Kazatomprom, the world’s leading uranium producer, has significantly revised its production target for 2025 due to delays in projects and shortages of sulphuric acid. This move has sparked concerns about a potential supply crunch for uranium, a key fuel for nuclear power.
The Kazakh firm, which supplies about 20% of the global uranium market, has lowered its production forecast by 17%, setting a new target range of 25,000 to 26,500 tonnes of yellowcake for next year. This adjustment is expected to drive uranium prices higher, which, despite easing from a 16-year high of over $100 per pound earlier this year, remain elevated at over $80 per pound, according to UxC.
Kazatomprom’s CEO, Meirzhan Yussupov, cited uncertainties around sulphuric acid supplies and delays in construction at new deposits as reasons for the revised production plans. “The uncertainty around sulphuric acid supplies for 2025 and delays in construction at newly developed deposits have necessitated a reassessment of our 2025 plans,” Yussupov said.
The resurgence of nuclear power following the global energy crisis triggered by Russia’s invasion of Ukraine has intensified the demand for uranium. However, uranium supplies have struggled to keep pace due to a decade of underinvestment in new production.
Nick Lawson, CEO of investment firm Ocean Wall, highlighted the structural challenges facing uranium production, noting that both Western countries and major players like Russia and China will face difficulties ramping up supply for their new nuclear power projects.
Utilities, which typically maintain large uranium stockpiles for their reactors, may be forced to pay higher prices to secure the necessary fuel, leading to potentially volatile price surges for yellowcake.
Per Jander, director of nuclear fuel at trading firm WMC, expressed concern over the production downgrade, particularly for Western utilities. He also pointed out the growing geopolitical ties between Russia and Kazakhstan as a potential complication.
Analysts at Canaccord Genuity predict Kazatomprom will produce around 23,000 tonnes of uranium in 2025, indicating a tight market. They also suggested that Kazatomprom’s initial higher target was likely an attempt to maintain favorable relations with the Kazakh government, which sets output levels through subsoil use agreements.
Kazatomprom has requested reductions in its production targets, particularly at the Budenovskoye mine, where output is expected to fall below the 80% threshold over the next two years. Similar requests have been made for other sites.
Despite earlier warnings about potential production cuts, Kazatomprom’s uranium inventories are at their lowest ever, down 31% from the previous year to 4,142 tonnes. The shortage of sulphuric acid, crucial for uranium extraction, has been worsened by delays in new acid plant construction, competition from the fertilizer industry, and trade restrictions in Kazakhstan.
Shares of rival uranium producers Cameco and NexGen Energy surged by 7% and 11%, respectively, on Friday, driven by expectations of higher uranium prices and increased demand from utilities seeking alternative supplies. Adding to market uncertainty is Russia’s dominant role in the conversion and enrichment of raw uranium into nuclear fuel, where it controls nearly 50% of global enrichment capacity. Kazatomprom has also faced internal challenges, including recent executive departures, such as Chief Financial Officer Sultan Temirbayev, who resigned after just one year in the position.
