Cameco Corp. (CCO), the world’s largest uranium producer, said some investors underestimate the potential for supply shortfalls to spur higher prices for the nuclear fuel. Disruptions in mine production, the difficulty faced by development companies in raising funds for new mining projects, and the end of a Russian deal to supply uranium from scrapped atomic warheads may help create a supply deficit, Chief Executive Officer Tim Gitzel said in an interview. Cameco, which is based in Saskatoon, Saskatchewan, in August cut its full-year global uranium demand estimate to 175 million pounds (79,400 metric tons) from 180 million pounds.
Global mined uranium supply was 53,663 tons in 2010, according to the World Nuclear Association. That’s not enough to cover global demand, and so some utilities also use fuel recovered from Russian warheads under the Highly Enriched Uranium agreement, which has run since the 1990s.
Gitzel said Russia will withdraw from the HEU accord by the end of 2013, removing 24 million pounds of supply. Although Germany plans to phase out nuclear power, there will be a net 93 new reactors by the end of the decade, Gitzel said. That compares with Cameco’s projection prior to the Japanese earthquake and tsunami of as many as 104, he said. Cameco is on schedule to start production at its Cigar Lake mine in mid-2013. The Saskatchewan mine is scheduled to eventually produce about 18 million pounds of uranium a year, of which Cameco’s share will be about 9 million pounds. Cigar Lake, which is on the site of the world’s richest undeveloped uranium deposit, was delayed by six years after an October 2006 underground flood at the mine. The uranium spot price more than doubled to a record $138 a pound in the eight months after the accident.
