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Friday, June 21, 2024
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Cameco’s clean fuel cleans up with new Bucharest-Nine-plus-one business: Topes next?

Cameco is Canada’s, and one of the world’s, biggest clean fuel providers. It is clean across all Environment, Social, and Governance (ESG) criteria; we would argue by far the cleanest in all of them.

  1. Cameco’s nuclear fuel produces no air pollution or greenhouse gases and has a minuscule waste footprint. That covers Environment.
  2. Cameco is socially progressive, a strong union employer, so check off Social.
  3. In terms of Governance, Cameco is based in Canada, one of the world’s oldest democracies, an exemplar in the area of human rights and dignity (though we still have a lot of work to do on that score).

To Central and East European buyers of nuclear reactor fuel, it is the third of these criteria that has put Cameco front and centre in their procurement decisions and in early February brought the Company a dizzying success in selling its products and opens the very real potential of many more—Cameco is Canadian. Canada is a signatory of the North Atlantic Treaty, a member of NATO, and a staunch supporter of Ukraine in that country’s war against the Russian invasion. Most Central/East European buyers of nuclear reactor fuel used to buy from Rosatom, the Russian nuclear giant. Those days are over.

Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia—collectively known as the Bucharest Nine—are not all nuclear power states. The Baltic States and Poland, who are among Ukraine’s strongest supporters, have not a reactor among them. Lithuania used to have one, a Soviet-built twin-RBMK plant close to the border with Belarus. According to the World Nuclear Association that plant produced nearly three-quarters of Lithuania’s power and made the country a power exporter. It was shut down in 2009 “due to European Union pressure.” That decision, and the EU pressure that forced it, have not aged well.

Most of the Bucharest Nine intend to fully wean themselves off all forms of Russian energy, including nuclear. Apart from nuclear, there is no other non emitting energy capable of running a modern economy. If and when the “Bucharest Nine Non-Nuclear Four” do join Bulgaria, the Czech Republic, Hungary, Romania, and Slovakia as nuclear power states, then, combined with Ukraine, the largest nuclear power of them all, NATO’s eastern flank will be a powerful climate change fighting force. If the non-nuclear B-9 states adopt nuclear power, as is widely expected they will, this will represent a major shift in Europe, as all of these former possessions of the German, Austro-Hungarian, and Russian empires lead a common-sense re-approach to European energy and climate change policy.

This spells huge long term opportunities for Cameco, and not just in fuel supply. Cameco has a stake in the Lithuania situation as well, through its equity share of Westinghouse. Westinghouse will decommission the legacy RBMKs mentioned above. And of course Cameco didn’t buy into Westinghouse just for decommissioning work. As the world begins to realize that nuclear power is a necessary and indispensable requirement for a meaningful response to man-made climate change, Westinghouse’s flagship AP-1000 will see an increase in orders, possibly in Eastern/Central Europe, and possibly even Ukraine.

But the blockbuster news is Cameco’s deal with Ukraine, signed early last month, to supply all that country’s nuclear plants with fuel. When Ukraine retakes the territory containing the Zaporizhzhya nuclear power plant, Cameco will have the option of supplying all the fuel for the six generating units at that facility.

But regardless of that situation, the other nine Ukrainian reactors not under Russian occupation will be supplied with Canadian uranium.

This latest deal with Ukraine puts Cameco as a vertically integrated nuclear power player: mining and refining reactor fuel, manufacturing reactors, and decommissioning them.

Cameco CEO Tim Gitzel talks about the impact of the deal on Cameco, Saskatchewan, and Canada in this video.

In addition to dominating the Eastern/Central European market for nuclear fuel, Russia dominates the global market for radioisotopes, including Americium-241 and especially fission products like Cesium-137 and others. Russia’s main international distributor of these materials, UK-based Reviss Services, currently is exempted from sanctions punishing Russia for its invasion of Ukraine; the exemption is because of the medical value of the isotopes Russia provides. Western isotope producers and marketers long ago ceded most of the fission product isotopes market to Russia. (Canada’s Chalk River NRU, which left service in 2018, once produced most of the world’s Molybdenum-99.)

But we wonder: as pressure grows to extend and deepen sanctions, is there not a potential for western interests, including and especially CNWC employer Chalk River Labs, to develop the manufacturing and supply chains to replace Russia as the main global provider of Am-241 and especially Cs-137? There certainly is the radiochemical expertise at Chalk River, and Canada certainly does possess more than enough feedstock to produce these materials at scale.

There has never been a better time to capture this market.

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