Russian Uranium Company Makes Major North American Acquisition

Betting on strong world market for nuclear, Rosatom takes controlling stake in Canada's Uranium One

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ARMZ, the uranium mining arm of Russia's state-owned atomic energy monopoly, Rosatom, is taking a 51 percent interest in Canada's Uranium One. The acquisition will make ARMZ the world's fourth largest uranium mining company, according to a report in the Financial Times,  and is part of the company's program of aggressive international expansion. It already has deals or is in serious discussion of deals with France, India, and South Korea, and hopes to be the world's second largest producer within a decade, trailing only Kazakhstan.

Evidently the deal is structured financially in a way that will enable the paired companies to boost production not only in North America and Russia but also Kazakhstan, Australia, and possibly South Africa. Mainly because of new nuclear plants coming online in East Asia, world uranium prices have climbed  about 50 percent this year, from $40 to $60 per pound, and ARMZ is guessing they might stabilize in the long run in the range of $70-80 per pound.

Acknowledging concerns about Russia's trustworthiness as a business partner and its growing role in the U.S. nuclear fuels market, ARMZ director general Vadim Zhivov conceded that the company has a "long hard road" to show Canadian investors that "a Russian state-owned company can . . . play by the rules of the modern developed world." ARMZ's proposed acquisition of Uranium One won the approval of the U.S. Committee on Foreign Investment in the United States last October, and last week the company's management was honored with an excellence award by Platts, the McGraw Hill energy speciailists.

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