UPDATE 2-Russia's ARMZ aims to become top 3 uranium producer

* Says to target more acquisitions after Uranium One stake

* Expects to boost Uranium One output by 30 pct in 2011

(Adds information on leading uranium producers, details)

MOSCOW, June 9 (Reuters) - Russian state-controlled miner ARMZ is eyeing more acquisitions in a bid to become one of the world's top 3 uranium producers after buying a controlling stake in Canada's Uranium One UUU.TO.

“We view Uranium One as a company to ensure global growth for ARMZ and therefore as a platform for mergers and acquisitions,” ARMZ director general Vadim Zhivov told reporters on Wednesday.

ARMZ sealed a deal to increase its stake in Uranium One to at least 51 percent in a complex transaction on Tuesday. [ID:nN08246560]

The deal will create an international heavyweight in an industry key to the building of new nuclear power plants -- widely seen as an alternative to diminishing hydrocarbon sources.

According to ARMZ's website, the company was the world's fifth largest uranium producer in 2009, behind Rio Tinto RIO.AX, Cameco CCO.TO, Kazatomprom and Areva CEPFI.PA.

Uranium One ranked eighth.


In order to increase its share of the global uranium market, ARMZ plans to continue to grow outside Russia, which holds one-tenth of the world’s reserves.

When asked who ARMZ could acquire next, Zhivov said: “It is not wise to predict what will happen next. We have to close the deal and capitalise on synergies... When we cement everything we will move forward with Uranium One shareholders.”

He added ARMZ has no plans to further increase its stake in Uranium One after completing the deal, which is expected to close later this year.

In a separate meeting with Prime Minister Vladimir Putin and the head of ARMZ’s Rosatom parent company, Sergei Kiriyenko, the executive, said that the acquisition will allow ARMZ to supply Kazakh uranium to Russian nuclear plants.

“With the acquisition of this controlling stake we are entering the extraction timetable established in order to cover the domestic demand,” he said.

Uranium One operates several projects in the Central Asian republic, while ARMZ already operates two mines in Russia, with a third under construction.

ARMZ also holds licenses for several other uranium deposits, including the Elkon field in the Sakha Republic (Yakutia).

This deposit is estimated to hold 5.3 percent of the world’s recoverable reserves, and Zhivov said talks are ongoing with possible partners before production begins in 2015.

The firms will produce a combined 7,130 tonnes in the current year -- including a 2,000 tonne contribution from Uranium One -- while the Canadian group is expected to boost output by 30 percent in 2011.

Rosatom also recently said it wanted to invest $1 billion to explore uranium in Namibia. Rosatom head Sergei Kiriyenko said the uranium could be used for a nuclear power plant Russia is building in Turkey. [ID:nLDE64J1D9]

Uranium One has assets in Kazakhstan, the United States and Australia. (Reporting by Polina Devitt and Gleb Bryanksi, Writing by John Bowker and Alfred Kueppers; Editing by Hans Peters)