in prices of the fuel in the future, Kim Seung Woo, an analyst at Samsung Securities Co., said by telephone in Seoul.

Extract Resources, 15 percent-owned by Rio Tinto Group, continues to evaluate potential partners to join its Namibian project, Chairman Steve Galloway said in an e-mail today, when asked to comment on a possible joint bid by Korea Electric and Korea Resources.

The South Korea group hasnt decided whether to bid for a stake in the Rossing South mine or Extract Resources itself, a Korea Resources official familiar with the plan said, declining to be named because internal discussions are still ongoing.

Stakes in Mines

Korea Electric rose 0.3 percent to 38,750 won in Seoul at 1:52 p.m. local time, compared with the 0.6 percent gain in the benchmark Kospi index. Perth-based Extract Resources was at A$7.97, up 9.2 percent.

Drilling at Rossing South suggests it could become one of the worlds largest uranium mines, Galloway said in October. The nearby Rossing deposit mined by a Rio Tinto unit is the third- biggest, according to the World Nuclear Association.

Korea Electric is also keen to buy stakes in uranium mines in Africa, Mongolia, Australia and Europe, Chang said. Korea Electric aims to obtain 3,800 metric tons a year of the fuel by 2020 from mines that it will acquire, equivalent to 50 percent of South Koreas requirements, according to Chang. The country currently operates 20 nuclear power plants.

South Korea had imported all its uranium needs from countries including Canada, Australia and Kazakhstan until Korea Electric bought stakes in overseas mines last year. The nations annual uranium consumption may rise to 7,600 tons from about 4,000 tons currently, Chang said.

Overseas Acquisitions

Korea Electric and its unit Korea Hydro & Nuclear Power Co. jointly acquired a 10 percent stake in a uranium mine in Niger for 170 million euros ($232 million) from Areva in December. Denison Mines Corp., a Canadian uranium producer, agreed in April last year to sell a 19.9 percent stake in the company to Korea Electric for C$75.4 million ($74.3 million) and supply the utility with uranium until 2015.

Korea Electric will also supply uranium to the four planned reactors in the U.A.E for the first four years, Chang said.

On acquiring coal mines, South Koreas dominant power supplier is focusing on Australia, Indonesia and the U.S., according to Chang. Particularly, the utility is seeking to buy a stake in a U.S. mine as early as June, he said, without elaborating.

--With additional reporting by James Paton in Brisbane and Ben Sharples in Melbourne. Editors: Ryan Woo, Clyde Russell.

To contact the reporter on this story: Shinhye Kang in Seoul at [email protected].

To contact the editor responsible for this story: Amit Prakash at [email protected].