Cameco president and CEO Tim Gitzel is “cautiously optimistic” that the uranium industry will see it’s market improve in 2017, due to a recent price bump and the potential for a healthier supply and demand relationship.
“We’re seeing a little bit of tail wind now,” Gitzel said in an interview on Friday.
“The price (of uranium) has come up from under $20 a pound, today it’s about $26.50.”
On Thursday, Saskatoon-based Cameco reported a net loss of $62 million in 2016, largely due to two of its assets declining in value because of the weak uranium market. On Friday, Gitzel used a conference call to express guarded optimism that things will improve in 2017, while admitting that last year’s market conditions were as tough as he had seen in 30 years.
“Uranium prices were down about 70 per cent in the year,” Gitzel said.
However, Gitzel pointed to a recent curtail in production by a uranium powerhouse in central Asia and the ongoing construction of more than 50 nuclear reactors worldwide as factors that could improve supply and demand trends going forward.
“When you get demand going up at a time when supply is being curtailed, we like those fundamentals,” Gitzel said.
Challenges still do remain for Cameco. In late January, Tokyo Electric Power Co. terminated a supply contract with $1.3 billion of revenue remaining, the company is wrapped up in a tax dispute with the Canada Revenue Agency and the sting of recent layoffs at a number of their sites still lingers.
“2016 was really the year that we re-structured the company,” Gitzel said.
“We’ve had to trim back our operations here and around the world and that’s hard for us to do, we don’t like to do that.”
University of Saskatchewan business strategy professor Brooke Dobni said 2016’s measures were necessary for Cameco to control its costs as it deals with low uranium prices.
“You either shut down mines or certainly take off a shift or two shifts as opposed to say biting around the edges,” Dobni said.
“If they shut down a mine and put it into maintenance mode, they can bring those mines up fairly quickly once demand starts to go up.”
Cameco officials said there are no plans to cut the workforce further in 2017, however they couldn’t rule out the possibility.
“We have to prepare for the worst and hope for the best,” Gitzel said.