March 8, 2016 / 6:21 PM / 4 years ago

Uranium miners cautious on new output, despite forecast shortfall

TORONTO (Reuters) - Several of the world’s biggest uranium producers say they are taking a cautious approach to building new mines, preferring to shave expenses and wait for higher prices despite forecasts for a supply shortfall by the end of the decade.

Uranium ore is heap leached with sulphuric acid at Areva's Somair mine in Arlit, September 25, 2013. Picture taken September 25, 2013. REUTERS/Joe Penney

France’s state-owned Areva SA will trim 100 to 200 more jobs this year and stay out of the hunt for new mine exploration projects, Jacques Peythieu, Areva senior executive vice president of mining business, said in an interview from Paris on Tuesday.

“We are very focused to reduce our cost and to reduce our investment, to be able to manage this period of low price,” he said.

France state-owned utility EDF is buying Areva’s reactor arm, leaving the company to focus on uranium mining and fuel after struggling with losses and scant reactor sales.

Last year, Areva, the third-largest uranium producer, eliminated 500 jobs. It now employs about 4,000 people.

Spot prices of uranium, used to make fuel for nuclear power production, have been depressed since the 2011 Fukushima disaster in Japan, which led to the shutdown of that country’s reactors and generated burdensome stockpiles globally. Demand is growing rapidly, however, with China in particular aggressively building reactors.

Areva is maintaining its exploration budget but is not interested in buying new projects, Peythieu said, adding that it will start building its Imouraren mine in Niger, with a capacity of 13 million pounds, once prices improve.

“What’s important for us is profitability,” he said.

Cameco Corp, the second-largest producer, is slowly expanding the world’s biggest uranium mine, but its CEO said on Monday the company is holding off on expanding to full capacity.

Russian-controlled Uranium One [UOII.UL] and partner Kazatomprom are ramping up uranium production in Kazakhstan during the next three years, adding 1.5 million to 2 million pounds. But Uranium One will delay building a new mine in Tanzania until prices rise more than 70 percent from current levels, Chief Executive Officer Feroz Ashraf said on Tuesday.

Toronto-based Uranium One, the world’s fourth-largest uranium producer, looks to start construction of the Mkuju River mine in Tanzania once spot uranium prices stick above $55 per pound.

Uranium currently trades around $32.15 per pound.

“When people realize the price is going to go up, it’s going to go up faster than you and I can dream about,” Ashraf said in an interview during the Prospectors & Developers Association of Canada convention in Toronto.

Editing by David Gregorio

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