Cameco Corp. sees hopeful signs with $2 billion in contracts

Ontario Power Generation deal reflects continued world demand for uranium

After more than a year of aggressive cost-cutting and mounting losses, Cameco Corp. got a reprieve this week in the form of new contracts with a major Ontario electrical utility it says are worth about $2 billion over the next 13 years.

Under the terms of the agreements, the Saskatoon-based uranium miner will provide Bruce Power LP with nuclear fuel for the next decade and reactor parts for its six component replacement programs starting in 2020.

“The uranium that goes into that contract will be mined in Saskatchewan,” Cameco spokesman Gord Struthers said, adding that the company expects the deal will use about 17 million pounds of yellowcake, which is then refined into fuel.

“It provides additional certainty for our people here at the office (in Saskatoon) and at the operations, and further strengthens our contract portfolio.”

Cameco has been struggling to cope with a precipitous drop in uranium prices, which have fallen to about US$25 per pound from US$75 per pound since the 2011 Fukushima Daiichi nuclear disaster led to the shutdown of every reactor in Japan.

The company responded by shuttering its Rabbit Lake mine in northern Saskatchewan, slashing about 10 per cent of its corporate workforce and, more recently, cutting about 120 positions from its other operations in the province.

Cameco is also contending with the abrupt cancellation of a $1.2 billion contract with a Japanese utility and a dispute with the Canada Revenue Agency, which is currently being tried in Ontario and could lead to penalties in excess of $2 billion.

While the company reported an $18-million loss in the first quarter of 2017, which follows a $62-million loss in 2016, its chief executive said last month that its costs are down about 30 per cent and that it is starting to see results.

Struthers said Friday that the deals with Bruce Power, which include highly specialized reactor components called calandria tubes and annulus spacers, are another “positive sign” for the global uranium market.

“It shows a very large utility that is acting to cover its future requirements,” he said of Bruce Power, which supplies around 30 per cent of Ontario’s electricity.

“They’ve made sure that their needs are covered out to 2030.”

The uranium that goes into that contract will be mined in Saskatchewan. It provides additional certainty for our people here at the office...