India and China are the future of the nuclear power business, and uranium giant Cameco Corp. is expanding its ties with both of them.

On a conference call yesterday to discuss the company’s third-quarter results, chief executive Jerry Grandey devoted a lot of time to the opportunities Cameco sees in the two Asian giants, which are expected to be the biggest sources of uranium demand growth in the years to come.

“We’re quite optimistic as time goes on that we’ll be a major partner [and] supplier with both countries,” he said.

Mr. Grandey is particularly excited about India, where Cameco opened offices last month. The governments of Canada and India are near a nuclear co-operation deal, and the fact India uses CANDUstyle reactors makes it an even stronger opportunity.

“The spectrum of opportunities in India for us is broad,” he said.

“It’s both uranium supply as well as co-operation in other aspects of the CANDU fuel cycle, we hope, and could span exploration activities there and perhaps jointly abroad.”

In China, he said that the focus will remain on uranium supply deals, but added that the two sides could partner up on activities elsewhere in the world.

According to the World Nuclear Association (WNA), China and India are building a combined 23 nuclear reactors, with another 57 in the planning stages. No other country has more than 13 reactors in the planning stage right now. WNA is also forecasting that China will produce six times more nuclear power in 2020 than it does today

With the Asian powers leading the way, Cameco remains very bullish about the long-term prospects of uranium. However, it is cautious on short-term pricing in the illiquid spot market.

Mr. Grandey pointed to two recent events that have provided mixed signals on prices: The U.S. Department of Energy’s announcement that it is releasing some uranium stockpiles, and a production setback at BHP Billiton Ltd.’s Olympic Dam mine.

While uranium sales volumes were down 15% year-over-year in the third quarter, the company said a few months ago that deliveries in the second half of 2009 were weighted toward the fourth quarter.

Source: Financial Post