Kazatomprom to continue uranium production cuts in 2021, 2022

London — Kazakh uranium producing company Kazatomprom plans to produce uranium in 2021 and 2022 at levels 20% below the maximum amounts allowed in the country's subsoil use contracts, the company said in a statement Aug. 19.

Such contracts specify the amount of uranium that may be produced at mines owned by Kazatomprom and at other mines in the country in which it has an ownership joint venture stake.

Kazatomprom said it expected to produce between 22,000 mtU and 22,500 mtU in 2022, as opposed to the range of 27,500 mtU to 28,000 mtU allowed under the contracts.

It said it also expects to produce a similar amount of uranium in 2021, as previously announced.

"The decision to keep production similar year over year, and extend production curtailment into 2022, is indicative of a global uranium market that is still recovering from a long period of oversupply," Galymzhan Pirmatov, the company's CEO, said in the statement.

"We are simply not seeing the market signals and fundamental support needed to ramp up mine development in 2021 and take our production centers back to full capacity in 2022," Pirmatov said.

The company said there was no additional production planned to replace volume lost in 2020.

The company said in an Aug. 7 trading update that it expected to produce 19,250 mtU in 2020, unchanged from previous guidance.

A uranium producer said in an interview Aug. 19 that Kazatomprom's revised production target for 2022 "is significant since it represents a reduction of supply in that period of 13 million lb" U3O8.

The producer said the 20,000 mtU of lost production for 2020 through 2022 "represents over 50 million lb" U3O8. This has a "direct effect, but not immediate effect, on the spot market, since a lot of Kazakh material ends up on the market, and there really is no substitute," he added.

That could impact the long-term price because utilities "won't have as much Kazakh material in the spot market available," and "producers, including Kazatomprom, will be able to ask for higher prices in future," the producer said.

An intermediary disagreed, saying in an interview Aug. 19 that "a lot of entities probably have [that news] already baked into the uranium price, so I wouldn't be surprised if it has no impact at all."

The market sources spoke on condition of anonymity to discuss sensitive market developments or in accordance with their company policy.