Kazatomprom’s uranium production goals hit by sulphuric acid shortage
Kazakhstan’s national atomic company Kazatomprom, the world’s largest producer and seller of natural uranium, has forecast a potential dip in its production numbers this year due to a shortage of sulphuric acid.
In some conventional uranium mills, sulphuric acid is the leaching agent and it is a critical ingredient in Kazatomprom’s operations.
A significant amount of global sulphuric acid production is a spinoff from the oil and gas industry and forecasters have been tipping a potential shortfall in supplies for some time.
For Kazatomprom, that tightening of supplies is now looming large and could have a wide-ranging impact on global nuclear markets.
Kazatomprom produced 23% of global uranium in 2022.
Construction delays also an issue
Along with the challenges related to the availability of sulphuric acid, Kazatomprom said its 2024 guidance is being impacted by delays in completing construction works at the newly-developed deposits.
However, the company says it remains committed to its 2024 delivery obligations.
In 2022, Kazatomprom unveiled a proposal to increase production volumes in 2024 to a 90% level relative to subsoil use agreements.
The decision to increase production to this level from 80% in 2023 was primarily based on Kazatomprom’s continued success in signing mid- and long-term contracts with new and existing customers.
However, throughout 2023 the company highlighted potential risks associated with these production increases due to the challenges related to global supply chains and limited availability of certain key operating materials and reagents – such as sulphuric acid.
Growing regional shortage
A growing shortage of sulphuric acid in Kazakhstan and the surrounding region has been exacerbated by the demand from agricultural and industrial enterprises and shortages in both domestic and foreign regional markets.
This has led to the company securing lower than required volumes of sulphuric acid for 2024 in preliminary agreements with suppliers.
Kazatomprom said that while it continues to pursue alternative sulphuric acid supplies, current projections indicate that the company is facing a challenge in its plans to achieve the 90% production volume in 2024.
New assessments underway
Assessments of the impact of the material shortage and construction delays are currently underway, with the results to be unveiled in an upcoming production guidance for 2024 as part of the Q4 2023 trading update expected to be released no later than 1 February 2024.
“Kazatomprom remains committed to fulfilling contractual obligations towards all existing customers throughout 2024,” the company said in a statement.
“If limited access to sulphuric acid continues throughout this year and should the company not succeed in catching up with the construction works schedule at the newly-developed deposits in 2024, Kazatomprom’s 2025 production plan may also be affected, subject to considerable supply chain risks.”
“Updated 2025 production plans are expected to be communicated around the H1 2024 results disclosure but a successful return to a 100% of the subsoil use agreements can be viewed as at risk.”