Cameco suspends Rabbit Lake operations; cuts more than 500 j

Cameco suspends Rabbit Lake operations; cuts more than 500 j

Postby Oscar » Wed Apr 27, 2016 10:17 am

Cameco suspends Rabbit Lake operations; cuts more than 500 jobs

[ http://www.theglobeandmail.com/report-o ... e29716465/ ]

IAN McGUGAN - MINING REPORTER The Globe and Mail Published Friday, Apr. 22, 2016 5:47AM EDT Last updated Friday, Apr. 22, 2016 7:16PM EDT

Cameco Corp.’s decision to mothball its Rabbit Lake uranium mine in northern Saskatchewan underlines the dismal outlook today for an energy source that many people believe will power tomorrow.

Since the start of the year, spot prices for uranium have slipped more than 20 per cent, making the metal one of the worst-performing commodities in global markets.

As booming supply has collided with disappointing demand, uranium for immediate delivery has plunged from nearly $35 (U.S.) a pound in January to below $27 now. It hit an 11-year low earlier this month.

“There’s an excess supply of inventory available to utilities,” Tim Gitzel, chief executive officer of Cameco, said in an interview. “There’s no sense of urgency whatsoever” on buyers’ part.

He said the oversupplied market makes it vital for Cameco to focus on its lowest-cost operations, such as its Cigar Lake mine, also in Saskatchewan.

The decision to shutter Rabbit Lake, which will result in the loss of 500 jobs, was prompted by an unexpected surge in output from Cigar Lake, which began production in 2014 and has costs that are “considerably cheaper” than the smaller Rabbit Lake facility, Mr. Gitzel said.

Rabbit Lake has been operating since 1975, and accounted for roughly 14 per cent of Cameco’s uranium production in 2015. It could be restarted if prices were to move “significantly higher,” he said.

He declined to put a number on the exact price that would be required for a restart, but indicated it would probably take a uranium price above $60 a pound to make new mines in general an attractive proposition.

There’s no predicting when such a price may be reached, Mr. Gitzel said. Uranium prices have been in decline since 2007 when they soared above $140 a pound.

More recently, demand for the metal was hit hard by the 2011 earthquake and tsunami in Japan, which resulted in meltdowns at three nuclear reactors at Fukushima. Japan halted most of its nuclear program as a result.

Cameco and many outside observers continue to insist there is a bright future for uranium. However, those better times have had a frustrating habit of receding into the distance.

In another reflection of low uranium prices, the company said Thursday that it is cutting 85 jobs in the United States. It is also reducing output at its McArthur River/Key Lake operation in Saskatchewan by two million pounds this year.

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[ http://www.theglobeandmail.com/report-o ... e29716465/ ]
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