Tim, you became the CEO of Cameco in 2011, the year when the Fukushima disaster happened. How would you describe those first few years for you?
The official timing was after the Fukushima disaster, which happened on March 11, 2011. I took the position on July 1, 2011, completing 13 years next week. Before becoming CEO, I was already serving as President for about 15 months and knew I would eventually take the CEO role. When the Fukushima accident occurred, we were in a management meeting, and I initially thought Japan, being a strong nuclear country with 54 reactors, would recover quickly. However, the aftermath led to Japan shutting down all its reactors, and only now have they started to bring a few back online.
The disaster significantly impacted the nuclear industry, leading to an oversupply of fuel and difficult decisions for Cameco, including shutting down some of the largest mines and laying off many employees. Despite these challenges, we adopted the motto, "Tough times don't last, but tough people do," to keep our spirits up. Today, the nuclear industry is seeing renewed momentum, and we have successfully navigated through those tough years, positioning ourselves for a positive future.
Where does Cameco stand on the uranium market today?
Cameco is the second-largest uranium producer globally, just behind Kazatomprom in Kazakhstan. We are currently ramping up production after several shutdowns, aiming to produce 18 million pounds from our key operations at McArthur River/Key Lake and Cigar Lake. Including our production in Kazakhstan, we aim to contribute around 12 to 15% of the world's uranium production. Although we produce a substantial amount, we sell more than we produce, thanks to long-term agreements and additional purchases.
We have a significant presence in uranium refining and conversion, despite challenges over the years, particularly from Russian competition. The market has tightened significantly, with conversion prices increasing drastically. We are also venturing into enrichment through our Global Laser Enrichment project in Wilmington, North Carolina, and have recently acquired Westinghouse in partnership with Brookfield. This acquisition complements our uranium business, expanding our capabilities into reactor building, servicing, and fuel supply, making us a comprehensive alternative to other global players.
Mining and building nuclear reactors are very different businesses. How do you plan to manage these two activities?
Westinghouse operates independently with its own management team led by Patrick Fragman. We have oversight through our board of directors, which includes members from Cameco and Brookfield. This structure allows us to maintain focus on our core business while benefiting from Westinghouse's expertise. We are not involved in the construction aspect of Westinghouse's projects, avoiding the pitfalls that led to their bankruptcy in 2017. Instead, we provide the nuclear technology, instrumentation, and controls while partnering with other firms for construction.
This approach ensures we leverage our strengths without overextending into areas outside our expertise. We see substantial growth opportunities as many countries are expanding their nuclear capabilities, and Westinghouse is well-positioned to be a key player in these developments. Our timing appears fortuitous, as the global nuclear landscape is evolving favorably, enhancing our strategic position and long-term outlook.
Which markets did Westinghouse step into after the Russian invasion of Ukraine?
Ukraine is a significant market where Westinghouse stepped in post-invasion. We signed a contract to supply all their nuclear fuel needs until 2035, supporting their 15 reactors. Additionally, we are now supplying fuel to Bulgaria, Romania, Czechia, Poland, and Slovenia. These countries, previously reliant on Russian supply, have turned to us for their nuclear fuel needs.
This shift has opened new opportunities and strengthened our presence in Eastern Europe. Our partnerships with these nations have deepened, and we are building long-term relationships, ensuring a stable supply of nuclear fuel in the region.
Could you tell us more about your uranium mining expansion projects?
Our expansion plans are market-driven, based on customer demand and long-term contracts rather than speculation. When customers seek uranium contracts, we assess our production capabilities. Currently, our primary focus is on our existing operations in Saskatchewan and our share of production in Kazakhstan. We prefer long-term commitments from utilities, which provide us with visibility and stability.
We first look to expand existing facilities, such as increasing McArthur River's production capacity from 18 million to 25 million pounds annually. Other options include restarting mines on care and maintenance, like Rabbit Lake in Saskatchewan and operations in Wyoming and Nebraska. For new projects, we have promising prospects like the Yeelirrie project in Western Australia, though local government opposition to new uranium mines limits immediate development. We continue to explore and develop optional projects, such as the Millennium project in Saskatchewan, ensuring we have multiple options ready to meet future demand.
