Cameco suspends operations
“We can’t control the market so our focus is on positioning the company to weather the continued low uranium prices and have uncommitted, low-cost supply to deliver into a strengthening market.”
URANIUM miner Cameco has suspended production at its flagship McArthur River mine and Key Lake milling operations in Canada’s Saskatchewan province due to “unsustainably low” uranium prices.
The operations will be suspended for 10 months, leading to the temporary loss of 845 jobs, and the company’s annual dividend would be reduced 32 cents down to 8 cents per share in 2018.
The Canadian miner said uranium prices had fallen 70 per cent since the Fukushima disaster in 2011.
“Cameco has been partially sheltered from the full impact of weak prices by its portfolio of long-term contracts, but those contracts are running out and it is necessary to position the company today to generate cash flow if prices do not improve,” the company stated.
“To date, we have made good progress in reducing costs but unfortunately given the continued market weakness, more needs to be done,” Cameco chief executive Tim Gitzel said.
“We can’t control the market so our focus is on positioning the company to weather the continued low uranium prices and have uncommitted, low-cost supply to deliver into a strengthening market.”
The announcement caused a positive reaction from other miners in the beleaguered uranium sector, as the mine closure should reduce 2018 supply levels by about 15 million pounds and drive an increase in uranium spot prices.