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= China's Wen Calls For Pricing Move On Australian Uranium(Comtex Energy Via Thomson Dialog NewsEdge)By Stephen Bell Of DOW JONES NEWSWIRES PERTH, Apr 02, 2006 (Dow Jones Commodities News Select via Comtex) --Chinese Premier Wen Jiabao said Sunday that he wants to establish a pricing formula for Australian uranium that will ensure a stable supply of the nuclear fuel. The call by Wen in Perth at the start of a four day tour of Australia comes amid record high prices for uranium and China's continued unease about soaring commodity markets, particularly pressure on iron ore prices. His comments were delivered on the eve of a bilateral safeguard deal, due to be signed in Canberra Monday, which will allow China to buy Australian uranium. As part of its diversification away from coal-fired power, China is also set to begin imports of liquefied natural gas from the Woodside Petroleum Ltd. (WPL.AU)-operated North West Shelf venture later this year. China wants a "stable relationship between supply and demand" for uranium, Wen said, in responding to a briefing by Australian resources minister Ian Macfarlane on the country's overall mining and energy sector. "We are also going to set up a price formation mechanism that is up to international laws," he added. One analyst, who did not want to be identified, said that Wen's comments demonstrate China's eagerness to secure long-term supplies of energy and raw material amid a backdrop of record high prices for several commodities, including uranium. "Many Chinese companies have suffered substantial cost increases because raw materials prices have gone through the roof in the past few years," the analyst said. But Australia's Macfarlane said there have been "no discussions" on pricing as part of the uranium agreement due to be signed by Premier Wen and conservative Australian Prime Minister John Howard. And there is an "unrealistic expectation" that uranium exports to China will begin soon after Monday's signing of the safeguard deal, Macfarlane said. "We are some distance away from exporting uranium to China," he said, adding that commercial talks will need to occur between Australian and Chinese companies. Those discussions will lead to sales contracts that "may be able to be filled by the expansion of existing mining operations", including (BHP Billiton's (BHP) Olympic Dam operation in South Australia, he said. "There will need to be a substantial expansion of the Australian uranium industry if we are to satisfy part of China's 20,000 ton per annum of demand in uranium," Macfarlane said. China plans to meet its growing energy demand with a fourfold increase in nuclear production by 2020. Iron Ore Prices Remain Contentious Issue Australia has the world's biggest uranium reserves, with Olympic Dam holding 38% of the world's known resources. Two other uranium mines are running. Ranger, in the Northern Territory, is operated by Energy Resources of Australia Ltd. (ERA.AU), a unit of Rio Tinto Plc. (RTP). Beverley, in South Australia, is managed by Heathgate Resources, an affiliate of California-based General Atomics. A fourth deposit, Honeymoon, has permits to mine uranium and is expected to decide whether to bring the project into commercial production by mid-2006. Asked if he is confident that China won't attempt to "cap" prices of uranium, a reference to recent speculation of price capping efforts by Chinese iron ore importers, Macfarlane said: "The Chinese government has made it emphatically clear that the (price) negotiations on iron ore will be commercial negotiations between the steel mills and the suppliers - not only from Australia but also from Brazil." China has been vocal in its opposition to recent moves by iron ore exporters including BHP, Rio Tinto and Brazil's CVRD (RIO) - to seek a contract price hike of as much as 24%, on top of the 71.5% rise agreed to last year. These companies account for about 70% of the export iron ore coal trade. The steep price increases have prompted China to step up direct investment in Australia, which supplied nearly half of Chinese iron ore imports last year. China has also put its foot on some Australian uranium resources. According to the Western Australian government, China's CITIC owns the rights to the Cogla Downs uranium deposit, near the gold mining town of Cue. CITIC was granted a five-year lease over the deposit, which is estimated to contain 100,000 metric tons of uranium oxide ore, in April last year. Wen, who is making the first visit to Australia by a Chinese premier in 18 years, and Prime Minister Howard are also expected to discuss a free trade agreement which is under negotiation. Among those joining Wen is Foreign Minister Li Zhaoxing, Commerce Minister Commerce Bo Xilai and Ma Kai, head of China's economic planning agency, the National Development and Reform Commission, the official Xinhua News Agency said. -By Stephen Bell, Dow Jones Newswires; 61-8-9245 6408; [email protected] -Edited by Ian Pemberton (END) Dow Jones Newswires 04-02-06 0402ET |