Cameco is in the final stages of a uranium supply agreement with India. The deal is expected to further mend the relationship between Canada and India as well as add thousands of jobs in Saskatchewan.
The uranium market could see some big moves as Canada’s largest uranium producer looks to finalize a sales agreement with India. Cameco (TSX:CCO,NYSE:CCJ) is currently in advanced talks with India on a deal to supply the country’s nuclear power plants.
Indian Prime Minister Narendra Modi is reportedly looking forward to the deal, which will not only be beneficial to both ends from a business perspective, but will also mark the reconciliation of Canada and India after Canada banned uranium and nuclear hardware exports to India in the 1970s. While the countries began to mend the broken relationship with a 2013 deal, this new commercial export agreement signifies growing trust in India as a safe and responsible user of nuclear power.
Of course, the benefits to Cameco will also be huge. The deal will increase the company’s revenues by millions of dollars, and will boost employment in Saskatchewan. “It’ll mean tax revenue, it’ll mean job retention, it’ll mean new jobs, if in fact there is an agreement here with India,” Saskatchewan Premier Brad Wall told Bloomberg. “Depending on all the specifics, you’re going to be talking about hundreds of millions of dollars worth of sales over some period of time.”
The deal is set to go through prior to the Modi’s visit to Canada, which is scheduled to take place from April 14 to 16, and will include stops in Toronto, Ottawa and Vancouver.
As mentioned, Modi is excited about the deal, and reportedly said on his Facebook page that he looks “forward to resuming [India’s] Civil Nuclear Energy cooperation with Canada, especially for sourcing uranium fuel for our nuclear power plants.”
India uses nuclear power for 3 percent of its electricity, but a Cameco spokesman told Bloomberg that it hopes to increase that number to 25 percent by 2050. Since coming to power, Modi has aimed to speed up price negotiations for building new reactors and purchasing fuel from France and Canada; he decided to visit both countries this month despite domestic opposition.
One project, the Jaitapur nuclear power plant, is on its way to being built after AREVA (EPA:AREVA) signed a pre-engineering agreement contract with the Nuclear Power Corporation of India. If all goes well, Jaitapur, which will include six reactors, will be the world’s largest nuclear power station.
At end of day Monday, Cameco’s share price was up 2.25 percent on the Toronto Stock Exchange, trading at $19.57. It was up 1.97 percent on the New York Stock Exchange at $15.51.
Securities Disclosure: I, Kristen Moran, hold no direct investment in any of the companies mentioned in this article.