Canada's Cameco said Dec. 14 it is temporarily idling its 18-million-pound Cigar Lake uranium mine in Saskatchewan due to growing risks posed by the coronavirus pandemic, and will increase uranium purchases in the spot market to secure U3O8 needed to meet sales commitments.
The company has had six positive tests at its operations in northern Saskatchewan, including three at Cigar Lake, it said in the Dec. 14 statement.
The other three cases were at McArthur River, Cameco's second uranium mine in Saskatchewan. That mine has been shut since 2018 because of low long-term uranium prices.
"Due to the suspension, we plan to increase our purchases in the market to secure uranium we need to meet our sales commitments," Cameco President and CEO Tim Gitzel said in the statement.
He did not say how much uranium Cameco will buy on the spot market or how long Cigar Lake will be on care and maintenance.
"I would expect the price to increase," an intermediary said in a Dec. 14 interview, noting that higher prices require Cameco to take action. "We haven't seen that yet," he added.
"Price should go up," a utility fuel buyer said in a Dec. 14 interview. It depends on "what will Cameco do and how," he said.
The intermediary and fuel buyer spoke on condition of anonymity as they are not authorized to speak to the media.
S&P Global Platts assessed the 12-month average of uranium spot prices, based on the mean of assessed activity for U3O8 delivered over the next 12 months to Canada, at $30.07/lb at 1 pm ET Dec. 14.
Cameco said it no longer expects the mine to produce about 11 million lb in total for 2020. Of that, roughly 5.3 million lb was Cameco's share of Cigar Lake's output.
The mine is owned by Cameco (50.025%), Orano Canada (37.1%), Idemitsu Canada Resources (7.875%) and TEPCO Resources(5.0%), and is operated by Cameco.
Cameco's announcement was followed by one from Orano Canada, which said Dec. 14 it is temporarily suspending operations at the McClean Lake mill, where Cigar Lake ore is processed.
Cigar Lake was first mothballed March 23, because of rising case numbers at Cameco's remote-mining operations.
Uranium prices rose more than 40% from March 22, the day before the announced closure, and May 21, when S&P Global Platts assessed a 12-month average U3O8 price of $34.52/lb, the highest price this year.
Prices fell after the mine restarted in September, and have been just below $30/lb in recent days.
Deliveries to date have not been materially impacted by the coronavirus, Cameco said. It does not expect "a material impact on our remaining 2020 deliveries."
Cameco said it will incur C$8 million to C$10 million in costs per month while Cigar Lake is on care and maintenance.
The company said Saskatchewan "is experiencing a significant negative trend in the pandemic, which is leading to increased uncertainty for the continuous operation of Cigar Lake, due in part to access to qualified operational personnel."
Gitzel said: "While the protocols we have put in place have to date allowed us to effectively manage these cases, there are broader risks we don't control."
Such risks are "the shrinking availability of workers in critical roles at Cigar Lake due to self-isolations, absenteeism and communities being on temporary pause for transporting workers due to the pandemic," he said.
There were about 300 workers onsite at Cigar Lake at "the peak of production this fall," the company said.
