THE villagers at Xinwuli, Hunan, direct us through a 1000-year-old maze of cobblestone paths to the family home of one of their minor celebrities, Li Zi'an. Li's mother, a dignified woman named Chen, shuffles out on her spindly legs to greet us. "I don't know what my son is doing, only that he's working in Guangzhou and this spring festival he didn't come home," she says. If Li's mother knows any more, then she's not letting on. Her 42-year-old son was one of four men convicted of uranium trafficking in a Guangzhou court in August. But other helpful villagers know exactly what he was up to. "If you're interested in uranium you have to go to Goat River village," says one. "I don't know today's price, but if you go to that village they'll certainly find some for you. All the mines are up there." The villagers at Goat River (not its real name) certainly did know how to find uranium, as detailed in the weekend's Age. They were just waiting for a well-heeled customer. And on Wednesday morning, Prime Minister Kevin Rudd arrives in Beijing, a little over a year since Australia and China ratified nuclear safeguard agreements enabling Australian companies to export uranium to China. BHP Billiton and Rio Tinto are negotiating to supply Chinese customers but are yet to sign any contracts. BHP has no available capacity until it expands Olympic Dam in South Australia - which the company says contains an astonishing 40% of the world's known uranium resources. Likewise, Rio first needs to expand its ERA Ranger mine in Kakadu National Park, which already accounts for 10% of the world's annual production. A combined BHP-Rio could be powerful enough to set the terms of the world market, much as it would hope to do with iron ore. Both companies are eager to sell to China for the same reasons that Chinese companies are desperate to buy from them. The "spot" market price for yellow cake (refined uranium oxide), in so far as there is one, rose from $US7 per kg to $US151 in the seven years to July, according to UxC, before receding to $US71 last week. Long term contract prices were steady at about $US95 last year, which was about 10 times the average price during the 1990s. Buyers are hoarding and prices are soaring because the world has almost finished dismantling its excess nuclear weapons. By 2013, Russia will have pulled 500 tonnes of highly enriched uranium from 20,000 war heads and sold them to American nuclear power plants - the energy equivalent of 1.3 billion tonnes of oil.