UPDATE 2-Cameco to shut world's largest uranium mine in labor dispute

Wed Aug 27, 2014 12:02pm EDT

(Rewrites throughout with analysts' views, adds comment from company and the union)

By Rod Nickel

WINNIPEG, Manitoba Aug 27 (Reuters) - Canadian uranium miner Cameco Corp will shut the world's biggest uranium mine at McArthur River, Saskatchewan on Saturday, barring a last-minute labor settlement, after the United Steelworkers union said workers would go on strike.

Cameco on Wednesday said it issued a lockout notice at the mine and the Key Lake mill. The work stoppage would involve 535 unionized workers at the two sites.

A shutdown would reduce some of the world's excess uranium supply, Cantor Fitzgerald analyst Rob Chang said in a note. But it may weaken Cameco's earnings as the company is forced to buy uranium from higher-cost sources, Chang said.

Cameco shares fell 2.8 percent in Toronto and 2.2 percent in New York in morning trading.

Uranium spot prices are near a nine-year low, as Japan, previously a major producer of nuclear-fueled electricity, has been slow to approve reactor re-starts after an earthquake and tsunami destroyed the Fukushima Daiichi nuclear power station in 2011.

Saskatoon, Saskatchewan-based Cameco, the world's third-largest uranium miner, said a labor disruption would not affect the company's 2014 uranium delivery commitments, as it can draw on a variety of supply sources.

McArthur River's capacity of 18 million pounds of uranium annually represents 12 percent of global mine supply, said BMO Capital Markets analyst Edward Sterck, who forecasts an oversupply of uranium through 2017.

France's Areva SA owns minority stakes in both the McArthur River mine and the Key Lake mill, which processes ore from McArthur.

In response to the union's strike notice, Cameco issued a lockout notice effective at 12:01 a.m. Central time (0501 GMT) on Saturday. Cameco spokesman Gord Struthers declined to say what the outstanding issues are as talks continue with the union. The previous contract expired on Dec. 31, 2013.

Mike Pulak, a United Steelworkers representative in Saskatoon for Local 8914, said the parties will continue to meet to try and resolve the issues.

The last strike at a Cameco site was in 2009, when United Steelworkers members walked off the job at a fuel manufacturing facility in Ontario. It lasted about three months. (Editing by Grant McCool)

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