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Ex-Russian PM reassures Uranium One shareholders

Sergey Kirienko, left, director general of Russia's Rosatom, and Vadim Zhivov, director general of ARMZ Uranium Holding Co., talk with reporters in Toronto on Tuesday

Sarah Dea/The Globe and Mai/Sarah Dea/The Globe and Mai

The interests of a massive state-owned nuclear company can coincide with those of a small Canadian uranium miner, a former Russian prime minister reassured investors and shareholders of Uranium One on Tuesday.

Sergey Kirienko, now the director general of the Russian state atomic energy agency Rosatom, was in Toronto to outline how his organization's acquisition of a 51 per cent stake in Uranium One will help Russia's ambitions as one of the biggest vertically integrated players in the nuclear sector, while letting the Canadian outfit piggyback on that international growth.

In June, Rosatom's uranium mining subsidiary ARMZ announced it planned to boost its minority stake in Uranium One to 51 per cent, in return for $610-million and a half interest in two mines in Kazakhstan. The plan goes to shareholders next week, and Uranium One chief executive officer Jean Nortier says early indications are that a large majority will approve.

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In an interview with The Globe and Mail and a luncheon speech to Uranium One shareholders, investors and investment bankers, Mr. Kirienko stressed that Rosatom is in transition from its past as a closed, opaque government agency.

Now, he said, it has split off the military nuclear business into a separate arm, and the civilian work is operating as a transparent, commercial entity. While Mr. Kirienko is a former politician - he was prime minister for about five months in 1998 under president Boris Yeltsin - and he runs a government-owned agency, "we draw a clear line between the national interest of Russia and its economic interests abroad," he said.

With demand for nuclear power growing sharply around the world, Rosatom is in a position to make gains on its two biggest nuclear plant-building rivals, Toshiba Corp.'s Westinghouse division and France's Areva Group.

One area where Rosatom falls short is in raw uranium mining - it controls only 7 per cent of worldwide production, while it generates 40 per cent of enriched uranium and builds 20 per cent of new reactors. That's where Uranium One comes in, Mr. Kirienko said.

The Canadian company will be the "global platform" for Rosatom's uranium ambitions, including further mine acquisitions - likely in Kazakhstan and Africa over the short term.

Uranium One will stay as a public company, Mr. Kirienko said, so it can be used to access capital markets worldwide.

For minority shareholders, he said, the union will mean guaranteed markets for the uranium the company produces, and an end to concerns over the political risk of Uranium One's Kazakhstan operations - thanks to Russia's smooth relations with that country.

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The company should also be able to ride the price of uranium, which is certain to increase in the years to come as supplies tighten and demand rises, Mr. Kirienko said. "We're looking at a shortage-driven market, with an inflexible supply," he said.

The Uranium One deal will also act as a model for other alliances Rosatom will likely create in the coming years. With 74 nuclear reactors in 15 countries, and 17 more under construction, the company has substantial worldwide ambitions. It already supplies enriched uranium for U.S. nuclear reactors and is currently in discussions about building a uranium enrichment plant in the United States using Russian technology.

When Mr. Kirienko was asked whether the company would like to build reactors in North America, he replied "Why not?" One thing it will not do is bid on the assets of Atomic Energy of Canada Ltd. that Ottawa has put up for sale. Russian reactors use pressurized water technology, so AECL's heavy-water CANDUs "are not in our area of interest," he said.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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