Uranium industry poised for promising future
Brighter days are ahead for Saskatchewan’s uranium mining industry, even if the past few years have proven a somewhat dark time for the world’s second-largest producer.
“Our world is somewhat unfairly measured in the last four years,” says Tim Gitzel, president and CEO of Cameco Corporation, the world’s largest publicly traded uranium miner, headquartered in Saskatoon.
And they have been challenging to say the least.
It has been quite a turn of events from less than a decade ago when the industry was booming as prices for uranium skyrocketed.
“The market was at its peak in 2006-07 and then the 2008 economic meltdown hit and prices tumbled,” says David Cates, president and CEO of Denison Mines, one of the larger junior players in the province’s sector.
“It started to build itself back up again, but then Fukushima disaster came along in 2011, changing everything.”
The Japanese nuclear accident caused by a major earthquake and subsequent tsunami took much of the momentum out of the industry as public opinion soured on nuclear energy and Japan shut down all its remaining reactors.
From its peak in 2007 at $130 pound — uranium’s unit of measure on commodity markets — it’s now worth around $40 or less.
Yet despite the recent challenges, the promise of nuclear power as green energy — despite the widely publicized risks — remains as strong today as a decade ago, say those involved the province’s uranium industry.
And if recent news is any indication of things to come, Saskatchewan’s uranium industry is poised for a good, long run.
Besides Cameco recently signing a deal with India to supply its nuclear reactors with 3,000 tonnes of uranium over the next five years, Japanese courts recently cleared the way for several reactors to come back online. “It’s a major optical win that Japan will be returning to nuclear power generation,” Cates says.
Moreover, the need for many nations to reduce their reliance on carbonbased energies such as coal and oil to mitigate climate change makes the argument for nuclear power even more compelling. Already many emerging economies with significant energy demands today — and even more so in the future — are making nuclear energy a priority.
“For rapidly growing emerging markets, nuclear energy makes a lot of sense because it doesn’t contribute to climate change with CO2 emissions,” Gitzel says.
As a result, Saskatchewan’s industry is poised to benefit with its abundant reserves in the Athabasca Basin stretching across the north of the province.
“The uranium grades in the Athabasca are several times higher than anywhere else in the world,” says Ross McElroy, chief geologist and president of Fission Uranium, an exploration firm that has made a significant find in the west of the basin.
“It’s a very unique place.”
Saskatchewan is already a major player. It is the only uranium producing province in Canada and was the largest producer in the world until Kazakhstan surpassed it in 2009.
While the former part of the Soviet Union now accounts for about 40 per cent of global production, Canada’s share is approaching 20 per cent of the uranium mined annually — making Saskatchewan the world’s second-largest producer. It is a share that will likely grow in years to come as exploration continues and more mines come online.
Making the argument for its industry even stronger is the fact Saskatchewan’s uranium reserves are the highest grade in the world.
McArthur River-Key Lake and Cigar Lake — both jointly owned by Cameco — are not only two of the most productive mines, but they also have some of the highest quality reserves in the world.
Still, production is challenging in many instances because not only are the mine locations remote, but the deposits are also often located deep underground.
“There are costs to bring them out of the ground,” Gitzel says.
In fact, Cigar Lake is considered the most technically challenging uranium mining operation ever constructed.
Yet the economics supporting the industry’s future prospects are undeniably good, Cates says. Many forecasts indicate demand will outstrip supply by a wide margin in the coming decades as dozens more reactors come online.
Even if prices do not return to previous heights, Saskatchewan is still the place to be, he says.
“If I want to be in the uranium business and I don’t believe that the price will go through the roof, I want to be here even more because I know that I can make the economics work because of its high-grade deposits.”
“THE URANIUM GRADES IN THE ATHABASCA ARE SEVERAL TIMES HIGHER THAN ANYWHERE ELSE IN THE WORLD. IT’S A VERY UNIQUE PLACE.”
ROSS MCELROY, CHIEF GEOLOGIST AND PRESIDENT, FISSION URANIUM