Just months after Saskatoon-based Cameco Corp. laid off hundreds of workers and shuttered the largest high-grade uranium mine in Canada, the market for the radioactive metal used in nuclear power generation is suddenly in flux, as tensions between the U.S. and Russia flare.

Last week, in response to new U.S. sanctions, Russian lawmakers proposed measures that would halt enriched uranium exports to the U.S. — a move other countries could follow — which analysts believe could reset the supply and demand picture.

“The fact of the matter is it could potentially be quite explosive,” said Rob Chang, a former analyst with Cantor Fitzgerald, who now sits on the board of Fission Uranium Corp., an exploration company.

Uranium prices have declined by more than 70 per cent since a tsunami destroyed the Fukushima nuclear power plant in 2011 and led Japan to take all its nuclear reactors offline. That contributed to an oversupply and depressed prices to the point that, at many mines, it costs more to produce uranium than to buy it on the spot market, which has largely put a pause on exploration and mining in Canada.

In January, Cameco laid off 845 workers and suspended operations at its McArthur River mining and Key Lake mill in northern Saskatchewan, for an estimated 10 months, at a cost of as much as $7.5 million.

At the time, Cameco chief executive Tim Gitzel blamed “the continued state of oversupply … and no expectation of change on the immediate horizon.”

Gitzel was not available for comment, but company spokesman Gord Struthers said it’s too early to say whether U.S.-Russia tensions will affect its operations. The company would not restart operations at McArthur without some change in uranium spot prices, he said.

“Definitely, we will need to see some reaction in the market,” said Struthers.

Royal Bank of Canada’s Andrew Wong said in a note that “the threat of supply to U.S. utilities is considered a potential positive for non-Russian producers, especially in the U.S. and Canada, but we stress that there are only limited details currently available and nothing has been decided.”

Wong has an outperform rating for Cameco, currently trading at $10.42, with a target price of $15.

The U.S. imports 89 per cent of its uranium, according to Vancouver-based Katusa Research, a resource focused financial advisory firm.

Although Russia provides just 14 per cent of the U.S. supply, two former Soviet republics, Kazakhstan and Uzbekistan, provide 24 and 4 per cent respectively of the U.S. supply, according to Katusa Research.

“When I travelled out there, I realized that really the Russians control all of that,” said Marin Katusa, chairman of Katusa Research.

By his analysis, Canada supplies 25 per cent of the U.S. market.

“Right now Canada could not make up the difference” if Russia follows through, he said.

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