Editorial Giving birth to a giant

July 1, Canada Day, will mark the beginning of a new major mining company in Canada. That’s the day a merger of Eldorado Nuclear and the Saskatchewan Mining Development Corporation is expected to close, a merger that will create a $1.6-billion company, the largest uranium producer in the world.

Eldorado is owned by the federal government and SMDC by the government of Saskatchewan so, governments being what they are, that deadline may be extended.

Nevertheless, when the new company is created, it will embark on an ambitious course. Its new management will have to navigate the largely uncharted course from a Crown-owned entity to a publicly-owned corporation. Considering the size of this new company, the commodity in which it’s involved and the very nature of privatization, there will be some very rough seas ahead.

First of all, does anybody want to buy a uranium producer? Chances are, considering the quality of this company’s assets, they do. And if the new company continues to diversify into precious metals, as both of its predecessor companies did, or base metals or industrial minerals, its appeal to investors will be enhanced. But the sheer magnitude of this new company will probably pose some interesting challenges for the underwriters.

Another question is whether there are sufficient potential investors in Canada to get this privatization off the ground without raising the hackles of those who are opposed to foreign investment. Canadians may be attracted by what is surely a blue-chip company, but will Canadians have the financial wherewithal to buy all of the shares? And, if not, what level of Canadian ownership would be politically acceptable.

Then, too, given the controversial nature of uranium and its uses, what kind of conditions would be placed on share ownership? Could a Canadian buy the shares, then turn around and sell them offshore?

There is also a strong anti-nuclear lobby with considerable public support. That is sure to make for some interesting debate.

Then there are those who disagree with the whole idea of privatization. Government ownership — at least their ideal of government ownership — means benevolent ownership for those Canadians whose only cash investment in the country is paid through taxes. By that standard, no natural resources should be sold to anyone. They should all stay in the hands of government. A major uranium producer will probably provide an ideal target for those opposed to privatization.

It won’t be easy, and it probably won’t catch the public’s fancy the way Cambior did when Quebec set it up to take its Crown- owned gold interests public. Cambior was an unqualified and instant success. The story of this new uranium company, however, will be an interesting one to watch unfold.