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Cameco Corp CCJ

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Economic Moat




Pandemic Weighs on Cameco’s Near Term, but Long-Term Growth Story Remains Intact

Analyst Note

| Kristoffer Inton |

The coronavirus pandemic has had mixed impact on uranium supply and demand but will likely be negative overall for Cameco. On one hand, the pandemic has forced unexpected supply disruptions. For example, Kazatomprom had reduced operations at all its mines for three months starting in April, with a recent extension announced earlier this month. With Kazakhstan responsible for 40% of global production, any change in production has a material impact on the supply market. In addition, Cameco had shuttered Cigar Lake, and various other producers also reduced operations in response to the pandemic. As a result, spot prices rapidly rose 35% to more than $33 per pound from February to April and have remained flat since.

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Company Profile

Business Description

Cameco is one of the world's largest uranium producers. When operating at normal production, the flagship McArthur River mine in Saskatchewan accounts for roughly 50% of output in normal market conditions. Amid years of uranium price weakness, the company has reduced production, instead purchasing from the spot market to meet contracted deliveries. In the long term, Cameco has the ability increase annual uranium production by restarting shut mines and investing in new ones. In addition to its large uranium mining business, Cameco operates uranium conversion and fabrication facilities.

11th Street West, Suite 2121
Saskatoon, SK, S7M 1J3, Canada
T +1 306 956-6220
Sector Energy
Industry Uranium
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 1,824