Canadian Manufacturing

Cameco still awaiting world’s turn to nuclear, says shift a question of ‘when’ not ‘if’

Uranium miner's earnings fall into the red for Q4, but it maintains optimistic industry outlook



A remote control scoop tram at the Rabbit Lake mine. Cameco took a $210 million write-down on the operation in the fourth quarter. PHOTO: Cameco

A remote control scoop tram at the Rabbit Lake mine. Cameco took a $210 million write-down on the operation in the fourth quarter. PHOTO: Cameco

SASKATOON—Despite cheap oil and natural gas prices, and the world’s shift toward renewable energy sources such as wind and solar, one of the world’s largest uranium producers remain optimistic about the future of nuclear energy.

In reporting its 2015 fourth-quarter results late last week, Saskatoon-based Cameco Corp. highlighted some of the challenges the industry faces, as well as some of the positive indicators that could push nuclear forward in the coming years.

“We are still waiting on a market recovery that was expected to come sooner, but we’ve learned to put those expectations aside and prepare for whatever comes our way,” the company’s president and CEO, Tim Gitzel, said.

“Looking ahead, our strategy is to continue focusing our capital on tier-one assets, because it’s those world-class, low-cost mines that will position us to quickly respond when the market calls for more production. And we believe that the question is not ‘if’ the market will make that call, but ‘when’, as we continue to see a bright long-term outlook for the nuclear industry.”

Cameco reported a loss for the fourth quarter of 2015, but remains optimistic about the uranium industry. PHOTO: Cameco

Cameco reported a loss for the fourth quarter of 2015, but remains optimistic about the uranium industry. PHOTO: Cameco

Among the uphill battles for the nuclear industry are low oil and gas prices, which make sticking to fossil fuels and building natural gas-fired generation plants more tenable. Slowdowns in nuclear reactor construction, as well as eight reactor shutdowns throughout 2015 also weighed on the market. Meanwhile, France, one of the largest nuclear markets in the world, has committed to reducing nuclear in its energy mix to 50 per cent by 2025.

Despite the gloom, Cameco also identified a number of reasons to be optimistic. Reactor re-starts in Japan, coupled with strong growth in China’s nuclear energy industry could finally kick-start the market following the 2011 Fukushima disaster. Throughout 2015, 10 new reactors came online worldwide—eight in China, one in Russia and one in South Korea. Seven new builds also got underway, six of which were in the fast-growing Asian nation, as well as one in the UAE, the Middle Eastern country’s first.

Cameco holds up the outcome of COP21—the high-profile climate conference last year in Paris—as another reason countries will begin turning to nuclear.

“As a non-GHG emitter, nuclear could play a significant role in achieving climate change prevention goals,” the company said.

Though its optimistic, Cameco Corp. finished 2015 on a less propitious note. The company announced a loss of $10 million, or 3 cents per share, for the fourth quarter, largely as a result of a $210 million impairment charge related to its Rabbit Lake operation. For the year, the company recorded a $65 million, or 16 cents per share, profit. Its revenues rose to $2.7 billion, 15 per cent higher than 2014.

“In 2015, the company continued to perform well, in the context of the global challenges our industry faces,” Gitzel said. “But despite the challenges, we continued to concentrate on the aspects of our business that are within our control, which has led us to once again deliver on, and in some cases exceed, our annual guidance.

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