The move may increase the nation's production capacity by 1,000 tons

BEIJING - The uranium subsidiary of China Guangdong Nuclear Power Group (CGNPG) said it is developing two large mines in China's Guangdong province and the Xinjiang Uygur autonomous region.

The move is likely to add as much as 1,000 tons to the country's annual production capacity of the nuclear fuel.

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"The two mines, both of the 10,000 tons level, are expected to start operations in 2013, each with an annual production capacity of no more than 500 tons," said Zhou Zhenxing, chairman of CGNPG Uranium Resources Co (CGNPG-URC).

"We are also in discussions with Rio Tinto Group about possible cooperation."

His remarks followed news suggesting that CGNPG had retreated from its bid for the Kalahari Minerals.

Zhou said that reports of a "withdrawal from the Kalahari bid" were "inaccurate", without providing further details.

However, a report from Reuters on Wednesday quoted a company spokesperson, who said CGNPG is considering whether to come back in three months with a fresh bid for Kalahari.

The news came after Britain's Takeover Panel said it would not allow the Chinese company to lower its 756 million pound ($1.2 billion) offer after Japan's nuclear crisis sent the target's shares plunging by at least 20 percent.

"The miner may use other strategies to finish this acquisition after a temporary retreat for three to six months," said Monica Sun, senior associate of the international energy group at Herbert Smith LLP.

The spot price for uranium dropped significantly in the wake of Japan's nuclear crisis. It fell to $55.5 a pound on April 30, compared with $69.75 at the end of February.

"Rising costs for uranium exploration may take some miners out of business in the future," said Sun. "That may provide some acquisition possibilities for Chinese miners."

"In the nuclear sector, China's biggest impact so far has been in the uranium market and it has become even more important after the Fukushima nuclear crisis," said Jonathan Hinze, vice-president of international operations at The Ux Consulting Co, a uranium research company.

In the past two years, China has signed long-term supply contracts totaling 275 million pounds (137,500 tons) for uranium delivery through 2020, 45 percent of the world's total at the time, according to The Ux Consulting.

China imported 17,136 tons of uranium in 2010 and the World Nuclear Association said that the country's annual consumption could reach 20,000 tons by 2020.

Global demands for uranium could rise to as much as 91,400 tons by 2020, according to CGNPG-URC's forecast.

China's uranium production capacity is 850 tons annually and will reach 2,500 tons in the future, according to The Ux Consulting. China has 13 reactors in operation and another 27 under construction.

CGNPG has the biggest number of nuclear projects currently under construction globally and will become the world's largest nuclear developer over the next 10 to 15 years, Zhou said.

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