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Posts Tagged ‘Namibia’

China Guangdong withdraws offer for Kalahari Uranium Deposit

May 12, 2011 Comments off

“China Guangdong Nuclear Power Holding Co. withdrew its two-month-old, £756 million (US$1.24 billion) bid to acquire a big stake in an African uranium deposit, after the Japanese nuclear crisis damped enthusiasm for nuclear power.

CGNPC, one of China’s two largest nuclear-power generators, late Tuesday withdrew its offer for U.K.-based Kalahari Minerals PLC after Britain’s Takeover Panel said the Chinese company couldn’t reduce its offer. Kalahari’s main asset is its nearly 43% stake in Australia-based Extract Resources Ltd., which is developing the US$1.48 billion Husab project in Namibia, one of the world’s largest untapped uranium deposits.”

Source: Wall Street Journal, January 18 2011

Observations:

  • CGNPC owns 5 nuclear power plants in China and is trying to secure access to uranium. It did a $1.2bln bid for Kalahari Minerals on March 8, 3 days before the earthquake in Japan. Global uranium market has been hit severely by the nuclear problems caused by the earthquake, reducing the value of Kalahari Minerals.
  • Kalahari minerals owns 43% of Extract Resources, which owns the Husab uranium deposit in Namibia (Rossing South). Rio Tinto is the third important player as shareholder of both Kalahari and Extract and owner of the Rossing uranium project close to the Husab deposit.

Implications:

  • Although the offer was withdrawn it is likely that CGNPC will still try to buy the deposit at a lower price. An new offer or a deal via an allied company at a lower price would force the British Takeover Panel to look at the case again. As Kalahari’s board agreed with the earlier price offered, it is likely they will be open to a new offer.
  • Rio Tinto has 3 options: divest its interest in Kalahari and Extract in a move to get away from uranium mining; try to gain control over Extract and merge the Rossing and Husab projects, potentially signing CGNPC as key customer; or leave the situation as it is, potentially partnering with CGNPC in the future.

©2011 | Wilfred Visser | thebusinessofmining.com

Uranium Miner Expects Profit Hit

October 14, 2010 Comments off

“Energy Resources of Australia Ltd., the uranium arm of mining giant Rio Tinto, on Wednesday downgraded its annual production guidance for the second time this year, and said a strong Australian dollar is hurting its bottom line.

The production shortfall means ERA will have to cover some supply requirements with purchases, further eroding its earnings.

ERA owns Ranger, a major mine that provided 9% of the world’s uranium oxide last year. The company, 68%-owned by Rio Tinto, said the fall in output was caused by disappointing ore grades. Without expansions, Ranger’s ore body is due to run out by 2012. “

Source: Wall Street Journal, October 13 2010

Observations:

  • Energy Resources of Australia also owns the undeveloped Jabiluka Deposit, close to the Ranger mine. However, development of this deposit is subject to the cooperation of indigenous people.
  • Rio Tinto is planning to increase its presence in uranium production through the Kintyre development (operated by Cameco) and Rössing Uranium mine in Namibia. BHP Billiton is the only competitor active in uranium production through the Olympic Dam mine.

Implications:

  • According to the World Nuclear Association, Australia accounted for 16% of global uranium production in 2009. Ceasing of operations at Ranger would more than half this share.
  • The global demand for uranium is likely to increase rapidly as safer small-scale nuclear power generation facilities become mainstream. Given the location of current reserves, Australia will be one of the major producers that will be able to facilitate increases of supplies. The Olympic dam reserves in Southern Australia are the world’s largest reserves.

©2010 | Wilfred Visser | thebusinessofmining.com

Itochu Buys Stake in Australian Miner

July 12, 2010 Comments off

“Itochu Corp. said Friday it has struck a deal with London-listed Polo Resources Ltd. to buy a roughly 10% stake in the owner of one of the world’s largest undeveloped uranium deposits. Itochu’s acquisition of Polo’s stake in Extract Resources Ltd. gives it a major advantage over North Asian rivals in the race to secure offtake from the Rossing South mine in Namibia once it begins production.

Australia’s Extract has been in talks for several months with potential partners in the development of Rossing South, which it says has the potential to produce 15 million pounds of uranium oxide a year. That would make it the world’s second-largest uranium mine. Itochu is buying Polo’s entire 9.2% stake, plus a 1.1% interest from a related party of Polo, in a transaction valued at about 15 billion yen (US$169 million) in total.”

Source: Wall Street Journal, July 9, 2010

Observations:

  • Itochu, a Japanese industrial conglomerate, basically buys 10.3% of Rossing South mine in Namibia, the worlds largest undeveloped (known) uranium deposit.
  • The company tries to secure a long term supply of uranium for the Japanese nuclear power industry. Japan is one of the countries with the highest capacity of nuclear power generation in the world.

Implications:

  • Uranium deposits and uranium exploration companies are becoming increasingly attractive acquisition candidates as the US government and large energy companies seem to agree that the next generation of nuclear energy (fast breeder reactors that do not produce nuclear waste and that do not have the potential of explosive reactions) is the most likely cure for the world’s fossil energy addiction in the long term.
  • The main producers of uranium are Canada, Australia, Russia, Namibia and Kazakhstan. This spread of deposits makes the production of uranium host to much less geopolitical issues than oil production.

©2010 – thebusinessofmining.com