Wednesday, February 14, 2007

Uranium fusion In yet another mining and metals consolidation move, Canada-based SXR Uranium One announced it has agreed to buy Canadian rival UrAsia Energy Ltd. The deal would create the world's #2 uranium company. The deal is worth around $3.1 billion. The new company will have operations in Australia, South Africa, the U.S., Canada and Kazakhstan, which together constitute all the world's largest uranium production areas. Canada's Cameco is the current world leader, with a 20% market share. Australia's Rio Tinto Ltd is the current #2. As with any mining move, there is speculation that Rio Tinto or BHP Billiton may try to outbid SXR. The move comes in the midst of renewed interest in nuclear power, form countries from China to Russia to Australia, with 250 nuclear reactors in construction or the planning stage across the world. That growth is partly due to worries about global warming and a shortage of fossil fuels. Uranium prices are at record levels, dye both to demand and to a supply problem, due to flooding in one of Cameco's key Canadian mines. Meanwhile, the recently announced aluminum merger has stoked rumors that  BHP Billiton or Rio Tinto is now planning to buy out either Alcoa or Alcan, the two largest aluminum companies. Both potential buyers already have some aluminum assets. The rumors helped spike the Dow Jones average, which lists Alcoa. 8:03:56 PM

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