Bilateral trade with Canada may touch $15 billion by 2015
Canada, India Sign Uranium-Supply Deal Involving Cameco
Canada and India signed a uranium-supply agreement on Wednesday that will see Saskatchewan’s Cameco Inc. provide the mineral to India over the next five years.
The contract, for 7.1 million pounds of uranium concentrate, marks the Canadian uranium producer’s first deal with India and comes as the South Asian country aims to greatly increase its electricity supply over the next 25 years, in part by relying on nuclear power.
“Cameco will supply Saskatchewan uranium for India’s atomic energy program over the next five years,” said Canadian Prime Minister Stephen Harper, who announced the deal at a news conference in Ottawa with his Indian counterpart, Prime Minister Narendra Modi, who is on the second day of a three-day visit to Canada.
Canada is the world’s second-largest producer of uranium behind Kazakhstan, exporting more than 1 billion Canadian dollars ($801 million) worth each year.
The deal is also potentially a positive development for the uranium industry, which has been in a slump since a major earthquake and ensuing tsunami caused a nuclear accident in Japan in March 2011, leading many industrialized nations to pull back from nuclear power.
“While the [Cameco] agreement will have only a modest impact on the overall uranium market given the current degree of oversupply, it could be a catalyst for increasing volumes in the term market and improving sentiment,” wrote Fraser Phillips, an analyst with RBC Dominion Securities Inc., in a note to clients.
Canada and India laid the foundation for Cameco’s uranium-supply deal with a nuclear cooperation agreement that took effect in September 2013. Canada had previously banned uranium exports to India after the South Asian country used Canadian technology to build a nuclear bomb.
Cameco Chief Executive Tim Gitzel said the value of the uranium supply deal will be determined by market pricing at the time of delivery. At Wednesday’s spot price, 7.1 million pounds of uranium concentrate would be worth about $300 million (U.S.), he added. That amount, however, is small compared to the 31 million to 33 million pounds that Cameco sells every year.
“The important part is, it’s building relationships with India, a country that has one-sixth of the global population,” Mr. Gitzel said. “Now that we have a toehold, we expect to do more business with India in the years to come.”
India’s current stable of 21 reactors provides 6,000 megawatts of nuclear capacity, which supplies about 3% of the country’s electricity needs, Cameco said. By 2032, India expects to have 45,000 megawatts of nuclear capacity, the company added.
Mr. Modi framed the uranium-supply deal as symbolizing a new era of bilateral cooperation. India’s prime minister, who swept to power last year, is pushing a number of economic reforms and trying to make India a global manufacturing hub. Canadian uranium, he said, plays a key role in that initiative.
In addition to increased energy cooperation, Mr. Modi and Mr. Harper are trying to accelerate bilateral trade between the two countries.
“That Canada is giving uranium to India is a mark of its trust and confidence in India and this gives energy to our relations,” said Mr. Modi, speaking in Hindi.