Reuters reported that a formal bid by BHP Billiton for rival Rio Tinto could tighten the uranium market due to uncertainty over supply as a link up would create the world's largest uranium company, ahead of Canada's Cameco, but a lengthy merger process might slow expansion at BHP's Olympic Dam mine in Australia.

Mr Jerry Grandey CEO of Cameco said "The biggest implication for the market, and for Cameco, is whether the significant expansion at Olympic Dam proceeds as scheduled. A potential merger may delay that decision.”

Olympic Dam, with the world's largest uranium deposit, is also Australia's largest underground mine. BHP is considering a major expansion to more than double production capacity by 2013. The firm is now conducting a pre feasibility study.

Rio is the second largest producer of uranium in the world with two large operating mines Ranger in Australia and Rossing in Namibia. In 2006, Rio's total production was 7,094 tonnes, second only to Cameco, which produced 8,249 tonnes. BHP Billiton produced 2,868 tonnes of uranium in 2006, making it the sixth largest uranium producer in the world. Post merger, 2 companies would be controlling 40% of the world's uranium supplies even without an expansion of Olympic.