CNNC buying stake in Namibia uranium mine

The China National Nuclear Corp is set to take a large stake in Australian uranium producer Paladin

China Uranium Corp Ltd, a wholly owned subsidiary of the State-owned CNNC, agreed to purchase 25 percent of the Langer Heinrich uranium mine, one of Africa's biggest uranium mines, for $190 million as well as paying a $20 million non-refundable deposit, the Perth-based company told Reuters on Monday.

CNNC, one of China's largest generators of nuclear energy, is stepping up efforts to build nuclear plants as the world's largest energy user tries to reduce its reliance on coal and focus more on clean energy.

air pollution, which not only poses a serious threat to the health and well-being of residents but also dampens economic prosperity.

"For an economy the size of China's, especially the size it will be in the next three decades, nuclear energy is really the only thing that I can think of to replace some fossil fuels in the next 20 to 30 years," said He Zhicheng, chief economist of Agricultural Bank of China.

China has 20 reactors in use and another 28 under construction, and its combined number of domestic reactors either under construction, planned or proposed totals about 150 - more than one-third of the 435 nuclear reactors operating commercially around the globe, according to the World Nuclear Association.

Li Ning, dean of the School of Energy Research with Xiamen University, predicted that "by 2025, China could grow to become the largest uranium consumer" amid mounting demand for new nuclear plants, each of which requires about 400 tons of uranium to start operating.

"China is likely to continue to import more uranium for years to come as the nation continues to boost its generation of electricity through nuclear power," he said.

Meanwhile the CNNC deal will help alleviate the woes of the Perth-based Paladin Energy, which has suffered prolonged losses after uranium prices dropped as a result of Japan's Fukushima disaster in 2011.

"The significant cash injection from this minority interest sale will largely be applied to debt reduction, which the board considers an essential step during a time of unprecedented low uranium prices," Paladin Chief Executive John Borshoff said in a statement.

Du Yunbin, director-in-general of the Geology and Mining Department at CNNC, said he looks forward to deeper cooperation with Paladin, adding that the two companies are sure to "develop a long-lasting business relationship that will be beneficial to each other and also bring long-term influence to the global uranium mining industry".

"It is a good deal, especially when the uranium market is potentially at its bottom," said a Beijing-based analyst for China Everbright Securities Co Ltd.

"It secures a direct access to global uranium supply, which is essential for the country to grow its strategically important industry," said the analyst who asked to remain anonymous, citing the ongoing nature of the deal.

It is not the first attempt by the Chinese nuclear giant to look for uranium in Namibia. In 2012, China General Nuclear Power Holding Corp paid $2.3 billion for the Husab project, one of the world's biggest uranium deposits.

Paladin, which operates mines in Africa and conducts fuel exploration in Australia and Canada, has expanded the Langer Heinrich mine twice since it began producing in 2007. With an expected life span of two decades, the mine is able to produce 5.2 million pounds (2.36 million kg) of uranium concentrate a year. Paladin has said productivity improvements this year may help boost the level to 5.7 million pounds.

The deal has yet to receive the approval of Chinese regulators, including the National Development and Reform Commission, the country's economic planner, but Paladin said it expects to get the green light by the middle of the year.