UPDATE 2-Areva starts processing uranium ore in northern Saskatchewan

Wed Oct 8, 2014 5:59pm EDT
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(Adds comments from CEOs of Areva Canada and Cameco )

By Rod Nickel

WINNIPEG, Manitoba Oct 8 (Reuters) - French nuclear group Areva SA said on Wednesday it has begun processing uranium ore at its Canadian mill at McClean Lake, Saskatchewan, bringing a new source of the radioactive metal to market after delays.

The mill, idled in 2010, has been undergoing modifications to allow it to process ore from the province's Cigar Lake uranium mine, which is operated by Cameco Corp.

"It's been a long story (with) many challenges," Vincent Martin, chief executive officer of Areva's Canadian unit, said in a joint phone interview with Cameco's chief executive, Tim Gitzel.

The C$2.6-billion ($2.34 billion) Cigar Lake mine is set to become one of the world's biggest by 2018. The mine, which has been delayed often by flooding problems, adds uranium to a currently over-supplied market, but analysts forecast a shortage by the end of the decade once Japanese reactors resume operations.

The global market has long factored Cigar Lake production into uranium supply forecasts, Martin said.

"We have already long-term contracts based on production from Cigar Lake," he said.

The earthquake and tsunami in 2011 that crippled the Fukushima-Daiichi nuclear power plant led the government to shut down nearly all of Japan's reactors, driving the spot price of uranium lower.   Continued...