CEO’s Message

Portrait of Tim Gitzel, President & CEO

Dear Shareholder,

Every year in this message, we look back at the year Cameco has had – the successes and the challenges. This year, I think it is significant that, at the time of writing, it has been five years since the accident at Fukushima when, overnight, the nuclear industry was turned upside down. I can tell you, just days before the accident, we at Cameco were talking about how we would meet the growth in uranium demand we saw on the horizon. And, to be honest, we weren’t sure how we were going to do it. The growth in nuclear coming from all corners of the globe was enormous – the US reactor fleet was growing, China was starting to build reactors at an unprecedented pace, and previously non-nuclear countries were starting to build. It was a great time to be in the industry.

I think it’s safe to say that no one knew just how much of an impact Fukushima would have, and for how long. We certainly didn’t think oversupply and low uranium prices would last for five years. But larger global drivers, like a sluggish economy, slower growth, flat electricity demand, and a host of other external factors have also conspired against us.

However, the challenges we have faced have also provided a lot of opportunity, the most significant of which has been the chance to improve as a company. Continual improvement has always been a priority for us, but extended market challenges meant we needed to take a hard look at our strategy, objectives, processes, in fact, every nook and cranny of our company, to find ways to be more efficient, more innovative, more effective. And it’s been impressive to see how well our people have risen to the challenge.

The result is a company that has the strength and flexibility to continue weathering market challenges as long as we need to, but also a company that is better prepared for the future. The streamlining of our business and the sharper focusing of our strategy on our tier-one assets means that when the market does turn, we will be even better positioned to benefit.

And we know that shift is going to happen. We know there’s a huge amount of growth in reactor construction, being led by China, India and South Korea, all of which have reactors under construction and brought new reactors online in 2015. We know there’s going to be growth in uranium demand as these new reactors come online over the next number of years. And, we know that supply will struggle to keep up, as investment in new projects is just not happening, existing projects are being deferred or cancelled, and existing supply is being curtailed. So, over the long term, we remain as optimistic as ever.

That doesn’t change the fact that the challenges we face today are real, and must be surmounted. But Cameco continues to return strong results. In 2015, we achieved record uranium production and exceeded our expectations at Cigar Lake, which performed exceptionally well. We delivered on our guidance. And, we returned excellent safety results – table stakes for our company.

Today, we are on track to continue this trend. We remain on track with our tier-one strategy, which focuses on our best-margin assets. We remain on track at Cigar Lake, which should reach full production of 18 million pounds per year in 2017. And, we remain on track to be ready when the market calls for more uranium.

Because it is a question of ‘when’, not ‘if’ more uranium is needed. The strong fundamentals that made us wonder five years ago how we would meet the growth in demand have not greatly changed; for the most part, they have just been moved further out in time. There is still a growing population that requires access to electricity. Nuclear is still an important part of the energy portfolio for many countries, especially those needing more baseload power. There is still investment in nuclear occurring that has not been seen in decades. And there is still going to be a need for more uranium – perhaps even more so now that many projects have been delayed or cancelled in the wake of low uranium prices. Those are prospects that keep us excited.

Tim Gitzel
President and CEO
March 14, 2016

Read more