Cameco mulling sale of U.S. assets
The continuing slump in the uranium market has caused Cameco (TSX:CCO) to shut down its Rabbit Lake operation, curtail production and lay off staff mostly in Canada, its home country, in an effort to stay competitive. The latest blow to Cameco came on Feb. 1, when a key Japanese customer cancelled its contract, meaning $1.3 billion in lost revenue.
Now the second-largest uranium producer is contemplating selling its producing mines in the United States.
According to Reuters, Cameco CEO Tim Gitzel said the company is in the early stages of evaluating the sale of its mines in Nebraska and Wyoming. The Crow Butte mine in Nebraska was the state’s first uranium mine and started production in 1991. The Smith Ranch-Highland combined operations in Wyoming, including the North Butte satellite mine, is the largest uranium production facility in the United States. Both Cameco operations use the in-situ method of extracting the nuclear fuel, whereby a chemical solution is injected into wells, as opposed to blasting the rock out.
In total Cameco’s U.S. operations produce between 1 and 2 million pounds of uranium annually.
“We are in the process of looking at divesting those assets. We’re not very far into it, so I can’t say too much, but it’s something we’re looking at,” Gitzel told Reuters from Saskatoon, the Canadian prairie city where Cameco is based. He added that the company is waiting to see what the government of freshly-inaugurated President Donald Trump thinks about nuclear power.
Early signs are promising. Two of Trump’s key Cabinet appointees, Energy Secretary/ former Texas governor Rick Perry, and Attorney General Jeff Sessions, are both said to be nuclear energy supporters. And in December Trump’s transition team asked the Department of Energy how it can help keep nuclear reactors operating as a part of U.S. infrastructure, what it could do to prevent a shutdown of plants, and whether there were any statutory restrictions in resuming work on Yucca Mountain in Nevada, a proposed depository of nuclear waste abandoned by the Obama adminstration, Bloomberg reported.