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Cameco profit drops 23%; lowers demand forecast

Canada’s largest uranium producer lost 23% of its profits in the second quarter, as uranium sales volumes declined.

In announcing its second-quarter results Thursday, Saskatoon-based Cameco also lowered its industry forecast in the wake of the Japan Fukushima nuclear crisis, which has slowed the expansion of nuclear power in Japan and resulted in Germany deciding to move away from atomic energy by phasing out and shutting down nuclear reactors.

Net earnings in Q2 were $54 million compared to $70 million in the same period last year, which represents a drop of 4 cents per share. Half-year number were also down, with the company earning $145 million in H1 against $228 million in the first half of 2010, a decline of 17 cents per share.

Revenues fell by 22%, from $546 million in the second quarter of 2010 to $426 million in Q2 of this year.

Cameco said it expects global uranium consumption of 175 million pounds in 2011, which is 5 million pounds less than its previous forecast of 180 million pounds. It expects world production of uranium to remain unchanged at about 145 million pounds. Looking 10 years out, Cameco said it expects worldwide demand for uranium to decline to about 2.1 billion pounds, which is about 3% less than its previous estimate of 2.2 billion pounds.

Despite the glum demand-side numbers, Cameco says it expects a significant shortfall in the supply of uranium over the next decade, and plans to double its uranium production to 40 million pounds a year by 2018.

Cameco produced more uranium this quarter but sold less of the material than the same period last year. It produced a total of 5.7 million pounds from its five mines, 0.8 million more than Q2 of last year, but sold only 5.8 million pounds, compared to 8.4 million pounds in the same period last year — a 31% drop.