Uranium prices may be near rock bottom, meaning there is potential for an eventual rebound after Saskatoon-based Cameco Corporation announced layoff notices for roughly 700 workers Wednesday, experts said.
The commodity’s value has tumbled from around US$75 per pound in 2011, to roughly US$25 in July 2018. There values have held steady, or what is known as a support level.
“I believe we are actually more onto the lows and ready to start to break through, it’s just a matter of when we start to see demand pick up,” said Sean Meshke, portfolio manager with PWM Private Wealth Counsel.
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However, there’s no way of knowing how long prices could stay in a holding pattern at its current support level.
Weak uranium markets have plagued producers dating back to the 2011 Fukushima disaster in Japan.
With those reactors offline, supply has piled up and prices have plummeted, putting strain on Saskatchewan’s industry.
On Wednesday, Cameco reported a net loss of $76 million in the second quarter ending June 30, compared to a $2 million net loss during the same period a year before.
By permanently laying off employees at its Key Lake and McArthur River mines, global uranium supplies are expected to tighten, according to Meshke.
“It’s sad when you have to lay off this many people, but the corporation is doing what it needs to do to survive these times,” he said.
Cameco also faces the uncertainty of a U.S. Department of Commerce investigation of imported uranium to determine whether it threatens national security.
Kazakhstan is the world’s leading uranium producer and is also subject to the investigation.
There is hope Canada will “maybe get more market share of the uranium that’s sold into the U.S., versus our competitors, especially in Kazakhstan,” Saskatchewan Mining Association president Pam Schwann said.
Schwann noted commodity prices are cyclical and said it’s possible to rebound to pre-2011 levels eventually.
“We will get back there, but it’s quite a painful period right now.”
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