Uranium: A Drama in the Making

From Goehring & Rozencwajg 

Mark your calendars: August 23, 2024 promises to be a pivotal day. That’s when Kazatomprom, the world’s leading uranium producer, will announce its half-year financial results and, more crucially, offer guidance for its 2025 production plans. This announcement is set to reverberate through the uranium markets, given Kazatomprom’s considerable influence— In 2022, Kazatomprom produced just under 55 million pounds of uranium—almost 45% of world supply.

In response to robust demand from utilities, the company announced in August 2022 that it would increase its 2024 production to 65 million pounds—a nearly 10-million-pound increase. Then, in August 2023, they further upped their 2025 production guidance to an ambitious 79-80 million pounds. By 2025, the company planned to utilize 100% of its subsoil exploitation rights with the Kazakhstan government.

However, things took a twist on January 12th when Kazatomprom announced a downward revision of its 2024 guidance to 55 million pounds, chopping approximately 10 million pounds off its original target. The company blamed sulfuric acid shortages and construction delays.

Just last week, Kazatomprom updated its 2024 production outlook again, increasing guidance by 6%. While the investment community viewed this as bearish, it is noteworthy that the new 2024 target of 60 million pounds still falls 5 million pounds short of the original guidance.

This begs the question: how will the continued shortfall affect Kazatomprom’s 2025 production? Next year’s production goal, announced in 2023, remains unchanged at 79-80 million pounds. During our visit to Almaty in April, Kazatomprom remained tight-lipped about its 2025 guidance, promising that all would be revealed during their August 25th earnings release.

However, our discussions with other uranium producers and consultants in Almaty yielded intriguing insights into Kazatomprom’s woes.