Cameco to Suspend Saskatchewan Uranium Mine, Cut Over 500 Jobs
April 22 2016 - 11:01AM
Dow Jones News
By Judy McKinnon
Uranium producer Cameco Corp. said late Thursday it would cut
more than 500 jobs in Canada and the U.S. as it curtails some
operations due to weak market conditions.
Cameco said it plans to suspend production at its Rabbit Lake
mine in northern Saskatchewan province and defer development at its
U.S. operations, which will contribute to about a 14% reduction in
planned production this year.
The company said about 500 positions will be cut at Rabbit Lake,
which will be placed on care and maintenance, and around 85 jobs
will be cut from its U.S. operations where it will defer
development plans.
"Continued depressed market conditions do not support the
operating and capital costs needed to sustain production at Rabbit
Lake and the U.S. operations," Chief Executive Tim Gitzel said in a
news release.
As with commodities such as crude oil and copper, uranium has
also been hit by oversupplied markets, which have driven prices
lower. New mine construction in Saskatchewan and Namibia is partly
driving the glut, TD Securities said in a recent note, as are
technology improvements. It also noted that demand is being
affected by the availability of large uranium inventories in
Japan.
Rabbit Lake and the U.S. operations are the costliest of the
company's production sites, according to Raymond James Ltd.
Due to oversupply in the market, Cameco said it has reduced its
2016 production target at its McArthur River/Key Lake operation in
Saskatchewan to 18 million pounds from 20 million pounds. It said
production continues to ramp up at Cigar Lake in Saskatchewan,
where commercial production started last May. It expects its
production to total 16 million pounds from that operation this
year.
The company said it would cost about 35 million Canadian dollars
($27.5 million) to suspend Rabbit Lake, while severance costs are
estimated at about C$19 million.
Cameco,one of the world's largest uranium producers, posted a
65% drop in annual earnings in 2015, hurt in part by a large charge
related to its Rabbit Lake operation. The company is now targeting
annual production this year of 25.7 million pounds, down from 30
million previously.
Write to Judy McKinnon at judy.mckinnon@wsj.com
(END) Dow Jones Newswires
April 22, 2016 10:46 ET (14:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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