(Kitco News) - Cameco (TSX: CCO; NYSE: CCJ), one of the largest global producers of uranium fuel, announced today it has reached an agreement with Energoatom, Ukraine’s state-owned nuclear energy utility, on commercial terms for a major supply contract for Cameco to provide sufficient volumes of natural uranium hexafluoride (UF6) to meet Ukraine’s full nuclear fuel needs through 2035.
The company said the 12-year agreement will run from 2024 through 2035, with all deliveries in the form of UF6, adding that the contract will contain a required degree of flexibility, given present circumstances in Ukraine.
According to a company press release, the agreement will see Cameco supply 100% of Energoatom’s UF6 requirements (consisting of uranium and conversion services) for the nine nuclear reactors at its Rivne, Khmelnytskyy and South Ukraine nuclear power plants for the duration of the contract.
These plants have combined requirements over the contract term of approximately 15.3 million KgU as UF6 (the equivalent of about 40.1 million pounds of uranium concentrate, or U3O8), it added.
The company noted that the contract will also contain an option for Cameco to supply up to 100% of the fuel requirements for the six reactors at the Zaporizhzhya nuclear power plant, currently under Russian control, should it return to Energoatom’s operation.
“If this option was exercised in 2024, the Zaporizhzhya plant would require roughly 10.4 million KgU as UF6 (the equivalent of around 27.2 million pounds of U3O8) over the contract period,” Cameco said.
“We are proud to play an essential role in helping Ukraine gain supply security for significant components of their nuclear fuel in these extraordinarily challenging times for the country,” commented President and CEO Tim Gitzel. “This has the potential to be the single largest supply contract in Cameco’s history, and it is only achievable through the strong relationship that has developed between our two companies.”
The company also said that key commercial terms, such as pricing mechanism, volume and tenor, have been agreed to, but the contract is subject to finalization, which is anticipated in the first quarter of 2023.
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