Cameco Corp. (TSX:CCO, NYSE:CCJ), the world’s third-largest uranium producer, announced Thursday that uranium production at its massive Cigar Lake mine in the Canadian province of Saskatchewan has began.
The Saskatoon-based company added its 50%-owned Cigar Lake (France’s Areva holds 37%) will employ more than 600 highly skilled workers, the majority of which are locals.
The first uranium ore produced at the Cigar is on its way to Areva’s McClean Lake mill, located 70 km away, said the firm.
The $2.6 billion mine is the world’s second largest high-grade uranium deposit (Cameco’s McArthur Lake being the largest), boasting U3O8 grades 100 times the global average.
“Cigar Lake is among the most technically challenging mining projects in the world,” said Tim Gitzel, president and CEO of Cameco, adding the gigantic project will “fuel clean electricity production around the world for many years, while providing quality employment and business opportunities for a generation of Saskatchewan people.”
Once it reaches full production, in 2018, Cigar Lake mine’s output is expected to be around 18 million pounds a year.
Demand for the North American and European market, the two biggest nuclear-power producers, continues to be weak. The shale boom in US and Canada has lowered the price of natural gas, giving utilities in those countries other options for generating electricity. In Western Europe, negative sentiment toward nuclear energy since the Fukushima disaster is creating obstacles for utilities.
Analysts believe the market’s mood may brighten when the first Japanese reactor does actually restart at some point this year. Until then, however, they don’t see any chances of near term demand for uranium to pick up.
For years, Canada was the world’s largest uranium producer, accounting for about 22% of world output, but in 2009, was overtaken by Kazakhstan. Currently the country’s production comes mainly from the McArthur River mine, in northern Saskatchewan, the largest in the world.