SASKATOON – Cameco Corp. is poised to grow, the chairman of the Saskatoon uranium giant recently told investors, as a “geopolitical crisis hit our market” with Russia’s war on Ukraine.
Tim Gitzel was speaking earlier this month after the company announced it had teamed up with Brookfield Renewable Partners to acquire Westinghouse Electric, a maker of equipment for nuclear power plants.
Cameco, one of the world’s largest uranium companies, said the deal would provide an opportunity to secure new business in countries traditionally served by Russia.
“With Russia’s actions in Ukraine, we now have a Western world grappling with its dependence on this fuel source and seeking Western sources of enrichment, conversion, uranium and , of course, Western sources of fabricated fuel,” Gitzel said. .
Experts say energy, minerals and agriculture feature heavily in motivating Russian President Vladimir Putin’s actions in Ukraine and the ensuing war has left world markets with falling supplies and prices. sharply.
Saskatchewan, with its stable and well-established agricultural and resource sector, found itself in a position to help fill the global void caused by the war.
“(The Prairies) are big players in global markets for these things,” said Ellen Goddard, agricultural economist and professor emeritus at the University of Alberta.
“For the majority of Canadians, the true contribution of the Canadian Prairies to global markets is not well understood at best.
Saskatchewan, with a population of less than 1.2 million, is known for producing plenty of National Hockey League players, but it doesn’t have a reputation as a world power in Canada. However, the decisions made in its boards of directors have a significant impact, especially as the war in Ukraine rages on.
In addition to Cameco’s global role, the province is also home to fertilizer producer Nutrien. As the world’s largest potash producer and third largest nitrogen producer, Nutrien increased production to respond to the war.
Earlier this year, potash shipments from Russia and Belarus fell significantly due to sanctions and restrictions on fundraising. Around the same time, Nutrien announced plans to increase potash production to 18 million tonnes per year by 2025 to meet growing global demand, marking a 40% increase from 2020 levels. .
The fertilizer giant hit record profits in the first six months of the year, raking in US$5 billion as farm input prices hit multi-year highs due to war and heightened security fears world food.
Acting CEO Ken Seitz told analysts in August that the company expected the ripple effects of the war to drive demand for many years.
“We believe that structural changes in global energy, agriculture and fertilizer markets will provide a supportive environment for Nutrien well beyond 2022,” Seitz said.
David Soberman, a University of Toronto professor and Canada National Chair in Strategic Marketing, said Saskatchewan has suffered in the past when there was a glut of resources from Eastern Europe. For example, prices languished for years after the breakup in 2013 of a Russian-Belarusian marketing cartel that increased potash competition in the market.
But Saskatchewan businesses have remained stable throughout this period, Soberman said, assuring the global market that they are reliable, especially in times of uncertainty.
“The world needs the things that the Prairies produce in many ways,” Soberman said. “The Prairies are like a savior to the world.
The war in Ukraine is terrible, he said, but the uncertainty it brings can also underscore the allure of dealing with Canadian companies.
Grain stocks and prices were also upset after Ukraine’s exports came to a halt. The first ship carrying grain since the invasion of Russia in February did not leave a Ukrainian port until August. While more grain was to be shipped from Odessa, the unpredictability of the war remains.
Russia and Ukraine were among the world’s leading producers and exporters of grain and cooking oil. In the years before the war, Canada’s share of the world export market had declined due to increased exports from Black Sea producers, including Russia and Ukraine.
The Canadian prairies can also act as a stable supplier of grains and oils, said Joel Bruneau, chair of the economics department at the University of Saskatchewan.
Bruneau said Saskatchewan producers must act ethically when meeting increased demand caused by war. If companies start raising prices, it won’t be soon forgotten by partners around the world, he said.
“We are a good supplier,” Bruneau said.
“So we make profits by being a good supplier.”
This report from The Canadian Press was first published on October 23, 2022.
— With files from Amanda Stephenson in Calgary
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