Dragon sees China opening up uranium sector

By Tom Miles

HONG KONG (Reuters) - China is determined to get access to enough uranium to avoid replicating the problems it has with iron ore, but it will have to liberalize to do so, the head of a China-linked Australian uranium explorer said on Monday.

Xu Gang, managing director of Dragon Energy Ltd, said in an interview that China wanted to mine the radioactive fuel on its own territory but also to gain access to uranium supplies abroad.

"They are counting on their own agencies to go abroad to secure their own resources so that they can have a say in the long run. They don't want to repeat the current iron ore story again, being manipulated by a few players," Xu said.

"China's uranium potential is beyond lots of people's imagination," said Xu, whose company has a close relationship with the Nuclear Bureau of Jiangxi province, home to one third of China's identified uranium reserves.

Dragon Energy wants to explore in China but the law forbids foreigners from holding equity in uranium exploration, relegating them to services such as exploration modeling, project administration and finance.

But Chinese players are also having trouble, Xu said.

Big firms such as China National Nuclear Corporation lack rights to the best land, which is often held by provincial geological agencies. Although they have the land, their funding from the central government is inadequate for the necessary exploration work and they are not allowed to commercialize uranium.

So something has to give, said Xu, and when it does Dragon wants to be there to snap up Chinese projects that would benefit from Australian know-how.  Continued...