Kazatomprom (LSE:KAP), the world’s largest uranium producer, has announced its 2025 production strategy, which involves a significant increase in production to 100% of Subsoil Use Agreements, signaling a pivotal moment with far-reaching implications for the global uranium market and the broader energy sector.
Kazatomprom has consistently upheld its market-centric strategy with an unwavering commitment, exemplified by its deliberate practice of maintaining production levels 20% below total Subsoil Use Contracts over the past seven years, showcasing a disciplined approach to market behaviour.
In 2024, they plan to produce 10% below these contracts. However, the announcement for 2025 reflects a strong belief in the uranium market’s potential.
Kazatomprom stands as the world’s largest producer of uranium, contributing approximately 22% of global primary uranium production in 2022.
The Company operates 26 deposits through subsidiaries, joint ventures, and associates, utilising in-situ recovery (ISR) technology while upholding industry-leading health, safety, and environmental standards.
Kazatomprom’s securities are listed on multiple stock exchanges, and it serves as the national atomic company in the Republic of Kazakhstan, catering to operators of nuclear generation capacity across the globe.
A Changing Landscape
The decision to restore production to 100% levels is motivated by a combination of factors, primarily bolstered by the Company’s strong contract portfolio and an expanding sales portfolio, which contrasts with a conservative production outlook for 2023-2024.
Furthermore, the industry’s shift toward a new long-term contracting cycle, driven by the recognition of restocking requirements, positions Kazatomprom, with its best-class and cost-effective mines, to adeptly adapt to these changing market dynamics.
Impacts on Global Supply
Kazatomprom’s move is expected to add up to 6,000 metric tonnes of uranium (tU) to the global primary supply in 2025 compared to the 2024 planned range.
This will bring Kazatomprom’s 2025 production to between 30,500 tU and 31,500 tU (100% basis), representing 100% of the 2025 total Subsoil Use Contracts level. While this increase is substantial year-over-year, it’s important to note that a significant portion of it is already committed to medium- and long-term contracts.
Future Plans and Flexibility
Kazatomprom will collaborate with joint venture partners and mining subsidiaries to incorporate necessary changes into the 2024 budgets and development plans to accommodate the expected production increase in 2025.
The Company also expressed its commitment to monitoring market developments and maintaining flexibility to respond swiftly to changing conditions.
While the announcement outlines plans for 2025, no decisions have been made regarding mine development activity and production volumes beyond that year.
“Kazatomprom remains committed to its market-centric strategy and its disciplined approach to production and sales, and we’re excited to witness the start of a long-awaited historical shift in the uranium market,” said Kazatomprom Chief Commercial Officer, Dastan Kosherbayev.
KAP’s London Stock Exchange-listed share price has risen 6.13% and is currently trading at 44.15 USD (11.45am UTC+ 8 hours).