Alex MacPherson reports that despite reducing its production and administrative expenses by almost a third, Cameco Corp. on Friday reported its fourth consecutive quarterly loss as uranium prices continue to languish more than 70 per cent below 2011 levels. “We’re prepared to sit and wait,” Cameco president and CEO Tim Gitzel said of the company’s “lower for longer” strategy. “We’re taking a bit of a bet on that, but we believe the market has to be better going forward.”
The uranium industry’s price woes stem from the Fukushima Daiichi disaster, which forced the shutdown of every reactor in Japan and left suppliers like Cameco with more nuclear fuel than they could sell. Cameco responded by taking what Gitzel has called “extremely difficult” cuts, including the decision in April 2016 to close its Rabbit Lake mine in northern Saskatchewan for good at the cost of around 500 jobs. The company, however, continues to lose money. On Friday, it reported a $124 million third quarter loss, bringing its nine-month total losses to $142 million. Over the same period last year, Cameco made $83 million on similar revenues.
Cameco has some protection over the next five years in the form of long-term contracts, through which it expects prices to remain higher than the global market price, and Gitzel said it is still signing new supply deals at terms that are “acceptable to both parties.” “(The utilities we supply) probably also realize that this market isn't sustainable forever.” While the company has long maintained that demand will increase as more than 50 reactors under construction in China, India and Korea come online, analysts have pointed out that there is uncertainty around nuclear power in countries such as France and the U.S.
Gitzel countered by suggesting that reconfiguring a country’s power grid is not as easy as it sounds, and that while cheap natural gas is hard to compete with, nuclear power continues to be the world’s best option for addressing climate change. “I’ve been in this business for about three decades now,” he said. “I’ve seen the ups and downs. It happens to be down, but when you’re down on the bottom part it’s more likely that you’re going up.”
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