In case you missed it, the Canadian government recently approved an application by Paladin Energy to become the majority owner of a uranium mine at the Michelin project in the province of Newfoundland and Labrador.
The news has been the focal point for numerous articles in the national and international media over the last few days, however, why all the excitement?
The answer is Canada’s NROP â€" the Non-Resident Ownership Policy - which prevents ownership, of 51% and higher, of any mining project in Canada.
Exceptions to NROP are rare and so of course this is being viewed by many observers as positive for Canada’s uranium sector. After all, if foreign ownership is now possible on a case-by-case basis then a lot of companies could end up benefiting.
However, let’s look a little deeper a one particular aspect that struck me and that’s the question of timing. Why did Paladin decide now is the time to push for ownership â€" effectively the green light for taking the Michelin project on the road towards production? Also, why did the Canadian government think that now is the time to begin making exceptions to NROP?
I can’t speak for them but I’ll give you my opinion based on my own observations of our industry: the demand for uranium five years from now, when measured against a global supply hit by project stalls, shutdowns and technical problems, means that the race is on to start prepping new sources of uranium.
It takes many years to put a uranium project into production, which means companies needs to start positioning themselves now. The same goes for countries. Canada is the second largest source of uranium (and the largest source of high-grade uranium) and for many years it was actually number one until overtaken by Kazakhstan.
With its stable political system, straightforward permitting and uranium grades up to ten times higher than anywhere else in the world, Canada could end up taking the lead once again in uranium supply, should it succeed in attracting the right attention and once demand reaches the right levels. It therefore seems to me that the Paladin news is as much about the Canadian government potentially loosening its stance to support the country’s uranium sector as it is about Paladin positioning for the rebound.
As our director, Anthony Milewski, wrote in a recent article on uranium pricing, at some point uranium’s positive fundamentals are going to outweigh its negative sentiment. We could very well be getting close to the tipping point.
Dev Randhawa, CEO of Fission Uranium