Canada Opens Arms to Uranium Investment

Source:

"Canada has the most favorable geological environment and the highest grade deposits. . ."

In last week's Throne Speech, the Harper government laid out plans to liberalize foreign investment in the Canadian uranium industry in an effort to fire up mining activity. The move comes at a critical time as Canada, the long-time leader in global uranium production, will be outdone by Kazakhstan this year and risks falling behind Australia in the near future.

Although Canada has "the most favorable geological environment" and "the highest grade deposits. . .these projects cost billions of dollars to build and by having foreign investment they are going to create further jobs and keep Canada on top of the pedestal," points out Simon Tonkin, analyst at Thomas Weisel Partners.

Present legislation restricts foreign ownership in Canadian uranium mining projects to 49 per cent. The Harper government views the cap as too restrictive in that it "inhibit[s] the growth of Canada's uranium mining industry by unduly restricting foreign investment."

The hope is that a more open investment climate will lead to a more robust Canadian uranium mining industry and help keep it on par with its global competition. The move is a part of Ottawa's wider plans to promote economic growth and create employment in Canada that includes opening up the satellite and telecommunications industries as well.

The Canadian Nuclear Association is also smiling after the Throne Speech as it sees a more liberal investment policy as a huge step toward improving competition in the industry.

Part of the government's plan would include simplifying the regulatory and project approval process in Canada's resource sector, which nuclear energy companies view as key to providing certainty in a very cost intensive industry.

Uranium demand from nuclear power programs in both China and India are expected to eat a big chunk out of global supplies in the coming years, leading to a rebound in recently depressed uranium prices.

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