President and CEO of Cameco, Tim Gitzel says close to 250 of the 550 layoffs announced yesterday at McArthur River and Key Lake sites will be from northern communities. Thursday the President and CEO of Saskatoon based Cameco will be in the north to meet with northern leaders and northern communities to talk to them about what Cameco is doing and why it is being done.
He says those affected are in jobs directly tied to McArthur River and Key Lake, as well, it is an overall downsizing to correspond to the amount of business Cameco has going on, around the world.
150 people are also being laid off at head office in Saskatoon. There are 600 people in the corporate office so the layoffs are about 25 per cent of the work force.
The accident involving the Fukushima nuclear reactor in Japan is the major factor that has led to Cameco Corporation deciding to permanently layoff 700 employees. Tim Gitzel says that was in March of 2011.
“So, the day before that, I can tell you, we were sitting here in Saskatoon in our office, wondering how we were going to keep up with all the growth in nuclear power. We had huge capital expansion plans. That accident happened, Japan almost immediately shut down their entire fleet, so that was 54 reactors which was probably almost 20% of the world market”.
He says the mines didn’t shut down right away, they kept producing and it led to an oversupply and he points out that Clearly Japan has taken much longer than the industry thought to bring its reactors back on.
Tim Gitzel says today Cameco can buy uranium on the market cheaper than they can produce it, which is what they plan to do.
“We have a contract portfolio. We’re gonna do that. We’re going to reduce supply and we’re going to add to the demand by going out to buy so that will bring better times sooner rather than just continuing to produce into the market.”
Cameco will continue to operate their Cigar Lake mine in northern Saskatchewan and they have a couple properties on care-and-maintenance including some in the U-S.
The President and CEO says the situation they face today is further complicated by the looming possibility of tariffs from the U-S.
“In fact they’ve brought the same action and put a 25% tariff on Canadian steel and aluminum so then we say maybe it’s not that ludicrous.”
He notes that about 30 per cent of their sales are down into the U.S. so if they decide to go the tariff route that would be impactful, more for the utilities in America because the U.S. has a 100 nuclear reactors that they run. He also points out that a suggestion of possible tariffs on uranium adds to the uncertainty in the market.
In terms of what is next, Tim Gitzel says the Department of Commerce has 270 days to review the matter.
“Make a recommendation to President Trump and then he decides, I guess, what’s gonna happen. So, I tell you, we’ll be down there, we’ll be spending a lot of time in Washington over the next few months.”
Gitzel says there has been a lot of hurt in the industry in the last five years with several of Cameco’s competitors going bankrupt. He says they tried for the last couple years to predict when things would improve, and they’ve been wrong every time, so he says there are too many variables to predict when better days lie ahead.