Uranium Mine Supply Faces Challenges

From Goehring & Rozencwajg

On February 1st, Kazatomprom officially lowered their 2024 production guidance by nearly 20%, from 56 to only 46 to 50 mm pounds– a decrease of almost 10 mm from previous guidance. Although the company did not discuss 2025 production, we believe their 67 to 68 mm pound target will be impossible.

Uranium rallied sharply to $90 per pound during the fourth quarter, driven by solid utility buying. Even after the recent activity, global utilities remain woefully under-contracted compared with historical norms. In past letters, we warned that utilities would need to re-enter the market to meet their needs – it appears that time has now arrived. Following Kazatomprom’s surprise announcement, uranium surged another $16, hitting a cycle-high of $106 per pound.