Canadian uranium miner Cameco’s (CCO.TO) (CCJ) deal to buy the Westinghouse Electric Company (WEC) will give it “pole position” in nuclear markets historically served by Russia, executives said Thursday.
CEO Tim Gitzel describes Eastern European countries “turning away from the Russians” and “looking for a substitute” to meet their nuclear energy needs.
“That surrogate is Westinghouse,” he said on a post-earnings conference call with analysts. “They are very active in Ukraine today. There are [the] The Czech Republic, Slovakia, Poland and many of these Eastern European countries that we think are potential businesses for Westinghouse, and quite frankly, for Cameco.”
Earlier this month, Saskatoon-based Cameco and Brookfield Renewable Partners (BEP-UN.TO) agreed to buy WEC for US$4.5 billion, plus debt, from another unit of Brookfield and to its institutional partners.
The deal for one of the most recognizable names in the U.S. electrical industry is expected to close in the second half of 2023. Cameco’s 49% stake in WEC, as defined in the terms, would give the largest Canada’s uranium producer more direct access to customers. through one of the largest nuclear service providers in the world. However, the company’s shares fell after the deal was announced.
Cameco says the global nuclear industry is now heavily dependent on Russia as President Vladimir Putin wages war on Ukraine. Gitzel estimates that the country controls 39% of the enrichment capacity and 14% of the supply of uranium concentrates.
“Utilities are now considering and planning for a variety of potential scenarios, ranging from an abrupt end to Russian supply to a phase-out,” he said. “It’s still early days, but we’re already seeing some utilities shift to sourcing strategies that weigh origin risk more carefully.”
“Westinghouse enjoys pole position…having the certified and verified capability to produce VVER fuel,” Cameco chief financial officer Grant Isaac said, referring to a series of pressurized water reactor designs developed at the origin in the former Soviet Union. “What we want to do is help provide these Western solutions to markets looking to turn away [from Russia].”
Toronto-listed Cameco shares were little changed on Thursday, falling 0.80% to $35.65 at 11:05 a.m. ET. The stock has climbed about 23% since the start of the year, in part due to growing concerns about global energy security and the growing acceptance of nuclear power as a means of reducing carbon emissions.
To this end, Isaac refers to recent comments by Mark Carney, the former central banker who now heads Brookfield Asset Management’s transition fund.
“You’ve seen Mark Carney say…there’s no path to net zero that doesn’t involve nuclear energy. So you’re seeing a pretty powerful awakening there,” he said. said during Thursday’s call. “A broader base of investors is paying attention to this essential clean energy.”
Cameco announced its third-quarter financial results Thursday, posting a loss of $20 million for the period ended Sept. 30, compared to a loss of $72 million in the same quarter last year. The company says this reflects normal quarterly variations in contract deliveries and efforts to ramp up production by 2024. Revenue in the quarter was up 8% year-over-year.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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