China National Nuclear Corp (CNNC), one of the country's largest generators of nuclear energy, yesterday agreed to buy a 25-per cent stake in an uranium mine in Namibia from Australian miner Paladin Energy for $190 million.
This is one of the very few deals in the uranium sector after the Fukushima nuclear disaster that hit Japan in 2011, which sent global uranium prices crashing.
State-owned CNNC, which operates 9 of China's 20 reactors, will buy 25 per cent of the production from the Langer Heinrich mine at the prevailing spot-market price and an option to buy further supplies from Paladin at market rate.
The Langer Heinrich Mine is located at the foot of the Langer Heinrich Mountain in the Namib Desert in western Namibia. The operation is in close proximity to the major port of Walvis Bay and the tourist town of Swakopmund.
The mine has a two-decade life span and is currently capable of producing 5.2 million pounds of uranium concentrate a year.
"I do believe, through the investment in the Langer Heinrich project, CNNC and Paladin will develop a long-lasting business relationship which is beneficial to each other and also bring long-term influence to the global uranium mining industry," CNNC director-in-general for geology and mining, Du Yunbin said in a statement.
''The significant cash injection from this minority interest sale will largely be applied to debt reduction, which the Board considers an essential step during a time of unprecedented low uranium prices,'' said, John Borshoff, managing director/CEO of Perth-based Paladin.
China needs uranium to run its ambitious clean energy program. It has 20 operational reactors and 28 under construction, according to the World Nuclear Association.