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Renova and Tekhsnabexport Team Up with Uranium
Viktor Vekselberg's Renova Group has become the first Russian investor that has been able to come to an agreement with OAO Tekhsnabexport on a uranium project. Renova may receive a 50-percent shares in several joint ventures with the state company for geological exploration and production of uranium in Africa and, possibly, Mongolia. Analysts say that Renova has made a sold deal. Profitability in that business reached 80 percent, which is higher than for any other raw material.
The agreement was announced on Friday. Renova partner Mark Buzuk told Kommersant that the first stage of the project will be carried out in South Africa, Namibia and Gabon, where the group already has licenses for geological exploration. Lter, the venture may extend to the Dordon-Aimak and Gurvan-Bulag deposits in Mongolia. Two joint ventures may be formed in Africa this year to produce uranium concentrate. Rosatom will enrich the uranium.
An industry source said that Renova may receive up to a 50-percent share in the joint ventures. Buzuk said that Renova would completely finance the project and Tekhsnabexport would handle sales of uranium, while Renova would have the right to sell accompanying metals, such as gold.
The agreement between Renova and Tekhsnabexport is a first for the Russian atomic industry. Only the Japanese company Mitsui has become a partner of the Russian state company to produce uranium concentrate (at the Elkonsky deposit in Yakutia) and it received only a 25-percent share. An industry source told Kommersant that Oleg Deripaska's Basic Element, companies associated with Alisher Usmanov, Vneshtorgbank, BHP Billiton and Comeko are also negotiating similar projects, and Vladimir Potanin's Interros has also shown interest in uranium. The progress of those negotiations is unknown. Troika Dialog analyst Mikhail Stiskin said that Renova may also take part in the privatization of the Kara-Baltinsky metals plant in Kyrgyzstan as well.
Spot prices on uranium oxide have risen 700 percent in the last four years, from $10-12 per pound in 2003 to $72 in 2006. “We predict that prices will grow to $90-100 per pound in the next three or four years,” Stiskin said. Alexander Kotikov of UBS explained that the price growth is connected with the exhaustion of warehoused supplies. The increased demand for uranium is due to rising oil prices, forcing a conversion to cheaper atomic energy in the West. “Asia, China and India have already announced their plans to build atomic power stations,” Kotikov added.
Russia is also experiencing a shortage of uranium. Its production in Russia amounted to 3200 tons in 2006, while 15,000 tons were consumed, including exports. The All-Russia Minerals Research Institute predicts that uranium consumption will grow to 28,000 toms by 2020.
www.kommersant.com
All the Article in Russian as of Jan. 22, 2007
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