Thank you, Mr. Chair, and my thanks to your committee for inviting Cameco here today to share our views on the importance of market diversification to Canada's energy sector.
I'd like to begin today by telling you a bit more about our company before talking about the evolving market for our products, and ending with a quick synopsis of what the federal government can do to help facilitate market access for Canadian players in this industry.
Headquartered in Saskatoon, Cameco is one of the world's largest producers of uranium for nuclear energy, accounting for about 16% of total global production. The majority of that production comes from our extensive mining and milling operations in northern Saskatchewan. I should add that we also have exploration projects on the go both in Saskatchewan and other provinces and territories across Canada.
Cameco’s Canadian footprint extends beyond mining into other aspects of the nuclear fuel cycle. We have uranium refining, conversion and fuel fabrication facilities in Blind River, Port Hope, and Cobourg, Ontario. We also own just under a one-third share of North America’s largest nuclear power generating station, the Bruce B reactors on the shores of Lake Huron.
In terms of sales, Cameco markets its uranium and fuel products around the globe. We play a major role in the energy equation of many countries, particularly here in North America, where Cameco uranium currently powers one in every 14 households in Canada, and one in every 18 households in the United States.
Through these activities Cameco employs more than 5,000 people in Canada between direct employment and long-term contractors. Importantly, close to 1,700 of these jobs are held by workers of first nations and Métis heritage, making Cameco the largest industrial employer of aboriginal people in Canada. It’s a record of which we are very proud, and we intend to build on it going forward as we grow our business.
Cameco is in the midst of an ambitious growth plan to increase our uranium production from the current rate of around 22 million pounds per year to 36 million pounds per year by 2018, with the vast majority of that increase again coming from expansion and development projects here in Canada.
We are undertaking this strategy in response to a growing market for nuclear energy that is currently manifesting on the world stage.
Despite the current global economic malaise, despite the short-term uncertainty that is affecting commodity markets, despite the lingering effect on the nuclear sector of the earthquake, tsunami and nuclear incident in Japan, I am pleased to report that the long-term fundamentals of the global nuclear energy sector remain strong.
There are presently 435 operable civil nuclear power reactors in the world. There are an additional 65 reactors under construction right now, and dozens more in the planning stages. By our estimation, this will take global nuclear generating capacity from the current level of around 392 gigawatts to 510 gigawatts by 2022. This represents a 30% increase.
Again, these are post-Fukushima numbers, representing growth this industry hasn’t seen in decades. Also interesting is where the majority of this expansion is happening, because it likewise signals a notable shift.
As with most commodities, the biggest growth market for uranium is China. China currently has 17 reactors in operation, another 28 under construction, and plans for dozens more thereafter.
Another rapidly expanding market is India, which operates 20 nuclear reactors, has another seven under construction, and is planning for several more units by 2020.
While these two economic giants lead the way, other nations are similarly expanding their existing reactor fleets, while still more countries that have not generated nuclear power to date are now turning to it as a form of clean, safe, reliable electricity production.
That’s not to say that growth is stagnant in our major long-standing markets, either. With 104 reactors, the United States is still the largest nuclear energy consumer in the world. Construction is now under way on three new reactors in the U.S., the country’s first new builds since the 1970s.
However, current expansion patterns clearly point to a global market for nuclear energy that is shifting.
While established players, like the U.S., will always remain important in the nuclear industry, the emerging growth markets are vital to our long-term success. The Government of Canada and indeed all parliamentarians play a major role in determining the ability of Canadian companies to participate in these markets.
The nuclear energy sector is among the most highly regulated in the world, and rightfully so. There are both international and bilateral non-proliferation safeguards in place to ensure that products and technologies sold for peaceful, civilian nuclear energy generation are used exclusively for that purpose and not diverted for military intentions. Among these safeguards are nuclear cooperation agreements, or NCAs. No trade of nuclear products or technologies can take place between two countries unless they have successfully negotiated and implemented a bilateral NCA governing the approved usage, tracking and reporting requirements for such materials.
Canada has had NCAs in place with countries like the U.S., Japan, South Korea for some time. However, a number of agreements with key growth markets have only recently been concluded under the current government, including those with China and India. These two NCAs, in particular, were welcomed as very significant and celebrated events by the Canadian nuclear sector. They open up the two fastest growing markets on the planet to Canadian uranium, fuel products, and reactor technology, enabling Canadian players in this industry to compete on an even footing with their counterparts around the world.
The net result of these agreements is that more of the financial benefits from the growth taking place in the global nuclear energy sector will accrue to Canada so that Canadian companies, workers, and communities reap the rewards of the jobs, investment, and economic activity that go along with this magnitude of growth. To provide a concrete example, Cameco currently has long-term sales contracts in place with two Chinese utilities, the value of which will be in the billions of dollars. Up until now we were compelled to fulfill these contracts using uranium sourced from other countries. With the NCA now in place, it's our intention to soon begin using Canadian uranium for this purpose. Again, the net result is that Canada will be bearing the fruits of this labour, not some other country.
Another activity that the federal government can undertake to help open energy markets is to engage in trade missions with key destinations. Governments play a major role in the electricity supply arrangements of many countries, especially when nuclear energy is involved, and in many of the countries where growth is happening, state-to-state relationships remain incredibly important to doing business, even for private companies.
Foreign leaders want to know they can trust the companies with which they are dealing, that they have the endorsement of the Government of Canada as a credible and reliable partner. That reassurance is delivered when senior federal representatives travel to these countries alongside their business leaders. In an industry where many of our competitors are state-owned enterprises, that support is particularly valuable. Cameco has made great strides in its commercial dealings by participating in such foreign trade missions, and we want to reinforce their importance with members of your committee.
Mr. Chair, I've covered a lot of ground in a short period of time, so with that, I will again extend my thanks on behalf of Cameco and look forward to any follow-up questions.