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Paladin May Gain on Queensland Uranium Reversal, BofA Says

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Nov. 24 (Bloomberg) -- Paladin Energy Ltd., a uranium producer, may benefit from any reversal by the Australian state of Queensland of its ban on mining the nuclear fuel, said Bank of America Corp.

The Federal government’s proposal to allow sales to India has increased criticism of Queensland’s continued prohibition on mining, the bank’s Sydney-based analysts Glen Chipman and Peter O’Connor said yesterday in a report.

“For a state exporting an enormous quantity of thermal coal, continuing to demonize uranium mining in an increasingly carbon-constrained world is difficult to reconcile and, in our view, unlikely to be maintained,” the analysts said. A reversal of the policy is quite probable, they said.

Prime Minister Julia Gillard’s plan to overturn the Indian ban would open a new market for producers such as Energy Resources of Australia Ltd. and BHP Billiton Ltd. Perth-based Paladin, which produces uranium in Africa, also has assets in Australia, including the Mt. Isa venture in Queensland.

The Queensland government won’t change its policy and remains opposed to mining uranium, state Premier Anna Bligh told the Australian Broadcasting Corp. on Nov. 16. The national conference of Gillard’s ruling Labor party due to be held next month is likely to approve her proposal, the analysts said.

Paladin rose 0.4 percent to A$1.435 at 11:30 a.m. in Sydney trading, while the benchmark index was little changed. The shares have tumbled 71 percent this year on concern that the Fukushima disaster in Japan would prompt countries to delay nuclear power expansion plans and cut demand.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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