Vedanta to exclude base metals business from sweeping demerger
The group said it will consider the base metals business demerger at a later stage.
Uranium miner Cameco (TSX:CCO; NYSE:CCJ) is weighing its options after a key Japanese customer attempted to cancel its contract, which would mean $1.3 billion in lost revenue for the Canadian company.
Tokyo Electric Power Company Holdings (TEPCO), the operator of Japan’s wrecked Fukushima nuclear plant, issued a termination notice for a uranium supply contract on Jan. 24 and, earlier this week, it said it would not accept a delivery that was scheduled for Feb.1.
Tepco’s termination of the contract would affect about 9.3 million pounds of uranium deliveries through 2028, worth about $1.3 billion in revenue.
Such contract cancellation would affect about 9.3 million pounds of uranium deliveries through 2028, including about 855,000 pounds annually in 2017, 2018 and 2019, Cameco said.
Shares collapsed on the news. They were trading down 12.5% to Cdn$14.50 in Toronto at 1:00 pm, and 13.3% down in New York to $11.06 at 1:26 pm ET.
Cameco said the Japanese power company has cited forces beyond its control — specifically government regulations arising from the 2011 Fukushima nuclear accident — that have prevented the operation of its nuclear plants.
The Canadian firm insisted that there’s no basis for terminating the contract and considers TEPCO to be in default. It said it will pursue its rights — including binding arbitration.
“We are surprised and disappointed that TEPCO is seeking to terminate its contract given all the past productive discussions we have had to date,” Cameco’s president and CEO Tim Gitzel said in the statement.
The company noted it has sufficient financial capacity to manage any loss of revenue in 2017 as a result of the dispute.
Including income coming from TEPCO, Cameco expects 2017 earnings will range between $2.1 billion to $2.2 billion. More information on the uranium miner’s financial position will be released next week.
