Rio Tinto Bags Hathor Exploration on Expected Recovery in Uranium Demand
Rio Tinto (NYSE:RIO) announced that it has secured control of Hathor Exploration Ltd. [1] Hathor Exploration primarily focuses on uranium exploration projects in the Athabasca Basin in Canada, which hosts all of Canada’s uranium producing mines and accounts for 23 percent of the global uranium production. To counter a rival bid from Cameco Corp, Rio Tinto had revised its bid for the uranium miner to $4.58 per common share last month. Rio Tinto is a global diversified miner with a product portfolio spanning across basic metals like iron ore, copper and aluminum to energy products like coal and uranium. It competes with other mining giants like Vale (NYSE:VALE) and Freeport McMoran (NYSE:FCX), Barrick Gold (NYSE:ABX)
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Earlier, the revised $4.58 per common share offer was unanimously accepted by Hathor’s board. More than 70 percent of Hathor’s shareholders have tendered for Rio Tinto’s offer and the mining giant has now extended the offer through December 12th to lure in the rest of the shareholders. [1]
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This past year has not been a good year for uranium with prices falling by more than 25 percent following the Fukushima (Japan) earthquake which caused significant damage to reactors in the area. The disaster raised concerns over the potential radiation threats from using nuclear fuel to produce electricity. The move to acquire Hathor may not seem very lucrative given such a scenario; however in the long run we expect that uranium demand will continue to grow due as fossil fuels become increasingly scarce.
Much of the demand increase is expected from developing nations, which are setting up new industrial infrastructure at a rapid pace and are already energy starved. Gaining control over Roughrider’s estimated 58 million pounds of uranium deposits couldn’t have come at a better time for Rio Tinto.
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Notes:- Rio Tinto takes control of uranium explorer Hathor, MarketWatch [↩] [↩]