Cameco sees opportunities following COVID curtailments

05 November 2020

The COVID-19 pandemic has disrupted global uranium production, adding to supply curtailments that have occurred in the industry for many years, Cameco said in its quarterly update yesterday. The risk to uranium supply is greater than the risk to demand that over time is expected to create a renewed focus on security of supply, the company said.

(Image: Cameco)

The pandemic prompted a five-month suspension of production from the Cigar Lake mine from March. The mine restarted in September, taking about two weeks to achieve initial production. Cameco's share of production from the restarted mine in the last quarter was 0.2 million pounds U3O8 (77tU), the company said, and it continues to target a total share of 2020 production of up to 5.3 million pounds.

The company reported a net loss of CAD61 million (USD46.6 million) for the quarter. This was driven by normal quarterly variations in contract deliveries but also impacted by ongoing purchase activity and care and maintenance costs of CAD18 million resulting from decision to suspend production at Cigar Lake, it said.

Trade policy, such as the recent amendment to the Russian Suspension Agreement in the USA, will create opportunities for commercial suppliers like Cameco, CEO Tim Gitzel said. "We see demand for nuclear growing driven by an increasing focus on electrification and the recognition that to achieve this while still meeting clean-air and climate change goals, nuclear will be needed in the toolbox. And this is occurring precisely while there is growing uncertainty and risk around global uranium supply. We believe these fundamentals will lead to security of supply concerns and will allow us to layer in the long-term contracts necessary to support the restart of our McArthur River/Key Lake operations and solidify our role as a low-cost, safe, reliable, commercial supplier of the uranium fuel needed for carbon-free nuclear electricity generation," he said.

Under a joint venture agreement - restructured in 2016 - Cameco is entitled to purchase 59.4% of planned output from Inkai in Kazakhstan in 2020 and 2021. Operational activities were reduced across all Kazakhstan's uranium mines in response to the pandemic. Activities resumed in August, but Cameco said it would not be providing outlook for its expected purchases of Inkai's planned production given the ongoing uncertainty caused by the COVID-19 pandemic in Kazakhstan.

Researched and written by World Nuclear News