CCJ Cameco Corporation

By Judy McKinnon 

Uranium producer Cameco Corp. said late Thursday it would cut more than 500 jobs in Canada and the U.S. as it curtails some operations due to weak market conditions.

Cameco said it plans to suspend production at its Rabbit Lake mine in northern Saskatchewan province and defer development at its U.S. operations, which will contribute to about a 14% reduction in planned production this year.

The company said about 500 positions will be cut at Rabbit Lake, which will be placed on care and maintenance, and around 85 jobs will be cut from its U.S. operations where it will defer development plans.

"Continued depressed market conditions do not support the operating and capital costs needed to sustain production at Rabbit Lake and the U.S. operations," Chief Executive Tim Gitzel said in a news release.

As with commodities such as crude oil and copper, uranium has also been hit by oversupplied markets, which have driven prices lower. New mine construction in Saskatchewan and Namibia is partly driving the glut, TD Securities said in a recent note, as are technology improvements. It also noted that demand is being affected by the availability of large uranium inventories in Japan.

Rabbit Lake and the U.S. operations are the costliest of the company's production sites, according to Raymond James Ltd.

Due to oversupply in the market, Cameco said it has reduced its 2016 production target at its McArthur River/Key Lake operation in Saskatchewan to 18 million pounds from 20 million pounds. It said production continues to ramp up at Cigar Lake in Saskatchewan, where commercial production started last May. It expects its production to total 16 million pounds from that operation this year.

The company said it would cost about 35 million Canadian dollars ($27.5 million) to suspend Rabbit Lake, while severance costs are estimated at about C$19 million.

Cameco,one of the world's largest uranium producers, posted a 65% drop in annual earnings in 2015, hurt in part by a large charge related to its Rabbit Lake operation. The company is now targeting annual production this year of 25.7 million pounds, down from 30 million previously.

Write to Judy McKinnon at judy.mckinnon@wsj.com

(END) Dow Jones Newswires

April 22, 2016 10:46 ET (14:46 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.