Cameco?s Uranium For New Mexico?s New Enrichment Facility?

Guess what? Our recent investigation shows the uranium to be enriched in the LES/Urenco proposed enrichment facility in Lea County, New Mexico may come neither from uranium properties in New Mexico nor anywhere else in the United States. Just as New Mexico?s nuclear/uranium mining renaissance was ready to get underway, a deal may have already been cut to enrich uranium mined in a foreign country. Louisiana Energy Services (LES), through the consortium's general partner Urenco Ltd., may have struck a deal with Canadian-based Cameco Corp. Will this uranium come from Canada or Kazakhstan?

According to New Mexico State Senator Carroll H. Leavell, the uranium ore to be enriched at the facility near Eunice, New Mexico facility would be coming from outside the United States. Senator Leavell told StockInterview, ?The uranium ore will be coming out of Saskatchewan.? When we asked if the uranium to be enriched in New Mexico would come from the Athabasca Basin, an area hosting the world?s richest grades of uranium and which is also located in northern Saskatchewan, Senator Leavell claimed he wasn?t sure where the Athabasca Basin was. But he told us that Urenco Ltd informed him the uranium was coming from that western Canadian province.

We can only speculate the uranium producer might be Cameco Corp. On July 22, 2002, Cameco signed a Memorandum of Agreement with LES, along with Urenco Ltd, Westinghouse Electric Company, Fluor Daniel and the affiliates of U.S. utilities: Exelon, Duke and Entergy. In an email response to our inquiry, earlier this week, Netherlands-based Urenco Ltd Communications Coordinator April Wildegose-Mistry informed us, ?Cameco Corp was part of the original LES project. They pulled out around March 2003 as they needed to focus on other business issues.?

We have also asked to interview Urenco?s CEO. Perhaps he may clarify this matter for us. One industry insider told us Cameco stated its continued support for the LES initiative after it withdrew as a partner. However, the recent joint venture company, Enrichment Technology Company, formed by Areva and Urenco may open the possibility the uranium could also come from Areva?s uranium interests in Athabasca. AREVA is a Paris-based company offering technological solutions for nuclear power generation, and electricity transmission and distribution.

This development could further irritate at least one New Mexico legislator. State representative John A. Heaton from Carlsbad, New Mexico, and who also sits on New Mexico?s Energy and Natural Resource Committee, was adamant about U.S. independence from foreign energy sources. He told StockInterview, ?We need to use the assets we have and not be dependent upon foreign countries. I worry a lot about the dependence we have on other countries.?

In this instance, Heaton might be getting a double-whammy of foreign dependence. Not only is Urenco Ltd a foreign-owned and controlled company (a Dutch/ British/German consortium), but the uranium its New Mexico facility would be enriching could come from at least one foreign source, Canada. Because the uranium ore might be sourced from Cameco, yet another country?s uranium could be supplying the New Mexico enrichment facility: Kazakhstan.

Cameco plans to boost uranium mining in this former Soviet country to a level which might approach its uranium production in the Athabasca Basin. Kazakhstan recently joined the ?Putin Alliance? of uranium-producing countries. On June 22nd, Kazakhstan signed a contract worth $1 billion to supply Russia?s Tekhsnabexport to supply Russians with uranium through the year 2020. The Economist Magazine?s Economic Intelligence Unit recently issued a caution on this country.

We asked our uranium industry analyst, David Miller, about this new twist in the LES/Urenco story. Miller is a third-term Wyoming legislator, who is an original member of the Wyoming Energy Commission and a past member of the National Council of State Legislator?s (NCSL) Energy Committee., now serving on a NCSL-related committee. Miller is also president of Strathmore Minerals, a company which is now advancing its properties through the permitting process in New Mexico. Miller told us, ?The State of New Mexico may miss out on the hundreds of millions of dollars of tax revenues from potential severance, ad valorem, sales and other taxes the domestic industry would pay the state to mine uranium in New Mexico. Instead, the foreign uranium pays zero taxes to enter the state for enrichment.? In other words, Cameco or another may be getting a free ride on taxes.

Ominously, Miller asks these questions, ?The real question for New Mexico is this: What happens to the part of the uranium that does not go onto the fabrication plant? Does it stay in New Mexico? Is it shipped back to Russia, Kazakhstan or Saskatchewan?? This gave us pause for thought. After it leaves New Mexico, how do we know it would be used for civilian energy purposes? Could it be transported elsewhere and be more highly enriched? That?s just speculation.

Miller recommended that New Mexico legislators demand the LES plant be fed uranium mined in New Mexico, not in Canada or Kazakhstan. ?If this were to happen,? Miller wrote in an email to us, ?thousands of new mining jobs would be created in areas of New Mexico which need the most economic development.? Once the world?s leading uranium producer, New Mexico?s Grants Uranium Belt is again being explored by more than a dozen companies. Some hope to permit and operate new uranium production centers in New Mexico. We trust this latest wrinkle will awaken New Mexico?s legislators and help them protect uranium mining developments in their states. Perhaps their voters, who might be looking for higher paying jobs, would appreciate that.

James Finch contributes to http://StockInterview.com and other publications. Visit http://www.stockinterview.com to read our new book, ?Investing in the Great Uranium Bull Market.?