Global uranium supply in jeopardy as Kazatomprom lowers production forecasts
Kazatomprom, the world’s largest uranium producer, has confirmed it will not be able to meet its previous production forecasts in an announcement that is expected to significantly impact supply and prices of the energy metal.
The company also declared that the world may not have enough uranium production to meet global demand after 2030.
Chief executive officer Meirzhan Yussupov noted in the company’s 2023 financial report that Kazakhstan accounts for about 40% of the world’s uranium production on an annual basis and that at least every third nuclear reactor in the world runs on Kazakh uranium.
Production shortage
“Although some of the producers made decisions to restart idled capacity and launch new production in mid-2020s, including ourselves, it will not be sufficient to cover uranium requirements post-2030, especially amid current geopolitical uncertainties, inflationary pressures and supply chain challenges worldwide,” Mr Yussupov stated.
“In the current pricing environment, another Kazatomprom-sized supply source will be needed to cover future market needs.”
In releasing its 2023 financial results, Kazakhstan’s national atomic company forecast its 2024 production will now be in the range of 21,000 to 22,500 tonnes of uranium on a 100% basis and 10,900-11,900t on an attributable basis.
This is significantly below its 2022 declaration that it intended to produce 25,000-25,500t on a 100% basis in 2024.
Multiple challenges
The company singled out challenges related to the availability of sulphuric acid and construction delays at newly-developed deposits as the main reason for the significant change in forecast numbers.
It now anticipates that the production volume for the majority of its uranium mining operations will be approximately 20% below the levels stipulated in its subsoil use agreements.
However, it still expects to achieve a modest annual growth in production in 2024.
The impact of these various challenges also saw Kazatomprom’s guidance for 2024 total capital expenditure increase significantly in comparison to 2023 as it moved to cover increases in purchase prices for materials, supplies, equipment and cost of drilling, as well as development costs for mining infrastructure of JV Budenovskoye LLP, JV Katco LLP (South Tortkuduk) and Ortalyk LLP (Zhalpak).
Spot market and exploration plans
The company also confirmed it may purchase uranium from the spot market, while continuing to monitor market conditions for opportunities to optimise its inventory.
It is also planning to step up exploration activities.
“As a national operator, Kazatomprom has always focused and will continue to put even more efforts to explore new uranium deposits and replenish its resource base,” Mr Yussupov said.
“The company is targeting to launch an exploration program and strengthen its work on assessment of territories aimed at ensuring reserve replenishment for future generations and to meet growing market needs.”