Kazatomprom looks beyond geopolitics

Thursday, 17 March 2022

"The first months of 2022 have been volatile and unexpected, to say the least," CEO Mazhit Sharipov said. "In January, our country experienced a tragic series of events in the first days of the new year, events that still echo in the hearts of every citizen of our country. As a company, we promptly took all necessary measures to prevent any disruption to our operations and ensured the safety of all personnel. There were no tangible impacts on the company's activities.

"At the end of February, the escalation of the Russian-Ukrainian conflict led to the military actions we are currently seeing in the territory of Ukraine. Our hearts are with all the victims of this conflict and we are hoping a peaceful resolution comes very soon," he said.

Sanctions imposed by various countries against Russia have not directly affected the uranium and nuclear industry to date, Sharipov said, although the rapidly changing situation makes it difficult to predict the possible impact and consequences on Kazatomprom's activities. The company "remains prepared with mitigation plans under a variety of scenarios," he added.

Active international sanctions against certain Russian banks mean it is "inappropriate" for the Kazatomprom group to service or interact with these banks or their subsidiaries, and the company said it has taken measures to redistribute funds to banks that are not under current sanctions.

Provision of services under Kazatomprom's uranium processing agreement with the Uranium Enrichment Centre, which is located in Russia, are currently expected to continue, Kazatomprom said. "There may be a risk of difficulty in making mutual settlements in US dollars with UEC in the event of restrictions and blocking of the UEC's foreign currency accounts or in the event of the withdrawal of Russian banks from the SWIFT system. Potential measures related to the risk of Rosatom being sanctioned are now under consideration," the company added.

Transport routes

Some of Kazatomprom's products are transported through the Russian Federation, but as of 16 March, there were no restrictions related to the supply of its products to end customers, the company said.

Just under 50% of Kazatomprom's attributable production is shipped to western convertors, mostly via St Petersburg, Chief Commercial Officer Askar Batyrbayev said in an interview with James Connor of Bloor Street Capital on 11 March. To date, the transit of material via that route has not been affected at all, he said.

Kazatomprom has already developed an alternative trans-Caspian international transport route, which "completely excludes Russian territory", he said. The company has since 2018 carried out several shipments per year via the alternative route. "So if if we need to use that route we're ready and have the possibility to do that," he said.

2022 guidance

Kazatomprom's total uranium production for 2021 was 21,819 tU on a 100% basis (11,858 tU attributable) - both higher than for 2020, when pandemic-related safety measures resulted in "unusually low" production volumes. Pandemic-related supply chain challenges have, however, continued and the group said it has announced a wider range for its 2022 production guidance of 21,000-22,000 tU on a 100% basis (10,900-11,500 tU attributable).

"Amid and beyond the current events, we are seeing growing concern around energy security and diversification, which has brought nuclear power back into focus as an indispensable alternative to carbon-generating sources," Sharipov said. "As the world's leading producer and supplier of natural uranium, Kazatomprom is best placed to play a significant role in the world's energy transition efforts and deliver on its value-focused strategy well into the future."