First Reserve pays $420m for South African mining company

First Reserve hopes to take advantage of soaring nuclear power industry demand for uranium with an acquisition in South Africa.

Energy-focussed buyout firm First Reserve Corporation, in partnership with AMCI Capital and Pamodzi Investment Holdings, has agreed to invest $420 million (€285 million) in the creation of a new uranium company based in South Africa.

The company, called Cooke, will be formed from the divesture of the uranium and gold assets of Harmony Gold Mining Company. The First Reserve consortium will own 60 percent of Cooke, and Harmony will own 40 percent.

The assets include three operational gold mines, a gold milling plant and several tailings dumps with gold and uranium content. The gold assets will provide near term cash flow and additional upside through redevelopment of the mines to produce both the gold and uranium resources, First Reserve chairman Alex Krueger said in a statement.

The uranium assets, a byproduct of gold production from the mines, can be reprocessed and sold as a fuel source for the nuclear power industry. Demand for uranium is expected to increase from 175 million pounds in 2007 to between 235 million and 275 million pounds by 2020 as a result of growth in nuclear power generation assets, First Reserve said.

Africa’s natural resources have attracted the attention of other firms as well. Last November Emerging Capital Partners and European buyout firm Truffle Capital paid $53 million for Moroccan mining company Compagnie Miniere de Touissit. The Global Emerging Markets Group is also currently raising $1 billion with the China International Trust & Investment Company for non-oil and non-gas resources in Africa, as well as China and Southeast Asia.