US electricity generator and supplier Constellation Energy has bought uranium trading firm Nufcor International from AngloGold Ashanti and FirstRand International. The move appears to highlight a new trend for integration in nuclear fuel.
The two owners each sold their 50% stakes in the London-based nuclear fuel trader and finance company to Constellation Energy Commodities Group, the UK subsidiary of Constellation Energy, for an undisclosed sum. Nufcor International's team will operate from Constellation's London office. Matthew Williams, of law firm Hunton & Williams who acted for Constellation in the deal, said that Nufcor International would be "actively exploring new risk management offerings to increasingly sophisticated financial uranium buyers in the North America, Europe and Asia."
Nufcor International has off-take arrangements and marketing service agreements with uranium producers and has been the sole marketing agent for all uranium produced in South Africa through the country's only uranium producer, Nuclear Fuels Corporation of South Africa (Nufcor) which is owned by AngolGold. Separately, Nufcor International acts as uranium market adviser to investment company Nufcor Uranium Limited, and Constellation says this arrangement will continue.
Constellation executive vice president Thomas Brooks described the acquisition as "a natural extension of Constellation Energy's expanding global commodities business" that will broaden its risk management capabilities across new markets. According to FirstRand, it chose to sell its 50% share in the company because Nufcor was not a core business for the group.
Constellation Energy describes itself as a major generator of electricity in the US and is one of the nation's largest wholesale power sellers. Its nuclear generation division operates five reactors at three sites, and through the Unistar consortium it is involved in plans for a further five new units.
Constellation is not the first to dip a toe into the waters of integration, bringing together front-end fuel cycle services and nuclear generation. A process to bring Russia's entire civil nuclear industry together into a single, vertically-integrated holding company, AtomEnergoProm, was begun by a decree signed by then-president Vladimir Putin in April 2007.
Canadian-based Cameco, already billed as the world's largest uranium producer, recently took a 24% stake in Global Laser Enrichment (GLE), adding to its other fuel services and electricity generation interests. CEO Jerry Grandey is clear about the company's ambitions. By 2018, he says, Cameco will be "a fully integrated nuclear energy company. And I see us in many, many more jurisdictions around the globe."
He also said nuclear assets were affordable, and that Cameco is "extremely bullish" on the long-term fundamentals of the industry. "When you look at the recent decline in the uranium price and response of market valuations of smaller companies to that recent squat you come to the conclusion that they're more affordable than a year ago. Some of them would be considered to be expensive, but we… look extensively at all of them to the extent that we see some that, if there were to be acquired by Cameco, would add value and we will look hard at doing so."