(Reuters) – Two of the world’s biggest uranium miners, Rio Tinto PLC and Areva SA , are pressing Canada to change a Cold War era policy that curbs foreign ownership of uranium mines.
The campaign, backed by the Australian government, two Canadian provinces and Western Australia-based uranium producer Paladin Energy Ltd, could unlock some of the world’s highest-grade ore for development just as demand for the radioactive element looks to surge.
Unlike Australia, which has no restrictions on uranium-mine ownership, Canada restricts foreign companies from owning more than 49 percent of any uranium mine. There are no ownership restrictions on foreign participation in exploration.
“It’s such an absurd situation,” John Borshoff, managing director of Paladin, said in an interview. It’s “something that is an anachronism from the Cold War”.
Borshoff said the Australian government, Rio Tinto and Paladin are joining forces to lobby Ottawa, while the Canadian provinces of Saskatchewan and Newfoundland and Labrador are also pressing for change.
The push to open Canada’s uranium sector comes while spirited debate about foreign investment elsewhere in the economy is underway. Ottawa last year approved a takeover of oil company Nexen Inc by China’s CNOOC Ltd but declared the Canadian oil sands off limits to state-owned enterprises in the future.
In 2010, as public concern grew about foreign control of resources, Ottawa blocked a hostile bid for fertilizer producer Potash Corp of Saskatchewan by Anglo-Australian miner BHP Billiton PLC.
LOTS OF URANIUM
Ranking behind only Kazakhstan, Canada is the world’s second-biggest producer of uranium, which is mostly used to power nuclear reactors. Canadian uranium, produced in Saskatchewan by Cameco Corp and France-based Areva, accounts for 17 percent of global output.
The ownership issue has come to the fore as Rio Tinto, Areva and Paladin all seek to develop promising Canadian deposits.
Ottawa can grant an exception to the ownership policy if a foreign company demonstrates it cannot find a Canadian partner. But it last did so in early 1990s, for two Areva projects.
Rio outbid Cameco in 2011 to buy Hathor Exploration for $654 million, securing the Roughrider project in northern Saskatchewan’s uranium-rich Athabasca basin.
Areva owns the Kiggavik project in the northern territory of Nunavut, while Paladin is developing Michelin in the eastern province of Newfoundland and Labrador.
To be sure, there is no certainty that the miners would start production in the near term even if they could, given escalating capital costs and stubbornly low uranium prices.
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