While progress is being made on issues creating uncertainty for the global uranium market, Canadian miner Cameco is still “a long way” from restarting its idled McArthur River/Key Lake mine – the world’s largest high-grade uranium operation.
Cameco president and CEO Tim Gitzel said on Thursday that US President Donald Trump’s recent decision not to impose new trade restrictions on imports of foreign uranium into the US under Section 232 of the Trade Expansion Act had been a welcome move, helping to provide more certainty in the global market.
However, some participants in the industry were still overproducing and the market remained oversupplied.
“Make no mistake, there is still a long way to go before we decide to restart McArthur River/Key Lake. We can’t lose sight of the fact that while we have a true value strategy, there are still others in our industry who lack conviction, experience, or are still over-producing their committed sales volumes and using the spot market for surplus disposal,” Gitzel said.
“Despite this, we will continue to execute on our strategy to add long-term value, doing what we said we would do.
“Long-term fundamentals reflect a growing demand story and a market where the uranium price needs to transition. Currently, the uranium price reflects surplus disposal in the spot market, and is dragging down the long-term price,” he noted.
Today, there are about 50 reactors under construction, and Cameco believes there is growing recognition of the role nuclear power must play in ensuring safe, reliable, and affordable zero-carbon electricity generation.
“The long-term price will eventually need to transition to one that will incentivize existing tier-one production to restart and ramp up to full capacity to satisfy that growing demand, with the spot price then reflecting a discount to the long-term price,” said Gitzel.
Cameco also reported its consolidated financial and operating results for the second quarter ended June 30, with a net loss of $23-million and an adjusted net loss of $18-million. This compares with a net loss of $76-million and an adjusted net loss of $28-million in the June 2018 quarter.
“Our results reflect the outlook we provided for 2019 and the normal quarterly variations in contract deliveries, which are weighted to the second half of the year,” said Gitzel.