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The numbers certainly aren’t mind-blowing on Cameco Corp.’s five-year agreement to provide 7.1 million pounds of uranium to India through 2020.
The deal is only estimated to be worth $350 million and it’s small when you consider that the Saskatchewan-based miner sells about 33 million pounds of uranium annually.
But it’s not the size of the deal that prompted investors to push the stock up 7.56 per cent on Wednesday. What excites them and Tim Gitzel, Cameco’s chief executive, is the opportunity that has now opened up.
“This was more than a uranium buy-sell agreement,” Gitzel said in a telephone interview. “It was really a marking of a new relationship between Canada and India via Cameco. The pounds here aren’t enormous, it’s really the importance of being able now to deal with the Indians and bid into their market.”
Canada banned uranium exports to India in the 1970s after the country used Canadian technology to build nuclear weapons. But the countries put what Prime Minister Stephen Harper called an “unnecessarily frosty relationship” behind them on Wednesday, building on a nuclear cooperation agreement established in 2013.
Harper and Indian Prime Minister Narendra Modi stood shoulder-to-shoulder with Gitzel and Saskatchewan Premier Brad Wall for the announcement on Parliament Hill in Ottawa.
Cameco’s first contract with India gives it access to the world’s second-fastest-growing consumer of uranium just behind China.
India currently has 21 nuclear power pants in operation that provide three per cent of the country’s electricity needs, but it wants to boost that amount to 25 per cent by 2050. It also has six more reactors under construction.
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