Kazakh uranium probe bad for business - Cameco

Cameco's CEO, Gerald Grandey, says the recent arrest of the former head of Kazatomprom creates worries for foreign investors and adversely affects the business climate.

ALMATY (Reuters)  - 

Last month's dismissal and arrest of the head of Kazakhstan's state uranium company has hurt the business climate in the Central Asian state, the head of Canadian miner Cameco said on Wednesday.

Kazakhstan's KNB security service has accused the former head of state uranium company Kazatomprom, Mukhtar Dzhakishev, of illegally taking over state-owned uranium deposits and selling them to foreign companies, a charge he has denied.

Kazatomprom has since said that it would honour all existing agreements with foreign firms. Cameco's (CCO.TO: Quote) deals with the Kazakh company are not subject to the probe.

But Cameco Chief Executive Gerald Grandey said the arrests of Dzhakishev and other senior Kazatomprom officials were still a worry to foreign investors.

"The arrests have added more uncertainty to doing business in Kazakhstan," Grandey told a metals and mining conference in Kazakhstan's commercial hub, Almaty.

"It affects our customers, the way they look at supplies."

Dzhakishev has been credited with turning Kazatomprom into one of the world's largest uranium producers, mostly through establishing joint ventures with foreign companies.

Kazakhstan sits on a fifth of global uranium reserves and Kazatomprom is on track to become the world's top producer this year.

(Reporting by Masha Gordeyeva; Writing by Olzhas Auyezov; Editing by Clarence Fernandez)

© Thomson Reuters 2009 All rights reserved

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