Russia likely to cease uranium exports from decommissioned weapons in 2013 - Cameco
The uranium miner's CEO says the group is increasingly convinced, although still skeptical that this is when the 20-year deal between the country and a consortium of companies commissioned to sell the highly-enriched uranium will come to an end.
Posted: Thursday , 11 Mar 2010
NEW YORK (Reuters) -
Russia will likely cease exports of uranium from decommissioned nuclear weapons when a supply deal runs out in 2013, the head of Canadian uranium miner Cameco Corp (CCO.TO) said on Wednesday.
Russia signed the 20-year highly-enriched uranium (HEU) deal in 1993 to sell the uranium through a consortium of companies, including Cameco, who help convert the weapons-grade uranium to lower grade uranium suitable for nuclear fuel.
The estimated 24 million pounds of reactor-quality uranium has helped bridge a gap between uranium supply and demand and helped restrain uranium prices.
While Grandey said he believed those pounds will disappear from the market after the deal expires, he admitted it was difficult to predict Russia's actions.
"We're increasingly convinced -- but skeptical -- that in 2013 the HEU deal will come to an end and that will remove 24 million pounds a year from the market," Cameco CEO Jerry Grandey told the Reuters Global Mining and Steel summit in New York.
He said much of the market currently thinks Russia will continue to sell about 12 million pounds of the uranium into the market annually after the HEU deal expires.
While he noted there is much more highly enriched uranium in Russia, he said much of it is contaminated, and so requires additional processing in Russia.
"They use about 40 percent of their processing capacity to clean it up, and that processing capability, that enrichment capability, makes a lot more money selling services to utilities than it makes cleaning the HEU for sale," said Grandey.
"So there's an economic driver that is quite considerable to stop."
The expiry of the deal comes as global nuclear power capacity is seen rising sharply over the next several years, led by aggressive building in China and India, but also by new reactors in the United States in Europe.
Once out of favor after high-profile accidents at Three Mile Island in the United States and Chernobyl in the former Soviet Union, nuclear power has enjoyed a renaissance in part due to its low greenhouse gas emissions.
Asked whether the high costs of building nuclear reactors could stop some planned projects from being built -- already some Canadian provinces have backed away from plans to build new reactors -- Grandey acknowledged high costs were a deterrent, but said he had faith in an Asia-led building boom.
He said Asian reactor projects have been driven by the desire for energy security rather than climate change, and said cost overruns have been less of an issue there than in Europe and North America.
Cameco expects its production to nearly double over the next 8 years, with much of that increase to come from its Cigar Lake project in Saskatchewan, which flooded in 2006 and again in 2008 while under construction.
The company recently finished pumping water out of the mine and projected a production start in 2018.
Grandey said on Wednesday he expects the rebuilt mine to produce at the original projections from before the flood, which is 18 million pounds per year.
Cameco owns 50 percent of the project, while French nuclear giant Areva (CEPFi.PA) owns 37 percent. Idemitsu Canada Resources owns the rest.
(Reporting by Cameron French; Editing by Tim Dobbyn)
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