BAKU, Azerbaijan, July 2
By Nargiz Sadikhova - Trend:
Kazakhstan’s Kazatomprom National Atomic Company JSC plans to maintain 2023 production at a similar level to 2022, which is expected to be 20 percent lower than the planned volumes under its Subsoil Use Contracts, Trend reports citing the company.
The Company will now begin working with joint venture partners to assess the impact and implement the plan across all of Kazakhstan’s uranium mines.
“Consistent with our market-centric strategy, we intend to continue exercising commercial discipline, which will result in 2023 production remaining 20 percent lower than previously planned Subsoil Use Contracts levels, keeping production essentially flat in 2022 and 2023,” said Galymzhan Pirmatov, Chief Executive Officer of Kazatomprom.
In his words, although the uranium market is starting to show signs of improvement, including an increase in long-term contracting interest, a thinning spot market, and slightly improved pricing, the company still finds itself in a position where adding tons back into the market in 2023 would be unlikely to maximize returns for our shareholders.
“Kazatomprom’s low-cost, flexible assets place the Company in a class of its own, where despite remaining profitable even at the lowest point in the commodity cycle, the true value of our leading position in the sector has been limited by a market environment that is unfavourable to long-term contracting. With the establishment of our THK subsidiary in 2017, Kazatomprom has the opportunity to diversify its contract portfolio and gain better line-of-sight to future sales. Accordingly, the Company does not expect to return to full Subsoil Use Contract production levels until a sustained market recovery is evident, supply and demand conditions signal a need for more uranium, and the Company’s pipeline of mid- to long-term contract negotiations implies that there is a low risk of produced volumes further delaying the recovery.”
The Company is announcing the plan well ahead of time to ensure its mining subsidiaries and joint ventures will be able to incorporate the required changes into their 2022 capital expenditure budgets, accounting for the revised production levels in 2023. The Company will continue to monitor ongoing market developments and maintain the flexibility to react quickly to changing conditions. No decision has been taken regarding mine development activity and production beyond 2023.
The full implementation of this decision would remove up to 5,000 tons of uranium from anticipated global primary supply in 2023, with uranium production in Kazakhstan remaining similar to the level expected in 2022. Kazatomprom’s 2023 production is therefore expected to be between 22,500 and 23,000 tons of uranium (100 percent basis), a 20 percent reduction of the total expected Subsoil Use Contract level of about 27,500 - 28,000 tons of uranium.
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