MOSCOW - Russian nuclear giant Rosatom has secured a 17 percent stake in a Western rival, Canada's Uranium One, gaining another foothold in North America as it pursues an aggressive programme of global expansion.
The cash and stock deal -- worth $385 million -- will give Uranium One 50 percent in a Kazakhstan's Karatau Uranium mine, which is expected to boost its 2010 output by about 35 percent.
On top of issuing 117 million shares to Rosatom -- worth C$331 million ($295 million) at Friday's closing price -- Uranium One will pay the state-owned holding $90 million.
According to announcement issued on Monday, the two companies will also enter into a long-term partnership under which Uranium One will enrich Kazakh uranium in Russia, increasing Rosatom's access to the Central Asian nuclear market.
First of all they get cash and second they get an option to purchase uranium from Kazakhstan so it is quite good for them, Troika Dialog analyst Mikhail Stiskin said.
The deal marks the latest stage in what has become a year of unprecedented expansion for Rosatom, already one of the largest players on the nuclear market.
After agreeing to cooperate with two major rivals this year -- Germany's Siemens (SIEGn.DE) and Japan's Toshiba (6502.T) -- Rosatom overcame legal barriers to the U.S. market by striking landmark deals with U.S. utilities in May. [ID:nLQ630414]
Those deals will allow Russia to supply uranium directly to U.S. companies for the first time in two decades.The logical follow-up to will be to access nuclear infrastructure that can feed into the U.S market, Rosatom said. Uranium One, which is based in Vancouver, has assets in the United States, as well as in Australia and South Africa. Its efforts, however, are focused on Kazakhstan -- home to a fifth of the world's uranium reserves. It said in Monday's statement that it now expects 2010 production of 7.5 million pounds of uranium after closing the deal, up about 35 percent from its earlier guidance of 5.6 million pounds.
The acquisition, to be carried out by Rosatom's mining arm Atomredmetzoloto (ARMZ), includes a clause requiring Uranium One to make up to $60 million in contingency payments between 2010 and 2012 and to give ARMZ one seat on the board.
In turn, ARMZ has agreed not to increase its stake in Uranium One beyond 19.95 percent for at least five years without the consent of the Canadian firm.