SXR Uranium looking for Australian assets

June 11, 2007 12:00am

ACQUISITIVE Canadian uranium player SXR Uranium One is sniffing for Australian assets as it moves to bulk up its production of the nuclear fuel.

Speaking to reporters after a seminar in Toronto, the company's chief executive Neal Froneman said he would like to achieve a "critical mass" in Australia, where uranium production is dominated by global miners BHP Billiton and Rio Tinto.

Uranium One is developing the Honeymoon project in South Australia, which is expected to begin production in 2008.

The company also has assets in the US, Kazakhstan and South Africa, and last week offered to buy Toronto-listed Energy Metals Corporation in an scrip deal worth about $C1.4 billion ($A1.55 billion).

Mr Froneman said the company was not currently in talks with any companies in Australia, however the Canadian miner is believed to be watching closely the efforts of local explorers, particularly in uranium-friendly South Australia.

China, which is planning to build almost 70 new nuclear power plants, is also taking a keen interest in Australia's uranium juniors.

Liu Xuehong, vice president of China Nuclear International Uranium Co, an arm of the state-owned China National Nuclear Corporation (CNNC), told World Nuclear News the company was contacting Australian explorers with the aim of forming partnerships.

CNNC will present next month at a conference in Perth, which is expected to be attended by a high-level Chinese delegation.

Six Chinese organisations are among more than 40 companies vying for a potentially lucrative uranium deposit in the Northern Territory.

The Chinese might also be buyers of uranium from Honeymoon, with just 40 per cent of the mine's production currently pre-sold.

Uranium prices have soared over the past two years, with renewed interest in nuclear energy driving demand well above supply, following years of sluggish exploration.

Spot prices hit $US138 a pound last week, up from $US7 in 2000, although producers caution that the spot market is driven largely by speculators and doesn't reflect long-term contracts agreed to by producers and utilities.

Mr Froneman said he expected demand to continue to outstrip supply, due to the long time lag between exploration and production.

"Up to about 2015, we don't see the market coming into balance," he said.

He predicted spot prices would hit $US150 a pound before the end of the year, but said prices actually paid by utilities over the long term would likely be about $US60 a pound.

Australia is home to about 30 per cent of the world's low-cost uranium reserves and moves to relax laws on developing new uranium mines have international players watching.

The Australian Labor Party recently scrapped its opposition to new mine developments, but has left the ultimate decision in the hands of the states.

Western Australia and Queensland -- home to some of the richest deposits -- are still opposed to uranium mining.

with Reuters