Uranium glut delays price recovery, pressures miners' profits

Mon Feb 8, 2016 1:20pm EST
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By Rod Nickel

WINNIPEG, Manitoba Feb 8 (Reuters) - Cameco Corp warned on Monday a long-awaited recovery for the slumping uranium industry was not imminent, as the second-largest global producer of the metal and other miners wait for utilities to work through surplus stocks.

Spot prices of uranium, used to make fuel for nuclear power production, have been depressed since the 2011 Fukushima disaster in Japan, which led to the shutdown of all reactors in that country, generating burdensome stockpiles globally.

Miners, including Cameco, have been forced to contend with lackluster bottom lines. The Canadian company reported a quarterly loss after markets closed on Friday.

Its stock plunged more than 5 percent in Toronto and New York around midday.

"We're still waiting on a recovery that has been expected to come sooner," said Cameco Chief Executive Tim Gitzel, on a conference call Monday. "Long-term, we know good things are in store."

Contracting activity between producers and utilities has been slow, and a meaningful uptick is unlikely before late this year, Cameco officials said.

It may take even longer.

Contracting looks to significantly pick up in 2018 as agreements expire, said Nick Carter, executive vice-president of uranium at Ux Consulting, based in Roswell, Georgia.   Continued...