Cameco cuts long-term uranium output goal on slow nuclear growth
(Reuters) - Canada's Cameco Corp (CCO.TO: Quote) on Wednesday lowered its long-term uranium production target by 10 percent, a sharp shift in strategy in response to slower demand growth for the fuel after the Fukushima nuclear disaster.
The uranium market has been in a downward spiral since a massive earthquake and tsunami struck Japan in March 2011, crippling the Fukushima-Daiichi atomic power plant.
Countries from Japan to Germany have reduced their dependence on nuclear power in the aftermath of the worst meltdown since Chernobyl, sending the spot price for uranium, the material that fuels reactors, sharply lower.
Cameco, the world's largest publicly listed uranium producer, reported a 50 percent drop in adjusted third-quarter profit as prices and sales volumes sagged.
With a reduction in net new reactors being built over the next decade, Cameco said it has cut its long-term uranium output target to 36 million pounds a year by 2018, from a previous goal of 40 million pounds.
The Saskatoon, Saskatchewan-based company said it has slowed development work at its Millennium project in Canada's uranium-rich Athabasca basin, along with projects in Kazakhstan and Australia, until market conditions improve.
The focus will now be on bringing the company's Cigar Lake project, also in the Athabasca region, into production, along with brownfield growth around its existing mines in the area.
"By taking these actions, we expect to spread our capital spending over a longer period and decrease project-related expenses," said Chief Executive Tim Gitzel in a statement. "Our focus will be on execution and reducing costs without compromising on our values."
Cameco will continue minimal work on all its major projects to ensure that when demand for more production returns, it will be poised to be one of the first to respond. Continued...