Cameco reports $205M annual loss
After emerging from what its chief executive said was “probably the toughest” 12-month period he had experienced in the uranium industry, Cameco Corp. recorded another dismal year in 2017.
Days after temporarily shutting down a mine and mill in northern Saskatchewan, the Saskatoonbased company booked a $62 million fourth quarter loss, bringing its annual losses to $205 million.
“Another tough year, obviously. The market didn’t change much; in fact it got worse, actually. That is seven years in a row we’ve faced declining prices,” Tim Gitzel said Friday.
Cameco attributed its losses primarily to low uranium prices, which have plummeted by at least 75 per cent since the 2011 Fukushima Daiichi nuclear disaster upended the global supply-demand balance.
The company’s annual loss, which includes $358 million in impairment charges, comes on $2.2 billion in revenue; by comparison, Cameco lost $62 million on revenues totalling $2.4 billion in 2016.
Late last year, Postmedia News learned Cameco planned to suspend production at its McArthur River mine and Key Lake mill, throwing 845 employees and contractors out of work for an estimated 10 months.
Gitzel said the decision to shutter the operations — which came 18 months after the company shuttered its Rabbit Lake mine, and was completed earlier this month — was among the toughest he has made.
McArthur River is the world’s largest high-grade uranium mine and “won’t stay down forever,” and the company is sticking to its 10-month plan, which corresponds with excess inventory it holds, he said.
“We said 10 months, we’re going to monitor the situation. If the price is where it is today or lower, we’d have a tough decision to make as to whether we bring it up right away or hold it back, but we have not taken that decision at all yet.”
The company has taken other steps to cut its costs by 30 per cent, including layoffs at other uranium sites and cuts at its corporate headquarters in Saskatoon.
Cameco is also dealing with two significant legal matters: A tax dispute with the Canada Revenue Agency, in which a decision is expected this year or next, and arbitration over a cancelled contract worth $1.3 billion set to begin in early 2019.
The company, which is somewhat shielded from market forces by long-term sales contracts at above-market prices, has for years maintained that prices will improve as new reactors under construction around the world come online.
Gitzel said Friday the company expects almost 60 new plants to come online by 2020, and continues to believe nuclear power is part of the solution to climate change.