Nuclear Power Industry

Uranium is the fuel nuclear reactors use to generate electricity. More than 400 nuclear reactors operate in 31 countries and account for about 17% of the world's electricity. This is about as much as all the world's hydroelectric power stations taken together. The US is the largest single country market and accounts for about 35% of the western world's annual uranium consumption-which was estimated at 145 million pounds in 2000.

Emerging Trends

Three key trends continued to evolve during 2000 and affect Cameco's competitive environment:

1. Consolidation of electric utilities. Faced with the challenge of deregulation, electric utilities worldwide are restructuring through mergers and acquisitions, achieving economies of scale and consolidation of expertise. A market with fewer operators will not decrease demand for U₃O₈. However, these larger buyers may change their fuel purchasing and inventory strategies with potential benefits and risks to Cameco.
2. Improved reactor performance. Deregulation has resulted in many utilities achieving improved performance at their reactors, as reflected in outstanding capacity factors. In 2000, the average US capacity factor increased to an estimated 90% from 87% in 1999. An increase in average capacity factors results in higher uranium consumption.
3. Reactor life extensions. US utilities continue to seek plant life extensions. The extension of reactor lives ensures that the current level of uranium and conversion demand for these reactors will continue.

Additionally, electricity shortages, air pollution concerns and climate change threats have caused utilities and governments to consider the construction of a new generation of nuclear power plants.