Japan's Itochu to buy uranium from Kazakhstan

/REUTERS, Tokyo, October 5, 05/ - Itochu Corp., Japan's third-biggest trading house, said on Wednesday it had agreed to buy natural uranium from Kazakhstan as increasing demand had pulled the spot price of the nuclear fuel to record highs. Itochu plans to take a total of around 3,000 tonnes of uranium from state-run Kazatomprom over about 10 years and market it to Japan and the United States, after the Kazakh firm boosts uranium production at the eastern block of the Mynkuduk project to 1,000 tonnes a year in as early as 2007. The contract will boost Itochu's uranium dealing volume by 10 percent. The company handled 3,000 tonnes of uranium in 2004, making it the world's second-largest nuclear fuel trader, an Itochu spokesman said. Japan's Mizuho Corporate Bank, part of Mizuho Financial Group, will loan $60 million to Kazatomprom for the production increase at the block. Spot uranium prices stayed at record highs above $30 per pound last week and this week, compared with around $20 last year, industry officials said. "Uranium demand will increase in tandem with rising global energy demand, and we expect the price levels to be sustainable," the spokesman said. Global uranium demand is expected to grow in the next couple of decades partly because of China's plan to build several nuclear power plants, industry officials have said. They have also said supply from Russia's military warheads might be reduced, possibly boosting demand for mined natural uranium. The United States has the world's largest nuclear power generation capacity. Japan holds third place after France. The government of resource-poor Japan has a policy of supporting nuclear power, and aims to build five new nuclear power plants by 2010. Japanese utilities used about 8,500 tonnes of uranium for power generation in 2004, according to the Federation of Electric Power Companies. One of Itochu's rivals in Japan will be Idemitsu Kosan Co., which holds a minority stake in the Cigar Lake uranium project in Canada. Idemitsu, Japan's third-largest oil refiner, plans to sell about 540 tonnes of mined uranium annually to Japan, China and the United States. Kazatomprom is the world's third-largest uranium producer. In September, the company said it would produce 4,000 tonnes of uranium in 2005, compared with 3,719 last year. [2005-10-05]