Cameco president and CEO Tim Gitzel. Photo courtesy of Cameco.
On Friday, Cameco executives spoke on year-end results from a year that saw the uranium company’s net profit drop by 195 per cent from 2015.
It’s an unexpectedly tough time for a company that’s been struggling to stay strong with the market’s soft uranium prices, which dropped after the Fukushima nuclear disaster in 2011, Cameco CEO Tim Gitzel said in the conference call.
“I think it’s fair to say, that no one – including me by the way – expected the market would go this low, and for this long, even with Fukushima taken into account,” he said.
Cameco’s 2016 net loss of $62 million has been further compounded by recent news that one of its significant Japanese uranium buyers has issued a termination notice to Cameco.
Cameco plans to pursue legal action to fight for TEPCO to honour the contract and “we will vigorously pursue remedies to recover value for our shareholders,” Gitzel said.
Still, he said they need to plan for all possibilities in 2017. Executives say their focus right now is managing their cash flow to weather the storm.
“We will take all necessary decisions to remain a competitive, low cost producer in the face of continuing market challenges,” he said.
In light of all these changes, MBC asked Gitzel if he foresees more northern mine site job losses in 2017. On Jan. 17, the company announced 120 employees in northern Saskatchewan are expected to lose their jobs by the end of May, which will account for a 10 per cent reduction in Cameco’s workforce at its northern mines.
“Obviously we’re always looking at our costs, our cost structure, we’ll never stop doing that in this difficult market. But for now, the announcement we made a couple of weeks ago is what we’re planning to do,” Gitzel said.
When asked if “for now” covers all of 2017 or a limited time period, Gitzel said “that really depends on how things are going, how the market goes going forward for us, how our production schedule goes. So it’s really hard to say. It’s been a tough six years for us now.”
He added that “we’ve had to, unfortunately, make some really tough decisions in the company.”
Cameco plans to drop uranium production by seven per cent in 2017.