Editorial A world leader

Mines are where you find them, and in the case of uranium, the best mines in the world are in Saskatchewan. The rest of the world just can’t compete. Sitting on the best of them is a new company owned jointly by the governments of Saskatchewan and Canada.

The Canadian Mining and Energy Corporation or Cameco, as it will be known, is the result of merging the Saskatchewan Mining Development Corp., a provincial Crown corporation, and Eldorado Nuclear Inc., a federal Crown corporation. Closing of the merger is expected before the end of September.

When the merger is complete, there will be just one way of describing the new company: a world leader. Controlling about 16% of the Western World’s uranium production, it is miles ahead of any competitor. Depressed uranium prices, competition from countries where labor costs are a fraction of what they are here and where a company’s social responsibilities are much less onerous — those factors and others will have their effect on how successful Cameco is. But one thing that can’t be changed, one fundamental competitive advantage that no one in the world can challenge and which gives Canada its stature as a world leader, is the quality of the company’s orebodies.

For example: The Key Lake uranium mine, 50% owned by SMDC and 16.7% by a subsidiary of Eldorado, is the world’s richest. Known mineable reserves of 147 million pounds of U3O8 will supply design production levels for at least 12 years at this mine alone. The not-yet-opened Cigar Lake deposit, discovered in 1981 and in which SMDC has voting control, has indicated reserves of 385 million pounds of U3O8.

In fact, Canada produces more uranium than the combined total of the next three highest producing countries, the United States, Australia and South Africa. About 17% of Western World uranium production comes from northern Saskatchewan’s Athabaska basin, where SMDC’s mines are dominant, and that share is expected to almost double over the next decade.

The main market for uranium is for use as nuclear fuel to generate electricity, and nuclear fuel is a growth industry. There are limits to the growth potential — the U.S. and Sweden for example are shying away from greater use of nuclear power — but elsewhere in the world the demand for this clean fuel is growing as an alternative to burning fossil fuels. And some environmentalists are becoming supporters of nuclear power for that same reason. The future for nuclear power is not clear by any means, but the potential is great. When the merger is complete, Saskatchewan will own 61.5% of the new company and Eldorado the balance, but that will change when the companies shares go on sale to the public, possibly before the end of 1988. That first public offering will probably be to raise about $150 million and will involve 15% of the company’s equity. Eventually, the entire company will be publicly owned, but Cameco has seven years during which to complete that privatization.

Privatizing Air Canada may be the share offering everyone is talking about today, but this new company will be the one to keep an eye on.