Canadian uranium giant eyes U.S. expansion
TORONTO, Aug 8 (Reuters) - The fast changing business of nuclear
power has Canada's Cameco Corp., the world's biggest
supplier of uranium, eyeing unused nuclear plants in the energy-
strapped United States, Chief Executive Bernard Michel said.
Speaking to Reuters in a recent interview, Michel said Cameco was
looking at the possibility of investing in
idled reactors or
completing unfinished facilities.
But he would not say if the company
was already in talks on a deal.
Saskatoon-based Cameco has already made a foray into nuclear energy
production in Canada, buying a 15 percent stake in the Bruce Power
plants in Ontario, where the provincial government plans to
deregulate the electricity market by 2002.
With partner British Energy Plc, it is to restart two
reactors at Bruce by 2003 that will add to four already in production
and boost capacity by 50 percent. Cameco will supply all fuel to the
"For the time being we do not believe that beyond Bruce
would be any opportunity in Canada, but there will be
in the United States and this would be where we'd focus
attention," Michel said.
He said some players had accused Cameco of competing with its own
clients, but stressed that opportunities like Bruce did not come too
often so close to home.
But Cameco would not stray far from its core business as a major
supplier of uranium, he added. Its products provide fuel for
commercial reactors around the world, with its biggest markets in the
United States and Asia.
Cameco supplies about 20 percent of the Western world's uranium needs
from three mines and milling operations in the Canadian province of
Saskatchewan and two in the U.S. It is one of three firms that
convert uranium concentrates to uranium haxafluoride, an intermediate
Cameco also has a 13-year deal with Russia to resell 45 percent of
uranium from Russia's nuclear weapons dismantlement program. It as an
exclusive agreement with Urenco Ltd, a European enricher, to
reprocess its tailings.
The company's total output of around 19 million pounds of uranium a
year can fuel over 40 reactors. An average 1,000 megawatt reactor
consumes about 425,000 pounds uranium a year.
Cameco interest in the U.S. market was boosted by a stress on nuclear
power in U.S. President George W. Bush's new energy policy. Several
U.S. utilities are extending the life of reactors or upgrading them
to generate more power. There are an estimated 103 operating nuclear
power reactors in the U.S.
Two operators are already reviewing the idea of completing partially
constructed reactors. Another two intend to apply for new nuclear
plant siting permits within a year, Cameco says.
Michel sees U.S. commercial nuclear power capacity growing between
10,000 and 50,000 megawatts over the next 20 years.
He said nuclear power was making a comeback as a cheaper, cleaner and
more predictable way to generate electricity than coal, oil or gas.
It was the fastest growing source of electricity in the world, with
438 reactors in 31 countries and an additional 44 under construction,
Michel said Cameco was in a unique position to benefit from these
developments as uranium supplies were already tightening. That helped
to push the spot price of uranium up by more than 20 percent this
year to around $8.90/lb, although that is still well below 1996
prices of $15/lb.
Michel said prices had risen as utilities reduced inventory levels
and returned to the market, and demand for secondary uranium was
perking up. Consumption is also seen growing with reactors operating
better than before, he said.
The company does not trade uranium on the spot market, but contracts
are closely tied to the spot price.
But Michel new nuclear power programs would not boost demand for
uranium until 2005. "It takes quite a while to initiate new nuclear
programs," he said.
He expected Cameco's uranium output to double in a decade once the
company develops its Cigar Lake deposit in Saskatchewan, in which it
has a 50 percent controlling stake.
Michel said developing the massive deposit, with 115 million pounds
of proven and probable reserves, was on hold until 2005 assuming
uranium prices improve by at least 50 percent. Construction may be
delayed for one or two years until prices recover.
Cameco's prized McArthur mine, also in Saskatchewan, should produce
18 million pounds a year by 2002. McArthur reached commercial
production in 2000 and contains the world's largest high-grade
deposit, with ore grades 50 times the world average. Its proven and
probable reserves are about 275 million pounds.