The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite. Brenda Bouw is the Globe and Mail mining reporter.
A battle is shaping up between global mining giant Rio Tinto PLC and Canada’s Cameco Corp. over a promising uranium explorer in Saskatchewan, with Cameco under pressure to win as it seeks to double production of its single resource.
London-based Rio has struck a friendly deal to buy Hathor Exploration Ltd. for $578-million or $4.15 a share, topping Cameco’s hostile offer of $3.75 a share made in late August.
The companies are vying for control of Hathor’s assets in the uranium-rich Athabasca Basin of Saskatchewan, where about 20 per cent of the world’s uranium is produced. Both bids come as the price of uranium, used to fuel nuclear power plants, struggles to recover from a slump since the nuclear crisis in Japan last March caused many countries to re-examine their nuclear power programs.
With the long-range belief that nuclear energy will expand in key growth countries such as China and India, Rio is looking to expand its existing uranium operations in Australia and Africa. Its offer for Hathor is the first Rio has made for a Canadian company since its ill-timed purchase of Montreal-based aluminum producer Alcan in 2007, on the eve of the global recession.
Hathor would give Rio “a proper and long-life third leg to our uranium business,” Rio Tinto Energy’s chief commercial officer Simon Wensley said in an interview Wednesday.
Rio claims its bid is not subject to the Investment Canada Act’s “net benefit” test, because it is below the $312-million threshold based on book value of the assets. It also says the bid is not subject to the Non-Residential Ownership Policy imposed on producing mines, since Hathor’s assets are years away from production.
Ottawa caps foreign ownership of producing uranium mines at 49 per cent, but higher levels are permitted if the project is considered Canadian-controlled or if a Canadian partner can’t be found.
Rio acknowledged that ownership of Hathor could become a factor when its flagship Roughrider deposit begins production, the timing of which has not yet been determined.
“We are aware of this issue, however we have a long-term interest in uranium mining,” the company said in a statement. “We’ve been encouraged by various public statements by government officials on attracting foreign investment and we look forward to joining the dialogue.”
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/rio-tinto-tops-hostile-cameco-bid-for-hathor/article2206323/