Kazatomprom cuts may lead to uranium shortage in global market
Kazakhstan has announced its plans to cut uranium production by 10% this year due to current low prices in the global market.
As part of these plans, the volume of production this year will be cut from 23,800 tonnes (as was in 2016) to 21,800 tonnes.
This has already been confirmed by Askar Zhumagaliyev, chairman of Kazatomprom, (the national operator of Kazakhstan for import and export of uranium), according to which, such a decision is mainly due to the slow recovery of the global uranium market from the consequences of the crisis, caused by low demand of uranium, which has been observed in recent years.
The planned cut will be equivalent to 2,000 tonnes, which is approximately 3% of the global production. Despite this, Kazatomprom will remain the world’s leading uranium producer.
The decision of Kazatomprom should support global uranium prices, which remain currently low and provide an impetus for their further growth. To date, prices have already increased by 10% up to US$24.24 per pound. In 2016 global prices for uranium fell by 41% to the lowest figures since April, 2005. At the same time another reason of the growth of prices became the recent comments by Donald Trump, which in his tweet said the United States needs to “greatly strengthen and expand its nuclear capability in the near future.” According to some analysts, this may result in the increase of uranium production in the US in the coming years.
Kazakhstan has been the world’s leading uranium producer since 2009. Over the past 10 years, the country has increased the volume of its production by almost 6 times, well-ahead its nearest competitors – Canada and Australia. It currently accounts for 40% of global production and hopes to retain its leadership at least until 2025.
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Kazakhstan does not have its own nuclear power plants and does not consume the products of the nuclear cycle, however its uranium reserves are the world’s second largest after Australia, being estimated at about 15 percent. According to analysts’ predictions, keeping of the same volumes of production, as at present, will result in their exhaustion by 2046.
The decision of Kazatomprom became a surprise for the majority of analysts in the field of uranium and nuclear energy, according to which, this could become a crucial moment for the market, which may result in the recovery of global uranium prices from historical lows, taking into account the cost of uranium production in Kazakhstan is one of the world’s lowest.
At the same time the announced cuts by Kazatomprom and some other uranium majors may eventually lead to a shortage of uranium in the global market, especially due to the plans of India and China to create conditions for the development of the domestic industries of nuclear power in the coming years, that will be reflected through the building of new nuclear reactors.
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>