Sinosteel signs uranium deal -

THE Foreign Investment Review Board will be forced to grapple with the issue of Chinese ownership of uranium deposits for the first time after China's Sinosteel signed a memorandum of understanding to purchase 60 per cent of a South Australian uranium project.
Sinosteel, a large metals trader, has signed a $39 million deal with PepinNini Minerals over the Crocker Well and Mt Victoria uranium deposits located near Broken Hill, subject to government approval.
The agreement would give Sinosteel the rights to all of the output, which would presumably be exported for use in Chinese nuclear power plants as long as a deal between the Australian and Chinese governments signed earlier this year is ratified by Parliament.
A Senate committee last week estimated Australia could send its first uranium shipments to China as early as the first half of next year.
A scoping study released in March estimated it would cost $120 million and take about two years to develop the open cut Crocker Well project, which has a Joint Ore Reserves Committee resource of 14.85 million pounds of uranium.
The nearby smaller, high-grade Mt Victoria deposit would need to be developed into an underground mine at a cost of $160 million.
The investment was deemed sub-economic in March, although uranium prices have since risen to $US52 a pound from $US40.50 at the time.
Both were explored by Esso and Shell in the 1960s and '70s and are fairly advanced compared with the majority of uranium exploration projects in Australia.
PepinNini director Rebecca Holland-Kennedy said her company had been in talks with several Chinese groups interested in the project. It first made contact with Sinosteel at a uranium conference in Western Australia last November.
"Everyone is interested in uranium, especially in China," Ms Holland-Kennedy said.
"There seemed to be good synergies with Sinosteel."
Sinosteel already has an office in Perth.
Its main mining asset in Australia is a 40 per cent stake in the Channar iron ore joint venture with Rio Tinto in the Pilbara.
Austrade helped to facilitate the agreement and PepinNini's corporate adviser plans to approach the FIRB next week to gain approval for the joint venture.
"I can't predict the outcome," Ms Holland-Kennedy said.
Sinosteel has been granted three months to enter into a legally binding agreement, subject to FIRB approval.
If the company decides not to proceed, it will have to pay PepinNini at least $1.5 million.
PepinNini shares rose 6.5c, or 12 per cent, to 60c yesterday.