A refined expansion.

The world's largest and most advanced uranium refinery is about to hire another 20-30 people.

Cameco has announced a new toll-conversion agreement with British Nuclear Fuels plc (BNFL).

Under the agreement, the latter's Lancashire, United Kingdom operations will convert about 50 million kilograms of Cameco's uranium over the next decade. Cameco, meanwhile, will spend about $6 million on its Blind River plant, adding to its payroll in the process. The money will be used to expand the facility's drum-filling and production capacity.

"We'll assess that further down the road to see if there are any further requirements," says Cameco spokesperson Lyle Krahn. "It's the newest refinery for uranium and we've actually been under-utilizing its capacity because it's tied to production at Port Hope."

Uranium has a lot of hoops to jump through between the mine and the nuclear reactor. Once it is mined and milled, the uranium is chemically refined to produce high-purity UO3 (Blind River). Then, depending on the type of reactor it will fuel, it is converted to UF6 (Port Hope) which is used to feed enrichment plants. The enriched UF6 is then converted to uranium dioxide, or UO2, which is packaged in the fuel bundles used in nuclear reactors. While most uranium producers refine and convert in one place, Cameco refines in Blind River and converts in Port Hope.

Cameco's Port Hope plant is one of only four conversion facilities in the western world and accounts for more than a quarter of the western world's capacity. The plant produces both natural UO2 used to fuel Canada's Candu reactors, and UF6 that is shipped to enrichment facilities around the world.

"There's uranium prices and then there's conversion prices," Krahn explains. "Both prices have been rising. But the most important thing here is Cameco had the opportunity to access a fairly new UF6 conversion facility. This agreement provides us the opportunity to access more conversion services and make our operations more efficient. The rising prices are an indication of the strength of that market. That conversion capacity in the U.K. will be badly needed in the future."

Rising uranium prices have sparked interest in Elliot Lake's now-dormant uranium mines, largely the reason the Blind River plant, about 35 minutes from Elliot Lake, was established in the first place.

"We have agreements with producers around the world. We'll look at any arrangements in the future. It depends on who taps into us."

Cameco president and CEO Jerry Grandey sees his company getting a lot for a little under the new deal.

"This agreement allows us to effectively achieve a significant increase in UF6 production capacity, sales and market share by investing a small amount of capital," he said in a release." At the same time, it preserves Springfields' production capacity at a critical time in the industry and enables us to lower our unit costs by utilizing Blind River's unused capacity."

The spot price of uranium in North America and the U.K. has jumped by about 50 per cent to about $9 per kilogram in recent months.

www.cameco.com

By CRAIG GILBERT

Northern Ontario Business