November 13, 2008 / 10:18 PM / 9 years ago

Shutdown looms at Cameco's Port Hope plant: union

TORONTO (Reuters) - Cameco Corp has told the union representing workers at its Port Hope, Ontario, uranium conversion facility it will likely suspend plant operations next month due to problems with its supply of hydrofluoric acid, the union said on Thursday.

The shutdown, which would likely last until mid-2009, could result in as many as 450 layoffs, said United Steelworkers local President Chris Leavitt, who spoke to Cameco officials on Wednesday.

“They say it’s going to happen. We anticipate that the layoffs will take place any time starting in mid-December to the start of the new year,” he said.

Cameco’s shares ended the session up C$1.35, or 7.8 percent, at C$18.70 on the Toronto Stock Exchange.

Lyle Krahn, a spokesman for Cameco, said the company had yet to make a final decision on the future of the plant, but he acknowledged that a shutdown and layoffs were a possibility.

Cameco is the world’s biggest uranium supplier.

The Port Hope plant, located on the Lake Ontario shoreline about 100 km (62 miles) east of Toronto, was just reopened in September following a 14-month shutdown after the discovery last year of leaked uranium and arsenic in the soil and groundwater beneath the plant.

The facility is one of only three commercial suppliers of uranium hexafluoride in the western world. Uranium hexafluoride is enriched and fabricated at other sites into fuel pellets used in most nuclear reactors.

Cameco warned in its third-quarter earnings report this week that future production at the plant was uncertain due to questions about the supply of hydrofluoric acid.

A contractual dispute with its supplier has forced Cameco to buy it on a spot basis at much higher cost.

“We’re now receiving (hydrofluoric acid) on a spot basis. It’s both expensive and uncertain, and if we cannot get HF, we will have to shut down the... plant, and this in turn could lead to some temporary layoffs,” Krahn said.

Cameco has said securing an alternative source would not likely occur until the second half of 2009 because of transportation difficulties.

($1=$1.21 Canadian)

Reporting by Cameron French; Editing by Peter Galloway

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