UPDATE 1-Cameco to supply uranium to China's nuclear power co

Wed Nov 24, 2010 6:52am EST

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* To supply 29 mln pounds of uranium concentrate

* To supply through 2025

Nov 24 (Reuters) - Cameco Corp (CCO.TO) signed a long-term agreement to supply 29 million pounds of uranium concentrate to China's state-owned nuclear power company, at a time when the Asian superpower steps up its ambitious nuclear power programme.

China Guangdong Nuclear Power Holding Co Ltd (CGNPC), the country's largest clean-energy enterprise, operates three nuclear power stations and is constructing 14 nuclear power plants.

Cameco has agreed to supply uranium concentrate through 2025, it said in a statement late on Tuesday. CGNPC has about 17,000 megawatts (MW) of nuclear capacity under construction and expects over 50,000 MW by 2020.

"This long-term supply agreement with China Guangdong Nuclear Power is a significant step for our company in the world's fastest growing uranium market," Cameco Chief Executive Jerry Grandey said.

By 2010, China aims to produce 80-112 gigawatts (GW) of electricity from nuclear power, up from the current capacity of 11 GW. It will need an additional 82 million pounds of uranium to start and fuel those new reactors.

Camceo, the largest uranium producer in Canada, said its expectation to double production by 2018 aligns well with China's nuclear reactor construction program.

Global uranium demand is expected to grow 32 percent by 2015, according to RBC Capital Markets, a forecast that already has uranium producers' share prices climbing.

Analysts are urging investors to jump on the bandwagon and buy shares of Cameco (CCO.TO), Uranium One UUU.TO, Paladin Energy (PDN.AX) (PDN.TO) and other industry stalwarts. [ID:nN18243832]

The Saskatoon, Saskatchewan-based Cameco's shares, which have gained 6 percent this year, closed at C$36 on Tuesday on the Toronto Stock Exchange. (Reporting by Aftab Ahmed in Bangalore; Editing by Don Sebastian) (aftab.ahmed@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: aftab.ahmed.reuters.com@reuters.net))

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