The world’s largest uranium producer cuts production target

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Kazatomprom, the world’s biggest uranium producer, has slashed its 2025 output target due to project delays and a shortage of sulfuric acid, threatening to cut supplies of the radioactive fuel vital for nuclear power.

The Kazakhstan-based company, which generates a fifth of global uranium supply, cut its target for next year by 17% to a range of 25,000 to 26,500 tonnes of yellowcake.

The move could put upward pressure on uranium prices, which have eased from a 16-year high of more than $100 a lb this year but remain at historically high levels of more than $80 a lb, according to UxC, a provider of pricing data.

Meirzhan Yussupov, the chief executive of Kazatomprom, said that “uncertainty about the supply of sulfuric acid for the needs of 2025 and delays in construction work at newly developed deposits have led to the need to reassess our plans for 2025.”

Nuclear power has undergone a renaissance since the world was plunged into an energy crisis by Russia’s full-scale invasion of Ukraine, but uranium supplies have struggled to keep up with rising demand after a decade of underinvestment in new production .

“This is a structural problem – they can’t grow,” said Nick Lawson, chief executive of Ocean Wall, an investment house that is bullish on uranium. “It won’t just be the West saying this is a problem for us; Russia and China will say it’s a problem for our new nuclear plants.”

Utilities hold large stockpiles of uranium to power their nuclear reactors, but are willing to secure the nuclear fuel at almost any price, creating the conditions for volatile yellowcake prices to rise.

Per Jander, director of nuclear fuel at WMC, a trader, said Kazatomprom’s downgrading “should be a cause for concern for Western utilities. Geopolitical developments and the writing on the wall made the Russians closer to the Kazakhs.”

Analysts at Canaccord Genuity said they expected Kazatomprom to produce 23,000 tonnes in 2025, adding that the result was “the market will be tight next year”.

They added that the company set the target higher “to stay in the good will of the government”, given that it needs to get closer to the production levels specified in the underground use agreements signed with Astana.

Due to expectations that it will not produce above the 80% threshold in the next two years for Budenovskoye, one of its new uranium mines, Kazatomprom has asked the government to reduce production volumes targeted in the agreement. On another site, he also asked to change the agreement.

Despite a warning in February about the risk of a production forecast cut, stockpiles at Kazatomprom are the lowest ever reported, according to Canaccord Genuity, at 4,142 tonnes of uranium, down 31% from a year earlier.

Sulfuric acid, essential for extracting uranium from deposits, has been in short supply in Kazakhstan due to delays in building new acid plants, competition from the fertilizer industry and trade restrictions.

Further stoking uncertainty in the market was Russia’s central role in converting and enriching raw uranium into nuclear fuel, controlling nearly 50 percent of global enrichment capacity.

Kazatomprom has recently been rocked by a series of executive departures, including its chief financial officer, Sultan Temirbayev, who resigned this month after just a year in the job.