Global uranium market responds positively to Kazatomprom announcement
Kazatomprom, the world’s leading uranium producer, announced its intention to reduce its uranium production by 20% in order to bring its production level in line with demand.
The cuts will be in effect for three years, beginning in January 2018. This is expected to result in the reduction of uranium production in Kazakhstan by 4,000 tonnes in 2018, which is about 7.5% of the projected world uranium production for next year.
This year the volume of production at Kazatomprom will amount to 22,150 tonnes.
To date, Kazatomprom has already informed all major customers of its decision and assured that these measures will not affect future obligations of the company for the supply of uranium.
Kazakhstan has been a world leader in uranium mining since 2009. Over the past 10 years the country has increased its production volumes by almost six times.
Statements of Kazatomprom has already resulted in the growth of shares of foreign uranium producers on global exchanges.
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In particular, shares of the Canadian mining company Cameco Corp. grew by 15% reaching a high of C$14.18. The shares of another Canadian company NexGen Energy rose by 14%.
Global uranium market will be able to fully recover from the consequences of Fukushima disaster by 2020, leading analysts in the field of uranium and global producers believe.
The Fukushima disaster, which occurred in 2011, resulted in the closure of nuclear power plants throughout the world and a significant decline in global uranium prices.
This, in turn, has negativelly affected the profits of global producers, many of which have been forced to revise their investment plans. According to Marina Liborakina, deputy general director for strategy and business development of Atomredmetzoloto (ARMZ), Rosatom’s uranium holding, the global uranium market continues to remain in difficult situation, which, however, is not the first time in the history, however the company believes that it could reach pre-crisis figures of 2010 in 2020.
Currently nine of the world’s largest uranium producers provide 81% of uranium mining in the world. In order to support prices, some majors are considering production cuts.
For example, the Canadian Cameco, the world’s second largest uranium producer, in recent years has cut production at its several fields in Canada and the US.
At the same time, in addition to Cameco, French Areva, the world’s third-largest uranium producer, also suspended production on some of its low-profit projects and refused from further expansion of production.
In the case of ARMZ, the company also cut its production by 2.3% in 2016 to 2984 tonnes. In addition, ARMZ managed to reduce the prime cost of uranium mining on its main asset – the Priargunsky mining and chemical complex by 30%. This should help the company to significantly improve its competitiveness in the long-term.
The disaster at Fukushima-1 has resulted in a significant cut of nuclear power capacities throughout the world. In the case of Japan, of the 42 usable reactors in the country only two currently remain operational, while the public’s attitude towards nuclear energy remains extremely negative.
Overall, the global nuclear power industry is currently comprised of 437 serviceable reactors, which have a total capacity of 381 GW. The biggest hopes of uranium producers are primarily related with China, where, according to plans of the local government, total capacity of operating nuclear power reactors by 2020 should reach 58 GW with another 30 GW under construction.
Eugene Gerden is an international free-lance writer, based in St. Petersburg, who specializes on writing in the field of mining, metals and rare earth metals. ... <Read more about Eugene Gerden>