Oman has agreed to invest up to $120m in a uranium mine in Spain, at a time when energy-rich Gulf States are looking closer at nuclear power.
The sovereign wealth fund of the Sultanate of Oman has an option to acquire 37 per cent of Berkeley Energia, which is developing the Salamanca mine about three hours west of Madrid. It will also have the right to uranium supply from the mine, known as an offtake.
The money will allow London and Australia-listed Berkeley Energia to finish construction of the mine, which is due to start production in 2019. The move comes as Gulf governments invest more in alternative energy as they look to move away from domestic oil production.
The Barakah Nuclear Energy Plant in the United Arab Emirates is due to start supplying electricity next year. It is the country’s first nuclear power plant.
The deal is subject to shareholder approval. But any supply from the mine to Oman will need the approval of Euratom, the pan-European body that regulates the use of nuclear energy.
Uranium prices have fallen to their lowest levels in more than a decade as many governments have scaled back their nuclear power programmes following the Fukushima nuclear disaster in 2011. But nuclear proponents say in order to meet global climate change goals as well as power electric cars cleanly, nuclear power will have to be an option.
“When you talk about EVs [electric vehicles] hooking on to the grid, there’s only one scalable answer,” Paul Atherley, managing director of Berkeley Energia, said.
Uranium prices are likely to be supported as operations that are losing money cut output and some utilities in the US and Europe look to secure new supply as their current contracts come to the end of their lives, Mr Atherley said.
In addition, the world’s largest uranium producer, Kazatomprom, is also looking to float next year, which could help support prices, he added. In January the company announced a 10 per cent cut in its output.
Salamanca project is capable of producing an average of 4.4m pounds in weight, or almost 2,000 tonnes, a year of uranium in its first 10 years, according to Berkeley Energia. It will have a cost of production of $15.06 per pound, it said.
Last year mines around the world supplied some 73,000 tonnes of uranium oxide concentrate to global utilities, according to the World Nuclear Association.
Oman’s investment includes an interest-free unsecured loan of $65m, which can be converted into ordinary shares at 50 pence per share, as well as options that can be exercised at an average price of 85 pence per share, contributing a further $55m.
If it exercises both, it will have a 37 per cent share of the company. Shares in Berkeley Energia rose 9.4 per cent on the news to trade at 49p.
Source: www.ft.com
