Cameco Scoops 550t of Yellowcake in Secret Deal

MONTREAL (CP) -- A Canadian company that has acquired a massive amount of concentrated natural uranium from Iraq says the U.S. military was behind the secrecy surrounding the transaction.

Saskatoon-based Cameco Corp. [NYSE:CCJ | TSX:CCO] purchased the reported 550 tonnes of ''yellowcake'', the seed material for higher-grade nuclear enrichment, in a deal reported to be in the tens of millions of dollars.

Cameco spokesman Lyle Krahn said the hush-hush nature of the transaction was at the request of the U.S. military, who supervised the transport of the raw material out of the volatile region.

''We were following the request of the U.S. government,'' Krahn said of the clandestine route the material took to get out of Baghdad and to Canada.

Krahn confirmed the yellowcake uranium shipment arrived in Montreal by ship Saturday and is scheduled to be transported by truck to the company's facilities in Ontario.

''We will be completing the transaction in the third quarter of this year, the shipment is in Canada at this point and we will be completing it by the fall,'' Krahn said.

''We are sending it to Port Hope and Blind River.''

Cameco is spending between $15 and $20 million to clean up and another $20 to $25 million to repair and upgrade contaminated soil at its Port Hope uranium hexafluoride conversion plant and expects the work to also be completed in the fall.

Uranium hexafluoride operations have been suspended since the discovery of contaminated soil under the plant in July of 2007.

''The (yellowcake) uranium is in various chemical forms and it needs to be processed further before it can be ultimately used as fuel and this is what these facilities do,'' Krahn said.

Krahn would not disclose the amount of yellowcake uranium or the price of the transaction, but called the deal a good one for Cameco.

''Every year we sell more uranium than we produce so we go out on the market and look for opportunities to purchase uranium,'' Krahn said. ''When the U.S. government came to us with this opportunity, we obviously thought it was a good idea to bid on it,'' Krahn said.

Despite its origins, some nuclear watchdogs wondered why the entire deal, reached earlier this year, was shrouded in so much secrecy.

''If it's yellowcake, then why would it be top secret? It's not weapons usable material per se,'' said Gordon Edwards, who heads Canadian Coalition for Nuclear Responsibility, based in Montreal.

''But why is there this secrecy surrounding it,'' Edwards said. ''That's the real question here.''

The Port of Montreal confirmed Sunday that a vessel carrying a shipment of uranium arrived Friday from Baghdad.

The cargo began its trek in April, when truck convoys started moving the yellowcake from Tuwaitha nuclear complex about 20 kilometres south of Baghdad to the city's international airport.

Then, for two weeks in May, it was ferried on 37 flights to Diego Garcia, a speck of British territory in the Indian Ocean where the U.S. military maintains a base.

On June 3, an American ship left the island for Montreal.

The stockpile has been described as the last major remnant of former Iraqi leader Saddam Hussein's nuclear program.

Yellowcake uranium poses no severe risk if stored and sealed properly.

''Yellowcake itself is a very fine powder, it's sort of the consistency of flour and uranium is radioactive heavy metal,'' said Edwards, adding the industry tends to downplay potential risk despite the material travelling on Canadian highways.

''The stuff is in very dispersible form and could easily be blown in the wind and could contaminate an extensive part an area ... because its so finely ground,'' he said.

But Krahn says great care is taken in transporting the material and the usual procedures will be used this time as well.

''The material is quite commonly transported and there are obviously safeguards and security involved with that,'' Krahn said.

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