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Kazatomprom's uranium supply contract with Iran hinges on UN approval

National Atomic Co. Kazatomprom JSC has clarified that it will honor its current contract to supply Iran with uranium but that the timing is dependent on the approval of the six countries that make up the U.N. Security Council.

A spokeswoman for the state-run uranium miner told S&P Global Market Intelligence Dec. 28 that the contract with Iran was extended to 2020 pending a decision by the U.N. In March, Kazakhstan's Vice-Minister of Foreign Affairs Erzhan Ashikbaev confirmed that Kazatomprom signed a three-year agreement for the delivery of 950 tonnes of uranium concentrate with Iran.

During a press briefing on Dec. 21, Kazatomprom CEO Galymzhan Pirmatov told journalists that the delivery of uranium to Iran had been scheduled for 2017.

"The contract stipulated delivery for this year, but, as you know, the delivery of uranium concentrate to Iran is only possible with the permission of the Six [countries of the U.N. Security Council] — U.S., France, U.K., China, Russia and Germany," he said, adding that delivery had been rescheduled to between 2018 and 2020 pending the Security Council's approval.

At the briefing, Pirmatov also broached the issue of Kazatomprom's recent decision to cut its uranium production by a further 20% over the next three years, aiming to "ensure the long-term sustainability of uranium mining." He stressed that the production cuts would have no effect on current contractual supply operations.

"Kazatomprom is actively working to strengthen the marketing function to maximize the sales margins and expand the supply geography," he said.

Lynkeus Capital LLC CEO Torsten Dennin told S&P Global the reason behind the cuts was the sluggish uranium price following Kazatomprom's 10% production cut at the beginning of the year. He said the price of uranium is likely to remain at the US$25/lb mark for the next three to six months and then climb to up to US$40/lb.