In a wide ranging interview for the World Nuclear News podcast, Cameco CEO Tim Gitzel explained: Why the time was right for the Westinghouse deal How Russia's war with Ukraine has led to 'bifurcation' of the nuclear sector Explained Cameco's long-term strategy Looks ahead at the impact of new technologies, including SMRs How nuclear will need to play a key role in getting to net-zeroTim Gitzel (Image: Cameco)
Here is an edited transcript of parts of the World Nuclear News podcast, which you can also listen to via the embedded player below or on any podcast players.On the general world situation and nuclear:
"I’m not sure I've seen as complicated a geopolitical situation as there is now around the world ... we were feeling tailwinds for nuclear even a couple years ago with the race to decarbonise and electrify and the race to net-zero. But then since February this year, with the Russians moving into Ukraine, the whole issue of energy security has really come to the fore, especially in Europe, but around the world.
"As far as Cameco goes, we went through a very difficult period I would say post-Fukushima, 10 years where there was too much uranium, too much nuclear fuel around. Things were looking not as good for nuclear, but they've really picked up now and and I could probably name you 20 countries that in the past 12 months have done a complete U-turn on nuclear and are now looking at expanding their fleets or bringing on reactors or SMRs perhaps. So it's a real positive story for nuclear and we have a big role to play in the energy security and clean air segments going forward."
On the Cameco-Westinghouse deal
"I think we've been very clear with our strategy for almost a decade now. It's a strategy of discipline that we will not produce uranium just to spray it into the spot market, because we saw how that worked. It doesn't work - it doesn't work for anyone. We lost some of our competitors over it, who were producing into a spot market that fell as low as USD17 per pound in 2017. We said we're only going to produce into the contracts we have and so that meant, for us, taking some really tough medicine. Back in 2016, we shut down our Rabbit Lake mine. We shut down Wyoming, Nebraska and then in 2017 we shut down the world’s largest high-grade mine and mill McArthur River/Key Lake because the world didn't need the uranium and no one else seemed to be stepping up, so we did that. We left over 100 million pounds in the ground at USD17 ... We maintained our supply discipline and today we have a better market. It's better, good enough that we can bring our big McArthur River/Key Lake production centre back into production at reduced levels that will match our sales, and so we'll continue with that as our sales grow, we'll bring on more production, but we will remain very, very disciplined from a production and a marketing point of view ... You'll see some production out of McArthur and Key Lake later this quarter. In the fourth quarter.”
"We think the timing is really good. As I said, we've seen some real strong tailwinds coming for nuclear. We could see nuclear coming back as a tool in the toolkit for energy security around the world and so first we looked after our own operations. We made sure we were ready to go and we're restarting, as I say, McArthur River/Key Lake. Cigar Lake’s running well. Our Kazakh operations are running well. Our fuel services conversion in Ontario is really doing well, so we started looking for other things in our area. We're not straying outside of nuclear. Westinghouse was out there and we started looking at it with Brookfield, who was the owner and just a different entity of Brookfield - their Clean Energy Transition Fund - wanted to get involved and we said, 'well, that's brilliant'. Seeing nuclear as clean energy, them buying in, staying in, and then us coming along as a strategic partner and it just made perfect sense. So it took us about six months of due diligence and negotiations. And we think we found the right timing, the right partner and the right project. So we're super excited about the future of Westinghouse.”
The news that Westinghouse was a successful bidder in Poland for its nuclear programme "is just icing on the cake for us".So what part of the Westinghouse deal is most exciting for Cameco?
What has been the impact of the war in Ukraine?
"I'd say all of it is pretty exciting for us. Obviously the fuel business - our fuel businesses are very complementary. We provide fuel, we have the uranium conversion and then we actually provide the fuel for the CANDU reactor fleet here in Canada - Bruce Power, OPG, NB Power. Westinghouse takes over where we don't go. They’re in the light water reactor world and provide fuel there and then of course all the servicing and engineering and outages that they can work on. So that's all exciting stuff, that's their core business really and it's a very durable business. There is some excitement too with some of these new products that they're offering. Obviously the AP1000s that they're out selling. I think for Westinghouse, the e-Vinci, a smaller unit ... I know here in Saskatchewan the government has been talking about perhaps buying and building one of the e-Vincis ... as Cameco we're looking at fuel for SMRs and whether we can play in that field, the HALEU field. We have the GLE global laser enrichment play in the US that we're moving along and moving along faster than we have because of the need for enrichment and so just a lot of areas for us to focus on now. We think there's a lot of room for growth in the nuclear business across the board, and Cameco wants to be there for that."
What about the global situation for Cameco?
"Let me start with the impact on our countries, and here in Saskatchewan where our head office is located, I think 15 or 20% of our population here are of Ukrainian heritage, and so it's a really sad state of affairs. And our hearts go out to the people in Ukraine, including our customers at Energoatom. Petro Kotin, President and CEO of Energoatom, is a good friend of mine. We had dinner with him just before the end of last year at a big conference in Paris and then, this happened, so our hearts go out on that side first of all. What has it done for the nuclear industry? It has certainly caused a bit of a bifurcation now in the nuclear industry. Meaning there's those countries and companies that will continue to work with Russia - there are some - but there are a lot that won't anymore, and I think of all the Eastern European countries that have VVER technology in their countries and have relied heavily on the Russians for fuel and servicing and engineering and the things we talked about who are now looking for alternatives, and so we think Westinghouse will have a good opportunity in that market to pick up some business. And then Cameco - I was over there in the spring in the Czech Republic and meeting with some of those countries and so we think some of those will start looking West for alternative fuel supply and we'll be there to provide that, so it's really had a huge impact on the global nuclear industry and on Cameco’s business."
