Cigar Lake to enter second COVID-related suspension
14 December 2020
Production at the Cigar Lake uranium mine in northern Saskatchewan, Canada, will be temporarily suspended over the coming weeks due to the increasing risks posed by the COVID-19 pandemic, Cameco announced today. The pandemic earlier prompted a five-month suspension of production from the Cigar Lake mine from March.
.jpg?ext=.jpg)
Cigar Lake (Image: Cameco)
"Saskatchewan is experiencing a significant negative trend in the pandemic, which is leading to increased uncertainty for the continuous operation of Cigar Lake, due in part to access to qualified operational personnel," Cameco said. "We will continue to carefully monitor the provincial COVID-19 situation, especially in northern Saskatchewan, as well as the impacts on our communities and the availability of employees and contractors to travel to Cigar Lake."
At the peak of production this autumn, there were about 300 workers on-site at Cigar Lake. As a result of this decision, Cameco said it will be placing the mine in a safe state of care and maintenance and there will be a significant reduction in personnel.
"Having Cigar Lake operating was always part of our strategy," said Cameco President and CEO Tim Gitzel. "The costs of care and maintenance are not insignificant, and you saw that impact in our third-quarter results. Therefore, the restart conditions for Cigar Lake are not the same as we have laid out for McArthur River. The timing of the restart and the production rate will depend on how the COVID-19 pandemic is impacting the availability of the required workforce at Cigar Lake, how cases are trending in Saskatchewan, in particular in northern communities, and the views of public health authorities."
Cameco said it expects to incur costs of between CAD8 million and CAD10 million (USD6.3 and USD7.8 million) per month while Cigar lake is on care and maintenance. It said it may also incur additional costs related to the purchase of uranium, which comes at a higher cost than its production. "Given the timing of the suspension, we do not expect these costs would begin to impact our results until the first quarter of 2021."
The company's deliveries to date have not been materially impacted by COVID-19 and it does not expect there will be a material impact on its remaining 2020 deliveries. As of the end of September, Cigar Lake had produced 2.3 million pounds (Cameco's share) of uranium concentrates. However, due to the temporary production suspension, Cameco does not expect to achieve 5.3 million pounds (its share) of production for 2020.
"The safety of our workers, their families and communities is our top priority," said Gitzel. "We have had six positive tests at our northern operations in recent weeks, including three at Cigar Lake. While the protocols we have put in place have to date allowed us to effectively manage these cases, there are broader risks we don't control. Therefore, we believe it is prudent to do our part to continue to protect our people and our operations from the increasing threats that are outside our influence."
"COVID-19 has taught us many lessons, including that the pandemic is a greater risk to uranium supply than to uranium demand," he added.
The Cigar Lake operation is owned by Cameco (50.025%), Orano Canada Inc (37.1%), Idemitsu Canada Resources Limited (7.875%) and TEPCO Resources Inc (5.0%) and is operated by Cameco.
In response to Cameco's announcement, Orano Canada said it is suspending production at its McClean Lake uranium mill, where ore from Cigar Lake is processed.
Researched and written by World Nuclear News