Grant Isaac: Yes. That’s a terrific question, Ralph. The way we look at it is, of course, we build a portfolio that we think offers the best of all worlds to investors. We take quick moves that can happen in so-called commodity spaces. But we turn those into a long-tail cash flows and revenues through long-term contracts. We don’t just ride up a tight spot dynamic and then ride it back down like we’ve seen other uranium producers do. And probably the best way to illustrate this is a lot of people these days are looking at that uncovered requirements which. And I think it’s slide 9 to accompany Tim’s comments. And what we see is it gets misinterpreted often in two ways. First of all, some people look at the uncovered requirements wedge.
And if you look at it for ’23, 2024 and 2025, utilities have very little discretionary demand. And some people incorrectly conclude that, that means there’s not going to be a lot of demand coming to the market. Well, that’s not right. Utilities will, by definition, be very well covered in year and next year. But that doesn’t mean demand 2025, 2026 and beyond can’t create price pressure today. So that curve will always look that way. So to your point, when you — when we’re in 2030, for example, there are some folks out there that are advocating that they’re going to bring production into uranium, and they say, we don’t have to worry about a contract portfolio today because look, demand is going to be 200 million pounds in 2030. Well, demand will be 200 million pounds, could even be more by 2030.
But that wedge will look exactly the same. The uncovered portion will be very, very small in 2030, 2031. And let me just put it into perspective because I know a lot of people like to look at the spot market. In 2022, utilities bought 8 million pounds in the spot market. So term contracting is going up, spot market purchasing actually went down. They were 13% of the spot market. In weekly terms, utilities were putting 150 million pounds of demand per 150,000 pounds of uranium demand in the market per week. So if somebody comes along and says, well, I’m going to build a 5 million pound mine and sell it into the spot market, they got to sell 100,000 pounds per week in the spot market. That’s foolish. If someone comes along and says, well, I’m going to build a 25 million pound mine, and I’m going to be spot exposed because I want to take advantage of all this price yet to come.
They’re going to be pushing 500,000 pounds through the spot market in a year where there’s no requirements. So for us, it is about giving investors exposure under long-term contracts to rising price environment and protecting them from that kind of behavior in the market. And if you want to see the performance of our contract portfolio, just look at it post Fukushima. We outperformed the market in those years with our contract portfolio because we gave you upside participation and protected you from downside if we saw that kind of behavior. So could we see it again? Hopefully not. Hopefully, investors understand the market structure and they’re not prepared to finance a project that has a silly spot market strategy to it. But if they do, Cameco’s investors are protected from…
Ralph Profiti: Appreciate the color, Tim and Grant, and congratulations on the appointment. Thank you
Operator: Our next question comes from Greg Barnes of TD Securities. Please go ahead.
Greg Barnes: Thank you. Grant and Tim, you’ve said in the past that contracting begets contracting. So I know the forecast from some of the forecasters were 100 million pounds again of contracting in 2023. But with this Ukraine contracts, I think that’s off to a huge start. Do you think this is going to encourage more utilities coming to the market perhaps faster than they previously anticipated?
Tim Gitzel: Greg, thanks for the question. Grant’s on a roll here, so I’ll let him keep going on the market.
