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Takeover activity is poised to heat up in the Canadian uranium sector as energy-hungry China hunts for feedstock to fuel its growing family of nuclear reactors.
The state-controlled China Daily recently reported that the country plans to buy more uranium mines abroad, and is looking in Canada. China also expects to import more uranium this year as its nuclear program resumes after being halted following Japan’s Fukushima nuclear disaster.
China has 15 reactors in operation and 25 under construction, and plans to build another 50. It imports nearly all its uranium from Kazakhstan, Uzbekistan, Namibia and Australia.
“It comes as a surprise” that China is showing its hand by publicly targeting this country’s miners, which could boost the prices of potential acquisitions, said Versant Partners analyst Rob Chang. But he said the country’s announcement deserves to be taken seriously in the wake of Prime Minister Stephen Harper’s decision last month to overturn previous trading bans and permit uranium sales to China for civilian use.
China would most likely focus on buying Canadian “exploration companies with high-quality assets” because there are no ownership restrictions on early-stage firms, Mr. Chang said. However, Ottawa bars foreigners from owning more than a 49-per-cent stake in a company that is mining the metal.
China has already been on the acquisition trail for explorers in Africa. China Guangdong Nuclear Power Corp., its nuclear agency, recently struck a $2.4-billion (U.S.) deal to snap up Australia-based Extract Resources Ltd. (EXT-T8.97—-%), which owns a huge uranium deposit in Namibia.
In Canada, uranium juniors such as Fission Energy Corp. (FIS-X0.67-0.02-2.90%), which has a property in Saskatchewan’s Athabasca Basin, Kivalliq Energy Corp. (KIV-X0.50—-%), which has a deposit in Nunavut, and Strateco Resources Inc. (RSC-T0.50-0.03-4.81%), which is developing the Matoush project in northern Quebec, could be of interest, Mr. Chang said.
There is industry speculation that the Conservative government will relax its foreign ownership laws on uranium mines. Throne speeches since 2010 have talked about lifting regulations that inhibit the growth of Canada’s uranium industry.
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