Kazatomprom to increase uranium production in 2024

"Unprecedented" global economic uncertainty and significant geopolitical developments in the first half of the year have tested Kazatomprom's corporate risk management practices, Acting CEO and Chief Operational Officer Yerzhan Mukanov said, and risks to both mine development and uranium production from supply chain challenges remain significant.

"Although the uranium market has improved, with an increase in long-term contracting interest, a thinning near-term market, and substantially improved pricing, we believe the fundamental shift in the supply-demand balance is still underway, with an illusion of endless secondary supply, creating ongoing opportunities for Kazatomprom as a primary supplier that maintains a disciplined approach," Mukanov said. "Therefore, consistent with our market-centric strategy and accounting for evolving mine development and production constraints, we expect to increase potential production by about 2000 to 3000 tU in 2024 compared to our planned range for 2023, representing continued production discipline and a decrease of approximately 10% against our total subsoil use contracts level in 2024."

Subsoil use contracts are agreements with the Kazakh government covering the production of uranium by in-situ leach methods. Kazatomprom in 2017 announced plans to reduce production to align with market demand, and prior to today's announcement its 2024 production expectation had been set at 20% below the 28,691 tU for the year specified in the subsoil use contracts.

The decision to increase production is based primarily on the signature of mid- and long-term contracts with new and existing customers, Kazatomprom said: "The current contract book provides sufficient confidence that the additional volume in 2024 will have a secure place in the market and be needed to fulfil future contractual obligations."

Kazatomprom's 2024 production is now expected to be between 25,000 tU and 25,500 tU (on a 100% basis). Although the year-on-year production increase from 2023 to 2024 is modest, the current state of global supply chains may still present "significant challenges to any increase above current production levels," it said. It will now begin working with joint venture partners and mining subsidiaries to incorporate the required changes into its 2023 budgets and development plans. No decision has been taken regarding mine development activity and production volumes beyond 2024.

Transport routes

The primary shipment route for Kazakhstan's uranium production is via St Petersburg in Russia. Despite continuing geopolitical uncertainty, this route has so far remained uninterrupted and has already been used several times this year, Chief Commercial Officer Askar Batyrbayev said.

An alternative route via the Caspian Sea - which does not cross Russian territory - developed in 2018 is available, and the company intends to send at least one shipment via that route this year, he said. Shipment via this route might be "slightly more costly" than via St Petersburg.

"I guess we'll be using the Caspian route a little more frequently than we did before," he added.