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China stockpiling uranium for new reactors, supplier says

(China Daily/Agencies)
Updated: 2009-08-14 11:48

Cameco Corp, the world's second-largest uranium producer, said power utilities in China are continuing to stockpile uranium, making them the market's single-largest group of buyers.

Utilities in China have bought an estimated 8 million pounds of uranium, the raw material in nuclear-reactor fuel, on the spot market this year, said George Assie, Cameco's senior vice-president of marketing.

"Keep in mind they have 13 reactors under construction," Assie said yesterday on a conference call with investors and analysts. "The stockpile there is for a very specific reason and that is to feed those reactors under construction."

Uranium purchases by Chinese utilities this year confirm the world's most populous country is becoming a more significant force in nuclear-fuel markets, said Dustin Garrow, a Denver-based executive general manager of marketing for Paladin Energy Ltd, the world's ninth-largest uranium producer.

"There's no question the Chinese will become more active buyers as they increase their installed nuclear capacity," Garrow said. Chinese activity in uranium spot markets was "minimal" last year, he said.

China, which has about 8,587 mW of nuclear-power capacity, is actively building enough new reactors to boost capacity by 15,360 mW, Garrow said, citing data from the World Nuclear Association.

"The level of nuclear development activity in China is astonishing," he said yesterday.

Related readings:  Qinshan nuclear power plant expansion under way  Nuclear power to rise 10-fold by 2020  China considers changes to nuclear power development plan  China to start building 5 nuclear power plants

About 33 million pounds of uranium has changed hands on the global spot market so far this year, Assie said.

"We've done some business with China and our discussions continue as regards longer-term arrangements," Assie said on the conference call.

The Saskatoon, Saskatchewan-based company said yesterday second-quarter net income increased 65 percent to C$247 million ($227 million), or 63 cents a share, from C$150 million, or 42 cents, a year earlier.

Cameco's uranium output dropped 27 percent to 3.8 million pounds in the second quarter, from 5.2 million pounds a year earlier, partly because of planned maintenance at a mill.

While Chief Executive Officer Grandey said that Cameco was on track to attain its target of 20.1 million pounds for the year, Davidson said some investors remained skeptical.

"To hit the target things really have to go normal," Davidson said. "And for Cameco, things haven't often gone normal."