The Canadian uranium producer sees long-term order growth as clean energy demand rises and U.S. nuclear operators seek alternatives to Russian supplies.
- Recent U.S. policy developments such as the July enactment of the ADVANCE Act and the U.S. Department of Energy’s June funding commitment for small modular reactor development, are among the longer-term tailwinds for Cameco’s North American business, the company said in its second-quarter earnings report released Wednesday. Net earnings rose to CAD$36 million (US$26 million) from CAD$14 million (US$10 million) in Q2 2023, Cameco said.
- The Canadian uranium producer and minority owner of Westinghouse benefited from rising uranium oxide prices, which hit their highest level since 2012 on global long-term markets amid increasing U.S. and international support for nuclear power. But industry-wide long-term contracting volumes were down significantly from 2023 as U.S. utilities sought clarity on the impacts of the U.S. ban on Russian uranium imports and related issues, the company said.
- “Nuclear energy is clearly being recognized as a critical tool in the fight against climate change, with additional advantages in the context of reliability, capacity, scalability and energy security being highlighted by governments and energy-intensive industries alike,” Cameco President and CEO Tim Gitzel said in a statement.
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In its Q2 2024 earnings report, Cameco cited the July enactment of the ADVANCE Act, the U.S. Department of Energy’s June funding commitment of nearly $1 billion for light-water SMR development, and May comments by Secretary of Energy Jennifer Granholm that the U.S. will need to deploy 200 GW of nuclear generation by 2050.
The ADVANCE Act is expected to speed up the Nuclear Regulatory Commission’s licensing process for new U.S. reactor technologies and could help simplify environmental reviews, Cameco said.
Cameco also cited The Nuclear Company’s plans to bring 6 GW of nuclear capacity online by the mid-2030s as a precursor to further “fleet-scale” reactor development, the DOE’s financial commitment to keep Pacific Gas & Electric’s 2.3-GW Diablo Canyon nuclear plant operating through the 2020s while PG&E awaits NRC action on its 20-year license extension application, and Energy Northwest’s plan to deploy 12 X-energy SMRs with nearly 1 GW combined capacity near its 1.2-GW Columbia nuclear plant in central Washington.
Cameco’s revenues rose 24% in the second quarter to CAD$598 million, or approximately $433 million in U.S. dollars, from CAD$482 million (US$349 million) in Q2 2023.
In the near term, Cameco was buoyed by rising uranium prices spurred by relatively tight supplies and anticipation of higher future demand, according to its earnings report.
“The need to replace retiring fossil fuel generation is right there in front of us [and] we have existing energy-intensive industries that need to integrate reliable, carbon-free baseload power to reduce emissions today,” Gitzel said Wednesday on Cameco’s earnings call.
Global spot prices for the U3O8 stable uranium oxide were $84.25/pound as of June 30, down from $87.75/pound on March 31 and $91/pound on Dec. 31 but up sharply from $56.10/pound on June 30, 2023, Cameco said. Long-term contract prices hit $79.50/pound, the highest inflation-adjusted reading since 2012.
Spot purchases call for delivery within one year, while long-term contracts generally call for deliveries to begin no earlier than two years after the contract date, Cameco said.
The strong price support came despite lower global trading volumes for uranium during the first six months of 2024, Cameco said.
Spot buyers purchased 22 million pounds of stable uranium oxide equivalent through June 30, down from 29 million pounds in the first six months of 2023, according to uranium market tracker UxC. Long-term contracts totaled about 32 million pounds for the six months ending June 30, down from about 117 million pounds during the same period in 2023.
Long-term contracting volumes were much higher in 2023 due to non-U.S. utilities shifting their supply chains away from Russia, while 2024’s modest year-to-date volumes were attributable in part to “U.S. utilities awaiting clarity on the impact of Russian sanctions, the Russian uranium import ban and…the U.S. waiver process [for Russian uranium],” Cameco said in its earnings report.
