Ukrainian nuclear utility Energoatom and Canada’s Cameco Corporation have agreed the commercial terms for a major uranium supply contract. Cameco will provide sufficient volumes of natural uranium hexafluoride (UF6) (including uranium and conversion services), to meet Ukraine’s nuclear fuel needs until 2035. Finalisation of the 12-year contract is anticipated in the first quarter of 2023 although key commercial terms, such as pricing mechanism, volume and tenor, have already been agreed.
However, the contract “will contain a required degree of flexibility, given present circumstances in Ukraine,” Cameco noted. Although financial terms of the contract are confidential and will not be released, Cameco President & CEO Tim Gitzel said the total dollar figure is in the multi-billion-dollar range.
Cameco will supply 100% of Energoatom’s UF6 requirements for the nine nuclear reactors at its Rivne, Khmelnitsky and South Ukraine NPPs for the duration of the contract. This represents combined requirements of approximately 15.3m KgU as UF6, equivalent to about 40.1m pounds of uranium concentrate (U3O8). There is also an option for Cameco to also supply the six reactors at the Zaporizhia NPP (ZNPP), currently under Russian control, should it return to Energoatom. If this option were exercised in 2024, ZNPP plant would require roughly 10.4m KgU as UF6 over the contract period.
Gitzel said: “This has the potential to be the single largest supply contract in Cameco’s history, and it is only achievable through the strong relationship that has developed between our two companies. Commercial arrangements between Cameco and Energoatom began modestly in 2018 and have grown today into a significant strategic partnership.” He noted that safety will be something to keep in mind with the ongoing conflict in the region, but as soon as it is safe to do so he and others will travel to Ukraine.
Energoatom President Petro Kotin said the development of cooperation between companies in the production and supply of nuclear materials and nuclear fuel “is one of the most important conditions for the further safe functioning of our domestic nuclear power generation”.
Gitzel commented that, with Ukraine and other European countries previously purchasing fuel from Russia, the war had created the opportunity for the agreement. “It was really when the Russians walked across the border that the opportunity opened up,” he said.
Russia’s invasion of Ukraine “really accelerated our business and the world’s need to find other suppliers of uranium.” The agreement was brought about by the ongoing relationship between Cameco and Energoatom. Gitzel described Kotin as “a “good friend”, adding, “it’s more than a contract”.
The new agreement, along with the fourth-quarter results from 2022, show Cameco is in a strong position, Gitzel said, thanks in part to renewed interest in nuclear power. He said the focus on decarbonisation, electrification and the “race to net zero” over the past several years have worked to promote nuclear energy options. In the past year, Cameco has sold 80m pounds of uranium. “That, for us, is enormous.”
Cameco’s recovery is progressing after the reopening a year ago of the McArthur River/Key Lake mine and mill – the world’s largest uranium mine operation. Over the past year, Gitzel said Cameco’s goal of producing 15m pounds a year has been increased to 18m pounds, and with more sales the company is hoping to increase that to 25m pounds a year.
The uranium used in Ukraine will mainly be produced from Saskatchewan, with the uranium then going to an enricher to be changed into a gas before it’s sent to Ukraine. The plant that converts uranium into a gas in Port Hope, Ontario, has been told to “put the pedal to the metal”, Gitzel said. The outlook for uranium looks “really, really good for Cameco, for our employees and for Saskatchewan.
Cameco reported a net loss of $15m in the quarter that ended on 31 December, down from a profit of $11m during the same period in the previous. The company attributed the loss to quarterly variations due to contract deliveries. However, over the year, Cameco recorded a net profit of $89m, up from a loss of $103m in 2021, when the company was still feeling the effects the Fukushima disaster. The Ukraine deal was not included in the company’s 2022 figures.
Image: Cameco's President & CEO, Tim Gitzel. The company has announced a fuel supply contract with Energoatom, Ukraine's state-owned nuclear energy utility (courtesy of Star Phoenix)
