Cameco is one of the largest uranium producers in the world. They are highly motivated to have an accurate forecast of how many nuclear reactors there will be that will use their uranium resources. Cameco is expecting 15 fewer net new reactors by 2021. They still expect 80 net new reactors.
While expected demand has decreased, there has also been an increase in global supply. In China, Uzbekistan and Namibia production increased at a number of mines, which we expect will equate to about 30 million pounds of further supply over the 10-year period.
The result when we put these changes to supply and demand together is a demonstrated need for new supply of 360 million pounds from 2012 to 2021, compared to the 440 million pounds we had forecast earlier in the year.
However, the current market environment also poses challenges to bringing on new supply and could impact supply expectations as conditions continue to evolve. A number of project deferrals and cancellations have been announced as producers have reacted to lower uranium prices and general economic pressures. As well, secondary supplies continue to diminish, particularly with the end of the Russian Highly Enriched Uranium (HEU) agreement in 2013. Conclusion of this arrangement will mean the removal of 24 million pounds of relatively low-cost secondary annual uranium supply from the market, and there are no indications of a second Russian HEU deal.
Despite the changes we see to the supply/demand outlook, what remains clear is that new supply will be needed. Though some could come from additions to secondary supplies, the majority will need to come from new mines and expansions to existing mines at a time when pursuing such projects is becoming increasingly difficult. In addition, the long-term fundamentals of the industry remain strong, with 64 reactors currently under construction and some of the growth pushed further out in time.
We continue to expect first commissioning in ore from the Cigar Lake mine in mid-2013 and the first packaged pounds in the fourth quarter of 2013.