With major global power’s ambition to triple nuclear power by 2050, can companies like Cameco supply enough uranium?
Yes, I believe we can. There are currently 440 reactors operating worldwide and another 60 under construction, giving us good visibility on future demand. We would first restart our closed operations and then consider new mines. In Saskatchewan alone, there are 102 uranium companies exploring in the Athabasca Basin, indicating a resurgence in interest as market conditions improve. Historically, the uranium market has been cyclical, and with renewed interest, companies like Denison and others are gearing up to meet the demand.
We are also exploring innovative solutions, such as our Global Laser Enrichment project in the U.S. with the Department of Energy, to re-enrich tails and produce nuclear fuel. This could potentially supply around five million pounds a year. With these options and the right pricing, I am confident that uranium producers and fuel suppliers will be able to meet the growing demand for nuclear energy.
As you mentioned, you collaborate with Kazatomprom. What is your perspective on Kazakhstan's reliability as a partner, given current tensions in Eastern Europe?
Kazakhstan operates in a complex geopolitical environment, but they have been reliable partners for over 25 years. Our production from Kazakhstan is significant, and they are crucial for the global uranium supply, contributing about 45% of the world’s production. While there are challenges, such as sulfuric acid supply issues and transportation complexities, we manage these effectively, now routing through the Caspian and Mediterranean instead of St. Petersburg.
I have a strong relationship with the leadership in Kazakhstan, serving on the Foreign Investors Advisory Council for both President Tokayev and former President Nazarbayev. Despite being in a tough neighborhood, Kazakhstan remains a dependable partner, essential for meeting global uranium needs. We will continue to diversify, but Kazakhstan’s role is indispensable.
Cameco stocks recently hit an all-time high but have since declined. Can you explain this movement?
The recent fluctuations in Cameco’s stock are part of normal market behavior. We experienced a rapid ascent that mirrored the rise in uranium prices and other fuel cycle components. Now, it is a typical quiet period as people go on vacation, and there is less market activity. There is no significant underlying issue; it is just regular market dynamics. We remain confident in our long-term position and the overall market outlook.
Can you elaborate on Cameco’s sustainability efforts and your relationship with indigenous communities in Canada?
Sustainability and strong relationships with indigenous communities are central to Cameco’s operations. Over 50% of our employees at the mine sites are indigenous people from northern Saskatchewan. We have spent billions of dollars with local suppliers, with 70 to 80% of our mine site purchases coming from northern, indigenous-owned businesses. This partnership includes jobs, training, business development, and environmental monitoring.
Having grown up in northern Saskatchewan, these relationships are personal to me. We aim to be good neighbors and partners, fostering mutual benefits for both the company and the northern communities. This relationship, spanning over 40 years, has strong support, with 83% of northern Saskatchewan supporting uranium mining and our operations.
Do you feel sufficient support for uranium mining from the Canadian government?
Support from the Canadian government has significantly improved in the last two to three years, driven by climate change initiatives and energy security concerns. The federal government now actively supports nuclear energy, including financial backing and cooperation with the U.S. on the nuclear fuel cycle. This support aims to rebuild self-sufficiency in North America’s nuclear capabilities.
Our provincial government in Saskatchewan has consistently supported us, recognizing the industry’s importance, particularly for indigenous communities. We have strong support at both the federal and local levels, aligning well with the current geopolitical focus on energy security.
Where would you like to see Cameco three years from now?
In three years, we aim to be a reliable supplier of uranium, conversion, and nuclear fuel, maintaining our record of never missing a delivery in 40 years. We hope to see our Global Laser Enrichment project advancing, potentially with a plant under construction in the U.S. to address enrichment deficits. For Westinghouse, we envision a full order book for various reactor models, indicating strong global demand.
We are on track for these goals, and our future looks promising. With strong support and strategic initiatives, Cameco is well-positioned for continued success in the nuclear industry.
