Canada, India eye nuclear export deal: report

[Ben Graham]

Canada and India are close to announcing a new $2.8 billion uranium export deal that would see Cameco (TSX: CCO; NYSE: CCJ) supply the energy metal as part of a warming of relations between the two countries, The Globe and Mail reported.

The deal, potentially covering 10 years, could be part of a broader approach to nuclear energy and economic collaboration between the two countries, the Globe reported Tuesday, citing unidentified people familiar with the matter. It would replace a previous $350 million, five-year agreement signed in 2015.

Canadian Prime Minister Mark Carney and his Indian counterpart, Narendra Modi, agreed this weekend to hold talks aimed at reaching an “ambitious” Comprehensive Economic Partnership Agreement, according to a statement from Carney’s office Sunday. Encompassing topics such as investment, agriculture and digital trade, the accord would help to more than double two-way trade to $50 billion by 2030, Canada said.

Nuclear cooperation

Both sides reaffirmed their longstanding civil nuclear cooperation and noted the ongoing discussions on expanding collaboration, including through long-term uranium supply arrangements, India said Sunday in a separate statement. Canada and India are looking to shield their economies against the “increasingly erratic” trade policy of the United States, according to the Globe.

“Given the materiality of this potential uranium supply agreement, we view this update as a positive for Cameco shares,” Scotia Capital mining analyst Orest Wowkodaw said Tuesday in a note.

Cameco rose 0.8% to C$118.50 Tuesday morning in Toronto, giving the company a market value of about C$52 billion ($37 billion). The stock has traded between C$49.75 and C$153.59 in the past year.

Million-pound shipments

Based on the current uranium term price of $86 per lb., a $2.8 billion deal would translate into annual shipments of 3.3 million lb. of uranium oxide for Cameco, or about 10% of the company’s annual sales volumes, Wowkodaw said. He called the amount “very material.”

Cameco spokesperson Veronica Baker declined to comment on the matter, saying that commercial contracts are confidential, the Globe reported.

India has 24 nuclear reactors in operation that together generate about 8.1 gigawatts of electricity, according to World Nuclear Association data. Another six reactors are under construction while 14 are planned. India’s government “is committed to growing its nuclear power capacity” as part of its “massive” infrastructure development program, the association says.