Uranium miners ready to meet market needs, WNFC hears

"We face an unprecedented time ahead of us," said session moderator Treva Klingbiel, president of TradeTech. "We face both incredible challenges and opportunities given where we are in the marketplace, both with the need for new nuclear and the expectations and realisation that we need it and we face a supply deficit. And also on top of that, we have outsized geopolitical events that are really overshadowing and can impact much of the nuclear fuel cycle."

Cameco President and CEO Tim Gitzel noted the 2011 accident at the Fukushima Daiichi plant in Japan "changed our lives for sure". He said Cameco continued producing uranium, even though demand dropped. "It took Cameco five years to realise we got to do something different than we had been doing and so, with our partners, we decided to pull back on some production and shut Rabbit Lake down. We shut Wyoming down, we shut Nebraska down and we pulled back on McArthur River."

"This year has changed everything," Gitzel added. "The last 60 days has been unbelievable. We are still trying to figure it out."

Nicolas Maes, CEO of Orano Mining, said that from the supply and demand perspective, the fundamentals have not really changed. "The consumption by reactors hasn't changed. And it's not because the financial community came and played on our market." He said geopolitical tensions have come at a time when production has been cut back. "We obviously have in mind what is happening at the moment in Ukraine, but geopolitics have been there in our market on a much larger scale and have been for a while."

Maes noted that nuclear fuel is a very small part in the overall financial equation in tensions between countries. He said it is unlikely geopolitical tensions between countries will lead to sanctions being taken on nuclear "because of the small impact on financial markets". The worldwide market for uranium is worth about USD9 billion annually, which is equivalent to "a few days of sales for the top oil companies. It is a relatively small market."

"We all want to see the same actions on the market," said Askar Batyrbayev, Chief Commercial Officer of NAC Kazatomprom JSC. "We would like it to be stable, predictable and reliable for all market participants."

He noted the COVID-19 pandemic brought many uncertainties and challenges for Kazakhstan's uranium industry. In addition, the country faced civil unrest in January this year. "But we came out of that situation very rapidly. All operations were sustained and were reliable, so nothing has changed, which now added with events in Ukraine, the market was already becoming very tight and it is hard to predict where it can go, how much more uranium we will need, what sort of restrictions will be there."

When asked about concerns over security of supply and Russia's involvement in Kazakh uranium projects, Batyrbayev noted that Rosatom has so far been excluded from any sanctions imposed. "In terms of that, there have been no disruptions in operations. We have five joint ventures with the Rosatom group. All of them are operating normally." However, he said Kazatomprom is taking measures in case of possible future sanctions that could impact production.

Transport issues

He said transportation of uranium was the biggest challenge. "We started to develop alternative routes that do not use Russia at all." A three-month ban on the transport of Class 7 radioactive material through St Petersburg, imposed during the 2018 soccer World Cup, was "a trigger point" for Kazatomprom to consider other options. Discussions to transit China are ongoing.

Batyrbayev said one appropriate route has already been identified, which is through the Caspian Sea, into the Black Sea and then via the Mediterranean Sea. The first shipment was made to Orano using this route in 2018, with 6 or 7 shipments made to countries around the world that way since then. He said transporting uranium via this alternative route is "definitely slightly more expensive" than via the usual route across Russia, which has been used for 20 years, but is also shorter and quicker for deliveries to France.

Raising capacity when needed

"From the supply perspective, we need to remember that at the moment Canada is operating at 50% of its capacity. We have reduced Niger to 50% of what it produced in the year 2011 and our operations in Kazakhstan are probably still 23-24% below their nameplate capacity," Maes said.

He said geopolitical risks and supply chain risks highlight the need for diversity and that has been a key feature of Orano's operations for a while. "Despite the low-price period and the very difficult situation, we kept progressing with our projects, we kept running the most significant exploration projects and the most significant development projects. As we speak now, we have one pilot ISL project operating in Mongolia, we are building one in Uzbekistan that will be commissioned by the end of the year and we have decided to reshape our Imouraren project in Niger ... At the end of 2023, we will have proven technologies at projects in Uzbekistan, Mongolia and Niger". Maes said the decision to make investments will have to be a joint decision between customers, being utilities, and the industry.

"We operate on supply-demand fundamentals," Gitzel said. "We want good utility customers that will stick with us for 5 to 10 years at conditions that are acceptable to both sides so that we can confidently invest in our operations and run them ... What we won't do is just fire up everything again just to get in the same spot we were before and go through another 10 years of tough time."

He said the operations that have been placed in care and maintenance and on stand-by are likely to be the first ones to be restarted "as the market improves and as our customers are calling for and can show to us that they need it, and when we come to an agreement we will start bringing those back on."

Cameco announced plans in February to start ramping up production at McArthur River/Key Lake, which had been idle since 2018. Gitzel said it will probably take 18-24 months "to reach the level we want. We are not going to run it at full-speed, we say we will run it at about 15 million pounds. We've had it has high as 20 million pounds and we're licensed for 25 million." He also said Cameco could also bring assets back online in Wyoming and Nebraska in the USA, if market conditions were right.

Batyrbayev noted that Kazakh uranium mines are currently operating about 20% below capacity. "If we see that the market needs more material, first we can return back to 100% capacity, we can go to 120% [under existing subsoil agreements]."

He also noted Kazatomprom is planning to start commercial operation at a new mine in 2024, reaching full capacity in 2026, which will be the biggest ISL mine in the world. The first year of production has already been contracted, he said.