China's nuclear power companies are actively seeking opportunities abroad, with the China National Nuclear Corporation (CNNC) making a significant move in acquiring stakes in Australian mining firm Paladin Energy. According to insiders, CNNC’s acquisition of Paladin Energy’s uranium ore stocks is expected to be approved by the National Development and Reform Commission around mid-April. This deal marks a strategic step for CNNC as it aims to secure critical resources for its expanding nuclear energy operations.
The transaction was finalized on January 20, 2014, valued at $190 million. In exchange, CNNC acquired a 25% stake in the Lange-Heinrich Mine, one of the world's largest uranium mines, and paid a non-refundable deposit of up to $20 million. The mine holds substantial proven reserves, and if the acquisition goes through, CNNC will gain priority access to a quarter of the mine’s production, either at spot market prices or through long-term contracts.
Xiong Yun, managing director of Hopu, noted that the current depressed uranium market has created favorable conditions for buyers. "Many international companies are under financial pressure due to falling prices, which presents a unique opportunity for strategic acquisitions," he said. The global uranium price has plummeted since the 2011 Fukushima disaster, dropping from a high of $72 per pound to around $35—more than a 50% decline.
Paladin Energy, once a major player in the uranium sector, has seen its stock price fall sharply. Its shares dropped from a peak of A$5.36 to A$0.52, significantly reducing its market value. The company reported a net loss of $420.9 million in 2013, with cash flow down to just $3 million. It also faces a massive debt burden, including $574 million in convertible bonds maturing over the next three years.
To alleviate its financial strain, Paladin Energy has been exploring the sale of its equity stakes. In August 2013, it approached several nuclear power companies, including CNNC, to negotiate the sale of part of its holdings in the Lange-Heinrich Mine. The company also suspended operations at the Kayelekera mine in Malawi, citing low prices and poor profitability.
According to Paladin Energy’s estimates, the Lange-Heinrich Mine is valued between $900 million and $1.1 billion, which aligns closely with the purchase price offered by CNNC. The company’s CEO, John Boushov, stated that CNNC’s bid was the highest received in 2013.
This trend is not exclusive to Chinese companies. Other multinational corporations have also been active in the uranium sector, such as Rio Tinto acquiring Canadian Hasselblad Exploration Company in 2012, and Denison Mining partnering with fission energy firms.
Despite China’s limited domestic uranium resources, its nuclear power companies have expanded their global footprint, operating in countries like Niger, Mongolia, Kazakhstan, Canada, and Australia. However, compared to global leaders like Areva, Kazatomprom, and Canadian mining giants, Chinese firms still face challenges in exploration, technology, and resource access.
China’s nuclear power capacity is growing rapidly. As of now, more than 72 million kilowatts of nuclear power are either operational, under construction, or approved. With 17 units already running and 29 more under construction, the country is preparing for a surge in demand. Inland nuclear projects are also gaining momentum, with half of the 40 preliminary projects reviewed by the National Development and Reform Commission being located in inland provinces.
While the 12th Five-Year Plan did not allow for inland nuclear development, recent signals suggest a shift. The National Energy Administration has emphasized the importance of protecting inland nuclear sites, and officials have indicated that inland projects may be included in the next five-year plan. Industry experts predict that inland nuclear power will take off during the 13th Five-Year Plan period, further increasing the need for uranium.
By 2030, China’s total nuclear capacity is expected to reach 130 million kilowatts, leading to a cumulative uranium demand of 284,000 tons from 2010 to 2030. As global demand recovers, with new reactors being built in 13 countries, the uranium market is poised for a rebound. With the expiration of the U.S.-Russia high-enrichment agreement and Japan’s return to nuclear energy, the outlook for uranium prices is becoming more positive.
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