Demand for nuclear power is driving the “best fundamentals ever seen” for the nuclear fuel market, said Canadian uranium major Cameco president and CEO Tim Gitzel on Thursday.

The geopolitical events of 2022 have accelerated security of supply concerns and, coupled with the ongoing focus on climate change, have created “transformative tailwinds” for the nuclear power industry.

Gitzel said that the Russian invasion of Ukraine a year ago had set in motion a geopolitical realignment in energy markets that highlighted the crucial role nuclear power played in providing secure and affordable energy.

“With the global nuclear industry reliant on Russian supplies for about 14% of uranium concentrates, 27% conversion and 39% enrichment, it is highlighting the security of supply risk associated with the growing supply gap and shrinking secondary supplies, and increasing the focus on origin of supply,” he said.

Cameco, which was now firmly back in “durable growth mode”, has had success in capturing the improving market fundamentals with a record number of contracts signed.

Last year, the company contracted 80-million pounds of uranium and 17-million kgU of conversion services. Of the 80-million pounds, about 58-million pounds have been finalised under contracts and the remaining 22-million pounds have been accepted with key commercial terms.

“With the improvements in the market, the new long-term contracts we have put in place and our pipeline of contracting discussions, we are moving to the next phase of our supply discipline,” said Gitzel.

To satisfy the growing commitments under its contract portfolio, Cameco is beginning to return to its tier-one run rate and brought back its McArthur River/Key Lake operation, in Canada, to production after five years on care and maintenance. The McArthur River mine and Key Lake mill produced 1.1-million pounds (100% basis) in 2022, while Cigar Lake produced at its licensed capacity of 18-million pounds a year.

Through its investment in Inkai, Cameco was impacted by the 20% supply reduction enacted by Kazatomprom (KAP) across all uranium mines in Kazakhstan and the continued supply chain challenges it has faced. KAP has the ability to flex production 20% above or below planned production levels (8.3-million to 12.5-million pounds a year).

Delivery of Cameco's share of 2022 production from the Inkai joint venture was delayed owing to the challenges of transporting uranium via an alternate route that does not rely on Russian rail lines or ports. The first shipment, containing 2.6-million pounds of its share of Inkai’s 2022 production, arrived at a Canadian port in late December. A second shipment containing the majority of Cameco's remaining share of 2022 production is currently in transit.

The plan is for McArthur River/Key Lake to produce 18-million pounds a year (100% basis), starting in 2024, and Cigar Lake will continue to operate at its licensed capacity of 18-million pounds a year (100% basis) in 2024. At Inkai, production will continue to follow the 20% reduction planned by KAP until the end of 2023.

McArthur River/Key Lake has licensed capacity of 25-million pounds a year, leaving Cameco with room to step up production should it be warranted.

“If we took advantage of all the tier-one expansion opportunities available to us, our annual share of tier-one supply could be about 32-million pounds. However, any decision to expand production will be dependent on further improvements in the uranium market and our ability to secure the appropriate long-term contract homes for our unencumbered, in-ground inventory, demonstrating that we continue to responsibly manage our supply in accordance with our customers’ needs,” said Gitzel.

In addition to plans to expand uranium production, at the Port Hope conversion facility, the company is working on increasing UF6 production to 12 000 t by 2024.