Cameco Corporation announced Wednesday it will be permanently laying off employees at its Key Lake and McArthur River mine sites and extending the suspension of production for an indeterminate duration.
The Saskatoon-based uranium company also reported a net loss of $76 million in the second quarter ending on June 30. A net loss of $2 million was reported for the same period last year.
“Our results reflect the impact of a weak uranium market and the deliberate actions we have taken driven by the goal of increasing long-term shareholder value,” Cameco’s president and CEO Tim Gitzel said in press release.
“We have not seen the improvement needed in the uranium market to restart McArthur River and Key Lake.”
The company said last Novemberthe closures were expected to last 10 months, but now says the uranium market has not improved enough to restart the sites. The closure in January of the McArthur River mine and Key Lake processing plant put 845 people temporarily out of work.
The suspension will result in the permanent layoff of around 550 site employees, including those currently on temporary layoff since January.
In addition, to further decrease costs, the workforce at Cameco’s corporate office will be reduced by about 150 positions.
Saskatchewan Minister of Energy and Resources Bronwyn Eyre said the province’s rapid response team will available to provide assistance to the employees impacted.
“The mining sector plays an important role in bringing jobs and economic growth to our province. Saskatchewan accounted for 22 per cent of the world’s primary uranium production in 2017,” Eyre said in a statement.
“This announcement underscores the challenges our natural resource industries continue to face. Now more than ever, all levels of government need to be engaged on this important file to ensure market access for Saskatchewan’s natural resource industries, such as uranium. We have had conversations with the Government of Canada and asked that it take action immediately.”
As a result of the layoffs, Cameco expects to incur between $40 million and $45 million in severance costs in the third quarter.
“We will not produce from our tier-one assets to deliver into an oversupplied spot market. Until we are able to commit our production under long-term contracts that provide an acceptable rate of return for our owners, we do not plan to restart,” Gitzel said.
“As 2018 unfolds, we will continue to evaluate the market signals. However, we remain resolved in our efforts to maximize cash flow, while maintaining our investment-grade rating so we can self-manage risk and preserve the value of our tier-one assets.”
A reduced workforce of around 200 employees will remain at the two mine site in northern Saskatchewan to maintain the facilities.
-With files from The Canadian Press