Cameco discusses utility uncovered requirements, uranium spot market

During Cameco’s investor day presentation, Grant Isaac, executive VP and CFO, stated in part, according to a transcript of the event: “Ours is an industry where utilities do not bring their demand in a predictable way every year. Instead, what we often see is periods where demand is low so-called below replacement rate utilities in active completion out in the market. And those periods are very difficult for those who are in the long term contracting business. Then we see events, events like geopolitical uncertainty, or events like a focus on clean and secure energy, and we see demand pick up and demand doesn’t just go to replacement rate, but it often goes above… This rise to our operational discipline and right now we’re in a very advantageous position, whereas we call for that production. It’s coming from brownfield leverage. We are not required to invest in greenfield projects in order to take advantage of this very strong fundamental that we see… So when you have a balanced and disciplined strategy, you’re doing the right strategy and you’re doing the strategy right… So let’s begin with the really well known utility uncovered requirements curve… So it’s a very exciting picture and one that we’re particularly focused on at Cameco… The spot market is where utilities have very discretionary demand. The spot market is where utilities have a very small proportion of the overall demand in the market… Those who have brought uncommitted primary supply into the spot market have struggled to create long term value, simply the spot market is not capable of picking up their demand. So we would conclude that the spot market is actually low quality, fundamental demand and should not be of a strategy of supply. The term market, on the other hand, very different as you see now. The term market as we stand here is really two years out and beyond. So you’re talking about demand in the market that really is starting to get to material levels.”