Cameco Corp. has suspended operations at its massive Cigar Lake uranium mine in Saskatchewan to reduce the threat of spreading the novel coronavirus into remote communities in northern parts of the province.
One of the biggest uranium mines in the world, Cigar Lake is located about 650 kilometers north of Saskatoon, and is a fly-in/fly-out operation.
In a statement, Cameco said the decision to idle Cigar Lake for four weeks was motivated by the "restrictions enacted by the federal and provincial governments, the significant degree of concern among leaders in remote isolated communities of northern Saskatchewan, and the increased challenges of maintaining the recommended physical distancing.”
The temporary closing of the mine will affect the vast majority of the 300-person work force, with only 35 remaining on site to operate critical systems.
Saskatoon-based Cameco is one of the world’s biggest uranium producers and Cigar Lake produces about 13 per cent of the global supply of the commodity.
There is currently a massive glut in the uranium market. A number of large nuclear power projects were cancelled after the 2011 Fukushima Daiichi nuclear power plant accident in Japan following a catastrophic earthquake and tsunami. Currently trading around US$24 a pound, the price of uranium has fallen by about 75 per cent after the accident.
Scotia Capital Inc. analyst Orest Wowkodaw says the temporary sidelining of production at Cigar Lake could help revive the price of the commodity.
In a note to clients, he wrote that if the suspension is extended beyond four weeks, a supply shock in the market “has the potential to become the turning point in a 10 year bear market.”
Elsewhere in Canada, a number of mining companies idled operations in Quebec in line with the province’s directive that all non-essential businesses must close by midnight Tuesday, until at least Apr 13, to help minimize the risk of virus spread.
On Tuesday, Eldorado Gold Corp. suspended operations at its Lamaque gold mine in Quebec. Last year, the mine produced 114,000 ounces of gold or roughly 29 per cent of its entire output. Eldorado also operates mines in Turkey, and Greece.
Iamgold Corp. also suspended production at its Westwood gold mine in Quebec. The site produced 91,000 ounces of gold in 2019. The company’s mines in Burkina Faso and Suriname remain in operation, but employees at both sites are moving into self-confinement to protect local communities from the spread of the virus. Last week, Iamgold said that one of its Toronto employees had tested positive for COVID-19.
Newmont Corp., the world’s biggest gold miner, said it will temporarily suspend production at its Eléonore mine in Quebec. The Colorado-based company inherited the mine as part of its US$10-billion acquisition last year of Goldcorp Inc.
Ontario has also ordered all non-essential businesses to temporarily close, but unlike Quebec, it classified mining as an essential activity, thereby allowing miners to continue to operate.
Still, a number of miners pared back operations in the province where the potential for virus spread is elevated, or in places that are particularly remote without ready access to major hospitals.
Newmont put its Musselwhite mine in Ontario into care and maintenance, to prevent the possible transmission of COVID-19 into the local Indigenous population in Northern Ontario.
Alamos Gold Inc. is suspending production at the Island Gold mine located in the small community of Dubreuilville in Northern Ontario. About half of the mine’s work force comes from the town of just over 600 people, and the rest fly in and out of the camp. Located about 83 kilometres north of Wawa, the site produced 150,000 ounces of gold in 2019.
In a note to clients, Kerry Smith, an analyst with Haywood Securities Inc., wrote that “given the rate of spread and duration of the virus in other countries,” the closing of Island Gold could end up being more than a month.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.