The board of the Kazakh uranium producer has approved a strategy to increase production volumes in 2025, returning to a 100% level relative to its subsoil use agreements for the first time since 2018 and adding up to 6,000 tU to anticipated global primary supply.
The decision was made amid improved uranium market conditions and successful medium- and long-term contracting activity with both new and existing customers, the company said in its 2025 production plan which it has released. It says 2025 production is now expected to be between 30,500 tU and 31,500 tU (on a 100% basis).
Kazatomprom announced in 2017 that it would "flex down" production by 20% below its subsoil use agreements from the start of 2018 for three years - which it subsequently extended - to better match supply with demand. However, in August 2022 it announced plans to increase uranium production in 2024 to 10% below its subsoil use agreements. The additional volumes that are expected to be produced in 2025 will be used to meet contractual obligations under medium and long-term contracts, the company said.
Kazatomprom remains committed to its market-centric strategy and its disciplined approach to production but is "excited to witness the start of a long-awaited historical shift in the uranium market", Chief Commercial Officer Dastan Kosherbayev said, adding that it has shown "strong market discipline for seven consecutive years" in keeping its production 20% below the total subsoil use agreements.
"Consistent with our market-centric strategy, our intention to return to a 100% level of Subsoil Use Contracts production volumes in 2025 is primarily driven by our strong contract-book and already growing sales portfolio against conservative 2023-2024 production scenario," he said. "As we are seeing a clear sign that the industry has entered into the new long-term contracting cycle, driven by the recognition of the restocking needs, Kazatomprom, with its best-class and lowest cost mines, is absolutely prepared to respond to these improving market conditions. Our current contract book provides sufficient confidence that the additional volume in 2025 will have a secure place in the market and be needed to fulfil future contractual obligations."
The company said it will now begin working with its joint venture partners and mining subsidiaries to incorporate the necessary changes into its 2024 budgets and development plans for the 2025 increase in production volumes, but added that it will "continue to monitor ongoing market developments and maintain the flexibility to react quickly to changing conditions". No decision has yet been taken regarding mine development activity and production volumes beyond 2025, it said, and geopolitical uncertainty and global supply chain issues along with high inflationary pressure "remain existent and the Company may therefore potentially face challenges in increasing production significantly above stated levels".
Kazatomprom, through its subsidiaries, joint ventures and associates, produces uranium from 26 uranium deposits grouped into 14 mining assets, all using in-situ leach technology. Subsoil use contracts are agreements with the Kazakh government covering the production of uranium by in-situ leach methods.