Cameco, the world’s largest uranium producer, has temporarily suspended operations at its McArthur River mine and Key Lake mill in northern Saskatchewan, in a blow for the uranium industry. The mine represents about 10 per cent of overall global uranium output alone.
The suspension is due to take place in January 2018 and comes as the result of what Cameco calls in its statement “continued uranium price weakness”. As a result of the suspension, the company has dropped its dividend from 40 cents to just 8 cents.
“With the continued state of oversupply in the uranium market and no expectation of change on the immediate horizon, it does not make economic sense for us to continue producing at McArthur River and Key Lake when we are holding a large inventory,” said Cameco president and chief executive officer Tim Glitzel.
“We regret the impact these actions will have on our workforce and other stakeholders and are doing what we can to cushion it while ensuring long-term sustainability.”
Duncan Craib, managing director of Australian uranium company Boss Resources, reacted to the news, citing it as “further evidence” of the industry’s lack of sustainability at current spot prices.
France and South Korea are among the world’s most prolific importers of the substance as they make extensive use of nuclear energy, while Japan is seeing a resurgence in reactor use following the Fukushima disaster in 2011 (which was a primary catalyst for the fall in uranium prices over the 2010s).
While uranium prices have seen a decline in recent years, the significance of Cameco’s mine suspension could have a knock-on effect, with the potential to increase the market price and lead to a new bull market.
Boss Resources revived the Honeymoon production facility in 2016 following a shut down by previous owners in 2013, becoming the fourth active Australian uranium producer alongside the Rio Tinto-led Ranger mine in the Northern Territory, BHP’s Olympic Dam in South Australia and Heathgate’s Beverley mine, also in SA.
“The cumulative impact of global supply reductions in 2018 should strongly influence the spot market in 2018, and further out, if the suspension period is extended,” said Craib. “We expect to see the strengthening in spot price reflected in the term price.”
Earlier this month, American nuclear power expert Michael Shellenberger told delegates at the 2017 International Mines and Resources Conference (IMARC) that Australia had a hang-up about nuclear energy that it needed to “get over a little bit”.