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A tank with filled uranium solution is seen at Inkai uranium mine near Taikonur settlement in southern Kazakhstan June 5, 2010. (Shamil Zhumatov/Reuters/Shamil Zhumatov/Reuters)
A tank with filled uranium solution is seen at Inkai uranium mine near Taikonur settlement in southern Kazakhstan June 5, 2010. (Shamil Zhumatov/Reuters/Shamil Zhumatov/Reuters)

For Cameco's new CEO, patience is a priority Add to ...

When Tim Gitzel takes over as chief executive officer at Cameco Corp. next week he will become more than just head of the world's largest publicly traded uranium company.

The 49-year-old Saskatoon-based executive will also be thrust into a leadership role in a global industry fighting to convince the world that nuclear energy is a clean, safe alternative despite the recent nuclear disaster in Japan.

He must also try to persuade investors that uranium - the price of which has fallen about 25 per cent since Japan's earthquake and ensuing nuclear crisis struck in March - is heading for a recovery. Even more pressing for Mr. Gitzel will be trying to stage a rebound in Cameco's stock, which has fallen nearly 40 per cent over the past three months.

Overall, Mr. Gitzel has his work cut out for him as countries such as Germany, Switzerland and most recently Italy have vowed to phase out their nuclear energy programs as a result of pressure from citizens nervous about the potential for a nuclear meltdown in their own country.

More than 90 per cent of Italians voted in a referendum last week not to bring back nuclear power, a decision made days after the German government said it would discontinue using nuclear energy by 2022 and Switzerland said it would do the same by 2034.

In Japan, where nuclear energy has long been a national strategic priority, less than half of its 54 nuclear reactors are in operation since the disaster, and recent polls show a majority of citizens are becoming anti-nuclear.

Mr. Gitzel's strategy isn't to fight that reaction. Instead, he appears to be practising patience and letting politics and emotions play out.

"The feelings are still fairly raw. To take any other decisions I think wouldn't be prudent for the government," Mr. Gitzel told investors on Tuesday, during a webcast presentation at the RBC Dominion Securities global mining conference in Toronto.

More time has to pass, he said, before people can better understand what happened at the Fukushima nuclear power plant, which melted down in mid-March, triggered by a devastating earthquake and tsunami. The Fukushima nuclear plant disaster is considered the second-largest ever after the Chernobyl in 1986.

Eventually, Mr. Gitzel believes some countries will have no choice but to revisit nuclear power plans to maintain climate change targets and meet their electricity needs.

"And, quite frankly, what will you replace it with? … Over time, I think it will come back on," said Mr. Gitzel, Cameco's president who takes over as CEO from the retiring Jerry Grandey on July 1.

Meantime, Cameco will focus on nations where nuclear energy is still being pursued, particularly in rapidly growing countries such as India and China, which the company has already targeted.

Last summer, Cameco signed two separate agreements with Chinese companies to help reach its goal of doubling production to more than 40 million pounds per year by 2018.

About 16 per cent of world production of uranium today comes from Cameco's mines in Canada, the U.S. and Kazakhstan.

The company has no choice but to be optimistic on the future of nuclear energy given that its success is based entirely on increased demand, particularly after it sold its stake in Centerra Gold Inc. in late 2009.

With uranium's spot price continuing to slip to around $54 (U.S.) per pound currently, after climbing to about $70 earlier this year, analysts are also calling on investors to be patient with the sector.

"We continue to expect that the uranium price should recover from the Fukushima disaster, albeit slowly," TD Securities analyst Greg Barnes said in a recent note.

Added RBC analyst Adam Schatzker at the his firm's conference on Tuesday: "The world cannot survive without clean nuclear power into the future."

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  • Cameco Corp
  • Updated July 26 4:19 PM EDT. Delayed by at least 15 minutes.

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