Due to continued uranium price weakness, Cameco announced that production from the McArthur River mining and Key Lake milling operations in northern Saskatchewan will be temporarily suspended by the end of January.
“With the continued state of oversupply in the uranium market and no expectation of change on the immediate horizon, it does not make economic sense for us to continue producing at McArthur River and Key Lake when we are holding a large inventory,” said Tim Gitzel, Cameco’s president and CEO.
As a result of the suspension, the workforce at the operations will be reduced temporarily by about 845 workers (560 employees and 285 contractors). About 210 workers (160 employees and 50 contractors) will be retained to maintain the facilities in safe shutdown state. The company expects the costs to maintain both operations during the suspension to range between $6.5 million and $7.5 million per month. The duration of the suspension and temporary layoff is expected to last 10 months.
Uranium prices have fallen by more than 70% since the Fukushima accident in March 2011 and remain at unsustainably low levels, according to Cameco. The company has been partially sheltered from the full impact of weak prices by its long-term contracts. Those contracts, however, are running out.
Cameco has committed sales volumes of 28 million to 30 million lb in 2018.