Cameco has announced production at northern Saskatchewan’s McArthur River and Key Lake operations will be temporarily suspended by the end of January.
The suspension and temporary layoff are expected to last 10 months.
The company says the workforce at the operations will be reduced temporarily by about 845 workers (560 employees and 285 contractors). About 210 workers (160 employees and 50 contractors) will be kept on to maintain the facilities in safe shutdown state.
“With the continued state of oversupply in the uranium market and no expectation of change on the immediate horizon, it does not make economic sense for us to continue producing at McArthur River and Key Lake when we are holding a large inventory, or paying dividends out of proportion with our earnings,” said Tim Gitzel, Cameco’s president and CEO. “We regret the impact these actions will have on our workforce and other stakeholders and are doing what we can to cushion it while ensuring the long-term sustainability of the company. We believe these actions will help shield the company from the nearer term risks we face and will benefit all our stakeholders for their continued patience and support of our strategy to build long-term value.”
Cameco will also review its corporate support activities for McArthur River and Key Lake operations, which may result in temporary workforce reductions at the corporate office.
Uranium prices have fallen by more than 70% since the Fukushima accident in March 2011 and remain at “unsustainably low levels”. Cameco says it has been partially sheltered from the full impact of weak prices by its portfolio of long-term contracts, but those contracts are running out and the company says it is necessary to position the company today to generate cash flow if prices do not improve.
To decrease costs, the company notes it had previously suspended production at the Rabbit Lake operation, stopped development and curtailed production at its US operations, reduced workforce across all its sites including head office, changed air commuter services for operations in Saskatchewan, changed shift schedules at two Saskatchewan sites, and downsized corporate office functions including a consolidation of its global marketing activities.
Cameco is the operator of both McArthur River mine and the Key Lake mill that processes all of the ore from McArthur River to uranium concentrate. Cameco owns 70% of McArthur River and 83% of Key Lake.