On technological developments in the nuclear energy sector
"We have customers in China and India - two countries that continue to grow, with China on a very fast path of growth and India, the same thing. And you see things changing - South Korea, a complete change - they were looking at phasing out some of their nuclear, now they've included it in their green taxonomy and plan to increase their nuclear presence. I mean, you can go to the UK, you can go to France and you can go to Japan and you can just see the momentum that nuclear is getting both from a clean energy perspective but from an energy security perspective as well. So we think there's great room for growth. I think the IEA came out last week and said if we have about 400 gigawatts today of nuclear, we need to double that. Double that in the next 20-25 years - and so for us that's not a long period of time. We need to get moving and get moving now and we're seeing it with Poland making their announcement, in the US - we're spending lots of time in the US where the Biden administration is very, very positive on nuclear with the Inflation Reduction Act, which has lots of support for nuclear. Here in Canada, our own government, the Ontario government and OPG building the first SMR are well on their way in Canada, the GE Hitachi model and so lots of excitement. Lots of things to do and lots of opportunities around the world."
How does the current positive outlook compare with previous optimistic eras?
"Especially on the small modular reactor front I would say I think that the Canadian regulator has in front of them probably 11 or 12 different models of SMR right now, all competing to be the first out of the gate to get permitted, licenced and start construction and find a home and we need that because those first-of-a-kinds won't be easy. They never are. We've seen it in the larger reactor world and now in the SMR world we need to start building them - the Nth one will be super economic and then probably faster to build. The first one will be tough, and then we need to get the fuel ready for those. And you know, there's your question on Russia and Ukraine. I think we were all relying on many models, relying on the Russians for the HALEU fuel for the first SMRs. Now that door has been slammed shut. And so we're all looking around, scrambling maybe, but looking around for alternative ways we can get HALEU to fire up those first SMRs. So that's going on, but lots of great things going on even with the large fleet - such as accident tolerant fuel and passive safety systems. There's lots going on in nuclear and it's very exciting and very positive."
Does Brookfields Renewables’ involvement in Westinghouse deal show taxonomy’s importance?
"We've seen ebbs and flows before. I remember the period from about 2000 to March 2011. I mean there were too many new reactors to keep track of them. So many uranium companies. I think there were 400 uranium companies around. We got into a real exuberant period of time, probably over-the-top exuberance on nuclear. Everybody was building all the time and then we had Fukushima, so we need to be careful about that because after that we went into a 10 year period that wasn't so positive. But I think we're back again. The world is taking another look at nuclear and saying 'yes we can do it, we can do it safely and and cover for these large energy needs'. I mean, if we're turning to electricity for electric cars and electric everything, we're going to need massive amounts of electricity. And we're good at nuclear, we're very good. We've got a great track record over probably 60 years now and new technologies coming out. And so I'm very optimistic about this period. We need to do it right. We need to get financing for new build. We need to build them as much on time and on budget as we can. We've suffered from that blight a bit in the past, but if we do it right and we can do it right because we've done it in the past, the first one is difficult, but then after that you saw it in Sweden in the 1970s, you saw it in France, you saw it in the US, Canada. We can do it and so now is our opportunity, so we should take advantage of that."
On new forms of investors in the nuclear industry
"I think countries around the world are really recognising the clean energy benefits of nuclear power now and really grabbing on to it - I think there's 70 countries who have now made a net-zero commitment and you know, I think 80% of the energy in the world is fossil fuel fired so we need the path to get there. So you can't throw anything out of the toolbox and I think a lot of countries, as I mentioned earlier, are looking around and saying, what do we have - wind, yes, solar yes. Intermittent and right now they are five or six or maybe 10% of the world production of electricity. We need massive amounts more, and they're looking at nuclear again and saying ‘yeah, we need to keep that as an option’. And so it's very positive for countries looking to hit their net-zero commitments. We're seeing it. We'll see it at COP27 meetings where nuclear is at the table. I can tell you a few COPS ago, we weren't at the table and now we're front and centre at the table of countries looking to build nuclear. So I think nuclear is going to play a huge role in the climate change race to net-zero and decarbonisation electrification. And we as an industry must be ready."
So what are the big challenges to fulfilling the potential?
"We saw it here in Canada last week where the Canada Infrastructure Bank, which has traditionally not gone anywhere near nuclear, committed just under a CAD1 billion to the first SMR - OPG’s SMR. That's a big move. Our Minister of Natural Resources came out with very strong statements last week at the IAEA ministerial, as did many other countries on nuclear. You're seeing taxonomies change that are including nuclear in the clean energy discussion ... it's a complete change of lexicon, a change of thinking, and very positive for industry and now, as I say, we need to deliver."
"I think we have the technologies, now we've got to start building again. I think on the SMR front we need to get some of those built and up and running so that we can build the Nth one, not the first one. The order books are out there now. I think everyone’s going to be watching very closely in Canada as OPG and GE Hitachi build that first unit. The ground is broken so they're off to the races on that one. And I know in the US there's numerous other ones, we need to get those going. On the big units that are being built - the Chinese are very good at it, the Russians are very good and have a big order book. We in the West now need to show that we're back in the game and that we can take our share of the market. I think the announcement with Poland and Westinghouse was a huge announcement, it's going to be a big project. And I think there are more to come. And so we need to show the world that we can deliver our projects on time, on budget, that nuclear is going to be a critical part of the clean energy infrastructure going forward, and we on the fuel side have to be there to back it up with the fuel to run these things. And that’s not for a year or five years or even 10 years - for 50 years. When you're building a reactor today, you're worried about uranium in 2060 and 2080 and so that's what we're thinking about now. It's not just the next few years, it's decades.”
Researched and written by World Nuclear News