Cameco reaps benefits of 'best-ever' fuel market fundamentals

"Demand for nuclear power, supported by growth across the near, medium and long term, is driving the best fundamentals we have ever seen for the nuclear fuel market," Gitzel said as he announced the Canadian fuel company's 2022 results.

The company contracted 80 million pounds U3O8 (30,772 tU) and 17 million kgU of conversion services during the year, with a record number of contracts signed. "With nuclear energy clearly back in durable growth mode, Cameco is also back in durable growth mode," Gitzel said, and the company has a "large and growing pipeline of uranium business under discussion."

The recently announced agreement of commercial terms to supply Energoatom with enough natural uranium hexafluoride to meet all of Ukraine's nuclear fuel needs through to 2035 is not included in the total 2022 contracted volumes but would bring Cameco's total contracting from the start of 2022 to over 147 million pounds U3O8 (58 million pounds finalised and 89 million pounds accepted and awaiting contract finalisation) and almost 43 million kgU in conversion services (12 million kgU finalized and 31 million kgU accepted and awaiting finalisation).

Cameco announced its decision to resume production at McArthur River and Key Lake - suspended in January 2018 - in February 2022 and celebrated the first pounds of milled and packaged uranium from the restarted operations in November. The restarted operations had produced a total of 1.1 million pounds (100% basis) by year-end. Cigar Lake met its annual production target of 18 million pounds (100% basis).

The company plans to produce 15 million pounds (100% basis) from McArthur River/Key Lake in 2023 and has now updated its plans to produce 18 million pounds per year from 2024, and this will remain its plan "until we see further improvements in the uranium market and contracting progress." Production from Cigar Lake is planned to continue at the licensed rate of 18 million pounds (100% basis) per year from 2024, which is also an increase on previously planned production of 13.5 million pounds (100% basis) per year.

Production at the Inkai joint venture in Kazakhstan will continue to follow the 20% reduction planned by Kazatomprom until the end of 2023.

McArthur River/Key Lake has a licensed capacity of 25 million pounds, giving Cameco the ability to expand production, but any such decision would be dependent on further improvements in the uranium market and securing "appropriate long-term contract homes" for material that is still in the ground, he said.

In May, Cameco increased its share in the Cigar Lake uranium mine in northern Saskatchewan to  54.5% (from 50%) when it and Orano acquired Idemitsu's 7.875% stake in the Cigar Lake Joint Venture. This was followed in October by the announcement of a strategic partnership with Brookfield Renewable to jointly acquire 100% of Westinghouse. The acquisition is expected to close in the second half of this year, subject to closing conditions and certain regulatory approvals.

"We have tier-one assets that are licensed, permitted, long-lived, and proven reliable, and that have expansion capacity," Gitzel said. "These tier-one assets are backed up by idle tier-two assets and what we think is the best exploration portfolio that leverages existing infrastructure. We also provide our customers with access to conversion, as well as fuel fabrication and reactor components for heavy water CANDU reactors.

"With the pending joint acquisition of Westinghouse, we are excited about being able to extend the base of our reach in the nuclear fuel cycle with assets that, like ours, are strategic, proven, licensed, permitted, and located in geopolitically important jurisdictions. Assets that we expect will be able to participate in the growing demand profile for nuclear energy from their existing footprint. And, we are exploring opportunities in the nuclear fuel cycle and in innovative, non-traditional commercial uses of nuclear power in Canada and around the world."