Hundreds of jobs cut, dividends slashed as Cameco shuts 2 Sask. uranium sites

For one Cameco employee,the companyshutting down production at two sites in Saskatchewan is not all that surprising.

After all, the uranium market has been poor.

"I'm shocked, but I'm not that surprised, and I'm not too concerned yet," said BernieClavelle, a maintenance planner at the uranium company's Key Lake site.

Camecoannounced Wednesday that it plans to shut down production at two of its sites in Saskatchewan McArthurRiver and Key Lake in January. It predicts 845 jobs will be affected.

Dividend payments slashed

"We regret the impact on employees," said CamecoCEO TimGitzelduring a conference call Thursday.

Today it makes the most sense to leaves those pounds in the ground.- TimGitzel, CEO, Cameco

Premier Brad Wall said the government will provide rapid response teams to help employees facing layoffs who want to transition into a different careeror who might need counselling,"because it's fairly traumatic, even for temporary loss of job."

Gitzelsaid the company was planning for a shutdown period of 10 months, but didn'tprovidea definite date for when work would resume.

"Today it makes the most sense to leaves those pounds in the ground," saidGitzel.

"We just look at this market and we say it's got a long way to go before it's adequately pricing uranium," chimed in Grant Isaac, the company'sCFO.

"We don't think that's where it needs to be to pull those pounds out of our portfolio."

Camecosaid Wednesday that it will change its dividend payment scheduleto annuallyfrom quarterlywhile simultaneously reducing the overall annual paymentto eightcentsper common sharefrom 40 cents.

The direct impact of the shutdown on the province's revenues will be "negligible," Wall said.

'Over-supply situation'

Nicolas Carter, executive vice-president of uranium for the American nuclear consulting firmUXC,said shutting down productionis a savvy one. After Japan's Fukushima disaster, and the subsequent phasing out of Germany's nuclear program, the demand for uranium has suffered, Carter said.

"Overall demands just trended downward, with the exception of some promising areas such as China and India, but all-in-all demand has been pretty flat."

Indeed, at the end of Octoberthe raw uranium, or U3O8, spot price was $19.95 per pound, according to UXC.

When the cores began to melt in the Fukushima reactors, the price was over $60 per pound, Carter said.

"The market is sitting in an over-supply situation," he said.

"Probably 15 million pounds or so, on an annual basis."

Companies like Cameco reducing production should bring balance to the market and the price of uranium should rise, he said.

The bigger question in the long term, he said, is whether the uranium market will see any further reduction in demand.

"That's been an issue, especially here in the U.S. We had cheap shale gas, renewable energies, and especially in deregulated markets it's been much harder for nuclear energy to compete."