Australian uranium hopefuls welcome Cameco production cuts

PERTH (miningweekly.com) – Australia’s uranium hopefuls have welcomed a decision from uranium major Cameco to shutter its McArthur River mining and Key Lake milling operations, in Canada.

Cameco this week announced its plans to remove some 10% of the current global uranium supply, on the back of continued uranium price weakness. Operations at McArthur River and Key Lake would be suspended for a period of ten months, starting in January 2018.

ASX-listed Boss Resources on Friday said that Cameco’s decision was further evidence that uranium production was not sustainable at the current term and spot process.

Boss MD Duncan Craib noted that Cameco’s decision last year to cut production at Rabbit Lake, as well as actions taken by fellow miners Paladin and Areva, would bring discipline to the supply side and reduce excess inventories.

“We are also seeing positive developments on the demand front with France postponing planned reductions in nuclear capacity by at least seven years, support from the public in South Korea for finishing reactors under construction, and continued strong growth from China, Russia and India.”

Craib said that the cumulative impact of global supply reductions in 2018 should strongly influence the spot market, particularly if Cameco’s suspension period was extended.

“We expect to see the strengthening in the spot price reflected in the term price.

“In the event of a new bull market, Boss Resources and its Honeymoon uranium project is one of only a few ready to participate,” he added.

ASX-listed junior Aura Energy was also hopeful that Cameco’s cutback on production would be good news for the uranium price, with the company saying it expected a “significant impact”.

Aura holds a combined 852-million pounds of uranium resource spread over two projects in Sweden and Mauritania.