Uranium increased the most in more than 2 1/2 years after Cameco Corp. moved to temporarily shut its McArthur River mine, the world's largest source of the nuclear fuel, amid a dispute with workers.
The price of U3O8 - a tradable form of uranium - rose 3.2 percent to $32.50 a pound today, the biggest gain since November 2011, data compiled by Bloomberg show.
Cameco said Wednesday it started a "safe and orderly" shutdown of McArthur River in Saskatchewan and the nearby Key Lake mill after the United Steelworkers union said a strike will start on Aug. 30. The Canadian company said it doesn't expect its move to affect 2014 deliveries and that it may draw on other sources of supply such as inventories.
McArthur River has the capacity to produce 18 million pounds of uranium a year, or about 10 percent of global demand, Edward Sterck, a London-based analyst at Bank of Montreal, said yesterday in a note to clients. The mine was the world's largest by production last year, according to the World Nuclear Association.
The previous four-year labor contract at MacArthur River expired Dec. 31, according to Cameco. The lockout follows nine months of negotiations and more than 28 face-to-face meetings with the union, Mike Pulak, a USW spokesman, said Wednesday in an e-mail.
Pulak and Cameco spokesman Rob Gereghty didn't immediately return calls for comment.
Uranium prices are still 52 percent lower than just before the March 2011 earthquake and tsunami that led to the meltdown of three Japanese reactors and the suspension of the country's nuclear power plants.
Cameco fell 0.7 per cent to C$21 in Toronto, extending its decline this year to 4.7 per cent.
Cameco, based in Saskatoon, Saskatchewan, is the largest uranium producer after Kazakhstan's KazAtomProm, according to the World Nuclear Association.