Uranium Giant Cameco Can’t Catch a Break

Monday wasn’t a good day to be in the nuclear fuel business, but then the past eight years hardly have been a picnic either.

News reports are filtering out of Russia about the explosion last week of a nuclear-powered engine at a secretive military base that caused a spike in radiation. That is the latest event to stoke public anxiety about all things nuclear.

Though its shares have been sagging recently, it is probably no coincidence that leading Canadian uranium miner


CCJ -1.40%

slumped to a multiyear low in New York trading Monday, touching $8.40.

Cameco’s slide began in March 2011 following the Fukushima nuclear disaster. Shortly before the explosion, its share price topped $43, and the spot price of uranium was over $72 a pound. Uranium spot prices are up from below $20 in 2016 to around $25 recently, in no small part because of Cameco’s efforts; it shut down its McArthur River/Key Lake mine to curtail supply. But market discipline has been hard to achieve. In late 2017, there was a brief surge of hope that coordinated cuts by Kazakh producers would finally stabilize the market.

Chief Executive

Tim Gitzel

made the charge last month following second-quarter results that while the company has “a true value strategy, there are still others in our industry who lack conviction, or are still overproducing their committed sales volumes.”

Kazakhstan’s uranium production went from a little over 5,000 metric tons in 2006 to a peak of over 24,000 in 2016 before declining modestly, according to the World Nuclear Association. That country is now the leading low-cost producer.

Of course, a Russian military accident has no impact on fuel prices or demand for civilian nuclear fuel in the short run, but events such as Three Mile Island, Chernobyl and Fukushima all proved to be major inflection points for industry growth. In the 1980s there was a new nuclear reactor commissioned every 2½ weeks, on average. Today there are just 53 under construction world-wide, nearly all in Asia, according to the WNA, and many of the world’s 448 existing plants face decommissioning.

Even without fresh safety concerns, the demand picture appears subcritical.

Write to Spencer Jakab at spencer.jakab@wsj.com

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