Tim Gitzel, CEO of uranium miner Cameco, is our Mining Person of the Year for 2023

Tim Gitzel, an executive at Cameco (TSX: CCO; NYSE: CCJ) for 17 years and president and CEO for 13, has led the company through more bad times than good. Among the bad times: repeated flooding at the Cigar Lake mine; the post-2007 uranium price crash; and the more devastating doldrums after the Fukushima nuclear disaster in 2011. 

Among the good times: right now. 

The company’s shares have doubled in the past year, following the exploding uranium price. But Gitzel’s careful preparation has positioned Cameco for such a moment, when supply challenges, geopolitics, and renewed fervour for nuclear power have swung uranium back into favour. 

That’s why Gitzel is our Mining Person of the Year for 2023.  

Cameco’s discipline through the tough times allowed it to take advantage of a company-changing opportunity as the nuclear sector’s fortunes turned. It acquired a 49% stake in Westinghouse last year for US$2.1 billion, diversifying its revenues and going downstream into the reactor service and design business. This at a time when hundreds of reactors are in construction or being planned around the world. 

Even keel

While excitement has been building around uranium for the past few years, Gitzel has always maintained a steady approach, regardless of the ups and downs of the market. 

“It’s a tricky business. You’ve gotta try and maintain an even keel through it, cause it’s commodities,” he told The Northern Miner in April. 

Cameco’s McArthur River uranium mine in Saskatchewan in 2022. Credit: Electric Umbrella/Liam Richards

Gitzel got his start in the business when he was just 17. Born and raised in Saskatchewan, the son of an RCMP officer, Gitzel’s first job in uranium was working summers at the province’s Cluff Lake mine — in the warehouse, as a heavy equipment operator and in other jobs. 

He earned an arts degree before studying law and working summers in France for state-owned Areva (now Orano). After graduating, he practiced law for a couple of years before rejoining the company. Gitzel stayed for 15 years, learning every component of the sector, and spent the last five running Areva’s worldwide mining business unit from Paris. 

Gitzel was recruited by Cameco in 2007, the year that spot uranium prices spiked to a record high of US$136 per lb. from less than US$10 per lb. in 2001. 

“It was kind of a shaky train heading down the track a little too fast,” he says, recalling the mania that attracted about 400 junior explorers into the space. “The Chinese were buying uranium. Everybody was talking about new reactors. Nuclear power had a lot of momentum.” 

Gitzel recalls Cameco faced criticism at the time for not jumping to expand its portfolio. But assets were far too overpriced for the company’s taste. 

“We try not to get too swept up in the euphoria of the day and I’ve said that from the day I got here — let’s be disciplined in what we’re doing.” 

In the meantime, Cameco was seeking a solution to flooding challenges that started in late 2006 at its Cigar Lake mine, then in construction. The mine in Saskatchewan’s Athabasca Basin (now 54.5% owned by Cameco) was supposed to produce 18 million lb. U3O8 per year — a fifth of global production — starting in 2007. 

The flooding and subsequent delay to production sparked fears of supply shortages, helping to propel uranium’s price rise. 

While repeated flooding ultimately set back production by seven years, the company solved Cigar Lake’s water challenges by devising a new mining method that involves freezing the ore and surrounding rock. It’s now the highest-grade uranium mine in the world with proven and probable reserves of 555.6 million tonnes grading 17.03% U3O8 for 208.6 million pounds. 

Fukushima disaster

Cameco faced a tougher challenge after the Fukushima nuclear disaster, caused by a March 2011 tsunami, decimated uranium demand.  

As Japan shut down more than 50 reactors within months and other countries backtracked or paused their nuclear power plans, mined production of uranium was only increasing. 

“It was a complete oversupply of uranium,” Gitzel said. “We kept going for a while and then we just said, you know what, if we keep doing the same thing we’re gonna be done.” 

Cameco suspended its Rabbit Lake mine, east of Cigar Lake, plus its in-situ recovery (ISR) operations in Nebraska and Wyoming in 2016. Its larger 70%-owned McArthur River mine and Key Lake mill (83%) followed in late 2017. The moves cut the company in half. 

Those difficult times motivated him to help rebuild the company when nuclear power finally emerged from the ‘penalty box.’ 

“What kept me in through the dark years was I felt this obligation to our people to stay here and help put things back together again,” he says. “I believed our day would come again.” 

Turnaround

And it has. Nuclear energy has seen nothing but momentum for the past several years. Starting with the rise of the net zero climate movement, nuclear is now gaining renewed traction as a secure, scalable and reliable power source. 

The Western world’s efforts to cut Russia out of the nuclear fuel supply chain have further revved up sentiment for Western uranium producers. 

As the long-term uranium price, which is what Cameco bases production decisions on, rose to US$68 per lb. at the end of 2023 from US$16 per lb. a year earlier, Cameco’s net earnings and cash from operations doubled last year, while revenues rose nearly 40% to $2.6 billion. 

Cameco’s 83%-owned Key Lake uranium mill in Saskatchewan. Credit: Cameco

Cameco restarted McArthur River and Key Lake in late 2022 and is ready to OK an already-permitted expansion of McArthur River to 25 million lb. per year from 18 million lb. as soon as the market calls for it. 

It’s also working to extend Cigar Lake’s mine life out to 2036. Between it and McArthur River, the company expects to produce more than 36 million lb. U3O8 this year in Saskatchewan. It also has a 40% stake in the Inkai ISR mine in Kazakhstan with Kazatomprom (LSE: KAP), and still has three other assets on care and maintenance in Canada and the U.S. 

Its stake in Westinghouse adds a complementary business designing and engineering light water reactors, supplying fuel for those reactors and servicing about half the global fleet of reactors. 

Brookfield (TSX: BN) engineered a turnaround of Westinghouse after buying it out of bankruptcy protection in 2018 for US$4.6 billion. Its Brookfield Renewable Partners (TSX: BEP-O) business is now Cameco’s 51% partner in the company. 

Westinghouse still owes US$3.8 billion, but the company is expected to easily service its debt while generating cash for its owners. Earnings before interest, tax, depreciation and amortization are forecasted to grow at a compound annual rate of 6-10% over the next five years. 

Importantly, Westinghouse doesn’t build reactors, a business where cost overruns are rife. 

The acquisition puts Cameco in a sweet spot for both exposure to China as a customer, and to compete with the country, which is in the midst of a “mind-boggling” nuclear buildout, Gitzel notes. 

The country plans to have 100 or more reactors by 2030, up from 54 today. They’re also able to build reactors that work well in a 60-month timeframe — shorter than in Western countries, he says.  

“They will be a major player in the nuclear space going forward,” he said. “They’ve just started now to go outside of China and build reactors in other countries.” 

Cameco’s Westinghouse stake puts it in a unique position as a publicly listed nuclear fuel and reactor technology company that’s not controlled by a state-owned enterprise. 

“The world was really looking for a Western supplier. I just got back from a week in D.C., and I can tell you they’re looking to reestablish American dominance in the nuclear industry that’s been lost over the last 20 years, space given up to the Russians and the Chinese,” he says. 

“They want it back and we’re a critical component — we have the reactor technology and we have the fuel for those reactors.”