Will Australia Sell Uranium to India?
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By Melissa Pistilli-Exclusive to Uranium Investing News
As the “nuclear renaissance” begins to heat up with Asia at its epicenter the world’s leading uranium suppliers are jockeying for top dog position.
The latest developments involving nuclear deals between India and several other uranium supplying nations including the 2008 world’s largest producer, Canada, have forced Australia to reconsider its tough stance on dealing with a nation who hasn’t signed on to the Non-Proliferation Treaty (NPT).
The latest news out this week says Australia may be reconsidering its ban on uranium sales to India based on recommendations from a report commissioned by Prime Minister Kevin Rudd and Japan’s Prime Minister, Yukio Hatoyama.
The International Commission on Nuclear Non-Proliferation and Disarmament report, commissioned 18 months ago by the two leaders, details how India, Pakistan and Israel can gain access to uranium and nuclear technology from nations who oppose trade with non NPT members by signing on to “parallel instruments” that protect against military use of these materials.
”Provided they satisfy strong objective criteria demonstrating commitment to disarmament and non-proliferation … these states should have access to nuclear materials and technology for civilian purposes on the same basis as an NPT member,” said the report, released Tuesday.
The idea of the Rudd government changing its stance on uranium sales to India is big news after it rejected to honour a deal between India and Australia made under the Howard administration. However, the government under Rudd also gave a permissive nod to a civilian nuclear technology agreement between the US and India, which opened the door for Australia’s biggest competitor, Canada, to secure a deal of their own.
Prior to last year’s Nuclear Suppliers Group decision to lift the moratorium on trade with India Canada also had a ban on nuclear trade with India that began in 1974.
Last month, Canadian Prime Minister Stephen Harper and Indian Prime Minister Manmohan Singh struck a very significant nuclear agreement, which Harper has said would “allow Canadian companies to benefit from greater access to one of the world’s largest and fastest expanding economies.”
The agreement is a big plus for the Canadian uranium and nuclear sectors because it gives them access to an energy market that is estimated to be worth $25 billion to $50 billion over the next two decades.
Civilian nuclear technology and equipment sales will no doubt give a good boost to the Canadian economy, but its uranium mining industry, which has taken a big hit, really stands to benefit from the new Asian market.
Australia’s uranium mining sector has also suffered greatly under the weight of the global economic downturn and could use a growing market like India to help revitalize the industry. For this to be possible, the Rudd government really needs to rethink its hard-line position on India and there are many signs that the Prime Minister may be coming around to the idea. There certainly is a push for it within the uranium-rich nation.
“This report is very supportive of the nuclear energy renaissance,” said Rory Medcalf, director for international security at the Lowy Institute. ”Australia has to be more actively engaged in the civil nuclear energy revival globally if we are going to be a credible player in the non-proliferation environment.”
Others say it makes absolutely no sense for Australia to continue rebuking India’s desire for the nation’s resources. ”It’s self-evidently rather quixotic for Australia to be maintaining a ban on the sale of uranium until India joins the NPT, when manifestly it is not going to join the NPT and manifestly this is not going to stop it acquiring uranium from other sources,” said Gareth Evans, International Commission on Nuclear Non-proliferation and Disarmament co-chairman and former Australian foreign minister.
Update: Khan Resources Management Rejects ARMZ Takeover Bid
On Tuesday, Khan Resources Inc (TSX:KRI) announced its management has rejected the takeover bid by Russian state-owned uranium producer ARMZ and is urging shareholders to do the same.
Khan Resources has consulted with its legal and financial advisors and has determined that the offer is highly inadequate in terms of price and highly suspect in motive.
“The ARMZ offer is not only inadequate but is also highly prejudicial and opportunistic and exposes Khan to serious risks,” said Grant Edey, director. “ARMZ has commenced its unsolicited offer during a critical period when Khan is making every effort to co-operate with the Government of Mongolia to re-register the essential mining and exploration licenses for the Dornod Uranium Property and to pave a path forward with the necessary and reasonable cooperation of the Mongolian Government. By doing so, ARMZ is seeking to take advantage of Khan and its shareholders at a particularly vulnerable time, and to capitalize on this regulatory uncertainty.”
Khan’s management outlined several reasons why its shareholders should reject the bid including:
The ARMZ 0.65 cents per share offer is “inadequate from a financial point of view to Khan’s shareholders” and “is highly prejudicial and opportunistic and exposes Khan to serious risks.”
“The offer significantly undervalues Khan and its assets” because it “would prevent shareholders from sharing in the potential upside anticipated as the Dornod Uranium Property advances closer to development and production.”
The offer “seeks to take advantage of Khan and its shareholders at a particularly vulnerable time when the Dornod license re-registration process is pending, but also at a time when Khan’s share price has suffered a disproportionate decline of 50 per cent as a result of the regulatory uncertainty unique to Khan, as compared to other comparable companies.”
On Tuesday, shares of Khan Resources on the TSX were trading at 0.62 cents.
Tags: ARMZ, Australia, Canada, energy market, india, Khan Resources, nuclear, nuclear industry, nuclear sector, nuclear technology, Russia, Uranium, uranium industry, uranium market, uranium miner, uranium mining, uranium producer, uranium sector, uranium suppliers, uranium supplies, urnaium sales
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