* CEO sees dramatic increase in worldwide demand
* Cameco production to rise 75 pct in 10 years
* CEO confident of supply agreement with China
(Adds CEO comments on China, Port Hope, Centerra; in U.S.
dollars unless noted)
By Rod Nickel
SASKATOON, Saskatchewan, May 27 Cameco Corp
(CCO.TO) will have to expand uranium production "dramatically"
over the next decade in order to meet rising demand for the
nuclear fuel, the company's chief executive said on Wednesday.
"The uranium industry is capable of responding to the
growth in demand and Cameco will play a major role," President
and CEO Jerry Grandey told the company's annual meeting.
In 10 years, Cameco will go from producing 20 million
pounds annually to 35-36 million, Grandey told reporters. That
will come either through the expansion of existing projects or
by opening new mines.
The company, the world's biggest producer, projects 2
billion pounds of uranium will be needed over the next decade
to fuel nuclear generating stations.
Rising world demand stems from a growing hunger for
electrical power and the awareness of nuclear energy's low
greenhouse gas emissions, Grandey said. He noted the U.S.
government's continued financial backing for new nuclear plants
under President Barack Obama.
Grandey said the Nuclear Energy Institute, an industry
advocate, expects four to eight reactors to be built in the
United States in the next 10 years. He said construction began
on 10 new reactors around the world in 2008, the largest number
of starts in 23 years.
Cameco is exploring new zones to sustain future production
at its McArthur River mine in the Canadian Prairie province of
Saskatchewan, the world's top producing mine. It is also making
steady progress on remediating its Cigar Lake mine in
Saskatchewan, Grandey said, adding he could not estimate when
production would begin. The mine flooded in 2006.
Cameco is negotiating a potential supply agreement with
China, Grandey confirmed, but he declined to estimate such a
deal's potential size.
"We hope, as time goes on, to get a greater presence in
that market on a sustained basis. Do I think we'll succeed?
Grandey said Cameco can afford to make acquisitions, but
there are few opportunities of interest.
The price of uranium is looking to balance in the range of
$40 to $60 per pound, but Grandey said he expects "a lot of
volatility" this year.
Cameco suspended production last December of uranium
hexafluoride (UF6) -- used in uranium enrichment -- at its Port
Hope, Ontario, plant, due to a contract dispute with a key
chemical supplier. Production will ramp up slowly, Grandey
said, starting early in the third quarter.
Meanwhile, Grandey said Cameco hasn't decided how it will
divest its stake in Centerra Gold (CG.TO), whether by a
secondary share issue or finding a strategic buyer, but said
the company is in no rush.
Centerra has reached an agreement with the Kyrgyz
government over its Kumtor gold mine, which will see Cameco's
stake fall as low as 38 percent from 53 percent. Grandey has
said Cameco will eventually sell off its stake.
Cameco's shares closed 38 Canadian cents, or 1.3 percent,
lower at C$28.67 on the Toronto Stock Exchange on Wednesday.
(Editing by Rob Wilson)