India agreed to buy C$350 million ($285 million) of uranium through 2020 from Canadian producer Cameco Corp. to fuel its expanding fleet of nuclear reactors.
The accord was announced Wednesday as Indian Prime Minister Narendra Modi visited Ottawa, the first such trip by a PM from that nation in a generation. Cameco stock rose the most in five months in Toronto.
India is the fastest growing market for nuclear power after China. The nation is extending electricity supplies to serve more of its 1.24 billion population. It operates 21 reactors; another six are being built and due to come online by 2017.
While nuclear power isn’t the cheapest option, it’s preferable from an environmental perspective, Modi said. “This is an effort to save the world from global warming and climate change,” Modi told reporters.
India’s Department of Atomic Energy will acquire 7.1 million pounds of uranium concentrate, Saskatoon, Saskatchewan-based Cameco said in a statement.
“This is a new port of entry, if you will, for Cameco’s uranium and we’re glad to have it open,” Chief Executive Officer Tim Gitzel said in a phone interview.
Cameco rose 5.7 percent to C$20.07 in Toronto, the highest close since Dec. 3.
“We haven’t done nuclear business with India for 40 years and to see that market open up, it’s great, not just for Cameco, but for India and Canada,” said Robert Gill, who helps manage about C$3.5 billion including Cameco shares at Lincluden Investment Management Ltd. in Oakville, Ontario.
Modi said ahead of his trip that a nuclear-power accord was a priority. Canadians have a less positive outlook on supplying the fuel -- an Internet survey from the Angus Reid Institute published Tuesday showed 60 percent of respondents opposed helping develop India’s nuclear energy industry.
India already has uranium supply accords with Russia, Kazakhstan, France and Uzbekistan.
“The relatively modest supply agreement is, in our view, effectively a first step in potentially a more significant longer-term arrangement with India,” Greg Barnes, a Toronto-based analyst at TD Securities Inc., said in a note to clients.