Cameco's Cigar Lake mine

Cameco's Cigar Lake mine

An interesting development in the Canadian uranium sector from Reuters this morning; as part of the Canada-EU free trade agreement, Canada has agreed to ease foreign ownership restrictions on Canadian uranium mines.  Currently foreign mining companies cannot own more than 49% of producing Canadian uranium mines, but that is about to change claims Reuters.  Note there is no restriction on foreign ownership of Canadian exploration assets.  The development comes amid heavy lobbying by Areva SA and Rio Tino Plc.

This could help warm the ice cold waters of foreign investment into the Canadian natural resource sector which has been very quiet since a few high-profile deals were vetoed by the Canadian authorities (Including BHP’s attempted $38.6 billion takeover of Potash Corp).   The uranium producer space, in general, is quite consolidated with only a handful of North American producers.

Although this is a positive move for the natural resource sector in Canada, the authorities still have their ‘net benefit test’ which a blockbuster deal for strategic Canadian assets have to pass.  For example, a deal for Cameco may not pass this type of test.  However, as they say, never say never.