Canada lets Australia's Paladin be majority owner of uranium mine

By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canada has made a rare exception to its policy of requiring uranium mines be majority-owned by Canadian companies, announcing on Monday it has approved an application by Australia's Paladin Energy Ltd (ASX:PDN.AX - News).

The government's go-ahead for Paladin's proposed Michelin uranium mine in the Atlantic province of Newfoundland and Labrador may open the door to other foreign investors seeking majority ownership of Canadian uranium mines, Cantor Fitzgerald analyst Rob Chang said in a note.

Raymond James analyst David Sadowski said Canada's willingness to make exceptions could encourage investment by two Chinese utilities, China General Nuclear Power Group and China National Nuclear Corp, both of which have said in recent months they are looking at Canada for acquisitions.

Canada is the world's second-largest producer of uranium, used to make fuel for nuclear power plants.

Canadian companies that own nonproducing uranium assets in the country include Cameco Corp (Toronto:CCO.TO - News), Fission Uranium Corp (Toronto:FCU.TO - News) and Denison Mines Corp (Toronto:DML.TO - News).

In a news release, Natural Resources Minister Greg Rickford said Canada requires operating uranium mines to be majority-owned by Canadian companies, but may make exceptions when Canadian partners cannot be found. He said Paladin had demonstrated a lack of Canadian interest in the Michelin project, which is in the development stage.

Paladin owns 100 percent of Michelin.

The company is only the second to receive an exception to the ownership policy after France's Areva SA (Paris:AREVA.PA - News), Sadowski said. Areva, previously called Cogema, was already operating a Canadian uranium mine when Canada adopted the policy in 1987.

Weak uranium prices have caused several major producers, including Canada's Cameco, to cut costs.

Paladin shares, which trade in Australia and Toronto, were slightly lower in Toronto at midday on Monday.

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Chizu Nomiyama; and Peter Galloway)