Kazatomprom prolongs uranium production cuts

The company in December 2017 announced that it would reduce planned uranium production by 20%, compared to planned levels under Subsoil Use Contracts, over three years from January 2018. It has now said it will extend the production curtailment, in a decision which reflects the fact the uranium market is still recovering from a period of oversupply, and uranium prices remain low.

"As the largest uranium producer in the world, Kazatomprom recognises the need for global output to better align with current demand," it said.

The full implementation of this decision would remove up to 5,600 tU from anticipated global primary supply in 2021, Kazatomprom said. The company's 2021 production would remain below 23,000 tU (100% basis), which is expected to be in line with production in 2019 and 2020.

"Uranium recovered somewhat from the lows of 2016, but the market is still signalling that there is no need to bring back existing production capacity," Kazatomprom CEO Galymzhan Pirmatov said. "Keeping production levels flat for now supports a return to long-term sustainability in the market, which will benefit all stakeholders. Delaying the return to planned output levels also demonstrates our commitment to the value-over-volume philosophy at the core of our strategy."

No decision has yet been taken regarding production levels beyond 2021, the company said, adding that it continues to monitor market conditions. "However, Kazatomprom does not expect to return to full production until a sustained market recovery is evident, and demand and supply conditions signal a need for more uranium," it said.

Kazatomprom said it will now begin working with its joint venture partners to assess the impact and implement the plan across all of Kazakhstan’s uranium mines. One of those joint venture partners is Canadian company Cameco, 40% owner of the Inkai in-situ leach uranium mine which is one of Cameco's so-called tier-one assets alongside Cigar Lake in Canada. Cameco in 2018 indefinitely suspended production at its Key Lake/McArthur River operations in Canada as part of its long-term strategy to focus on those tier-one assets and align production to keep pace with market signals. It previously suspended production at its US in situ leach projects and the Rabbit Lake mine in Canada.

According to World Nuclear Association, Kazakhstan has 12% of the world's uranium resources and in 2018 produced about 21,700 tU. It has been the world's leading uranium producer since 2009, with a 39% share of world production in 2017. Kazatomprom's 2017 production of 12,488 tU was 21% of world production.