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Uranium is having more than a momentary surge, says Cameco CEO

9th February 2024

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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The current bullish trend in the uranium market is not just a fleeting moment, uranium major Cameco CEO Tim Gitzel declared on Thursday, stating that the market is driven by global-scale factors that will “persist for years to come”.

Unlike historical spikes triggered by isolated events, the uranium market is undergoing “more than just a moment”.

“Instead, we are seeing full-cycle growth in the near, mid and long term with broad interest in nuclear energy like never before,” he said on a conference call.

Gitzel stated that geopolitical tensions were prompting governments to re-evaluate energy security and enact policies to reduce risk and eliminate reliance on unstable jurisdictions. At the same time, climate change and electron accountability remained top of mind.

“There is a growing consensus that there is no net zero without nuclear, and 28 countries have now signed on to an international declaration that calls for a tripling of nuclear energy capacity by 2050,” he said.

The commitments of influential nations, such those making up the EU, the US, UK, Canada, France and Japan, to this declaration signifies a significant endorsement of nuclear energy as a crucial component in achieving sustainability goals.

As a result of this support, initiatives such as nuclear life extensions, reactor refurbishments and calls for new nuclear builds are gaining traction.

While Gitzel painted a durable demand outlook, the Canada-based CEO believes that the supply outlook is where the most uncertainty remains.

Geopolitical tensions, the driving force behind the reevaluation of energy security, are exerting negative pressure on the supply chain. The impact is felt across mining activity, fuel cycle services, supply chains, and global transportation, presenting challenges for the industry.

Gitzel pointed to news from uranium major Kazatomprom last week that it would revise down its 2024 production volumes, owing to limited access to acid and development delays.

The combination of supply chain challenges, ongoing mine depletion, declining secondary supplies, and a decade of underinvestment amid low market prices had led to a tight market. This tightness was anticipated to persist well into the next decade, he said.

The uncertainty about where nuclear fuel supplies will come from to satisfy growing demand has led to increased long-term contracting activity. In 2023, about 160-million pounds of uranium was placed under long-term contracts by utilities.

Prices across the nuclear fuel cycle have also risen sharply over the last year. Uranium spot prices have more than doubled from around $48/lb at the end of 2022 to $100/lb at the end of January 2024, after peaking at $106/lb earlier in the month, and the long-term price for uranium was $72/lb, an increase of about 38% over the same period.

Higher realised prices, coupled with higher sales volumes, have boosted Cameco’s 2023 financial performance.

Net earnings, adjusted net earnings and cash flow from operations all more than doubled, compared with 2022, with adjusted earnings before interest, taxes, depreciation and amortisation up 93%, reported Gitzel.

The company reported fourth-quarter net earnings of $361-million and adjusted net earnings of $339-million.

Cameco delivered 32-million pounds of uranium at an average realised price of $67.31/lb.

Edited by Creamer Media Reporter

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