Australia, China close to uranium deal

ISN SECURITY WATCH (Wednesday, 29 March: 10.35 CET) – Australia and China are close to signing a uranium deal that would allow Australian uranium to be exported to China for power generation and allow China to explore for uranium in Australia, according to news agency reports.

The deal, which could be signed as early as next week, would mean a major boost for Australia's uranium industry.

According to the Australian daily Herald Sun, uranium-sector stocks soared on Tuesday after Prime Minister John Howard said the deal could be cinched by next week and an industry report predicted that Chinese investment in Australian uranium exploration would follow.

The daily quoted analyst John Wilson as saying that "security of uranium supply is paramount to China's expanding nuclear power industry, and cost is a secondary issue".

He also reportedly predicted that the spot prices were likely to rise from US$40 per pound to US$58 per pound by June 2006.

Energy-hungry China is seeking to quadruple its nuclear energy capacity by 2020 with the addition of 28 new nuclear power plants.

Chinese Prime Minister Wen Jiabao is scheduled to visit Australia next week.