On August 19, Kazatomprom, a Kazakh based multinational resource extraction company, which is the world’s largest producer and seller of natural uranium, announced that it will produce uranium in 2021 and 2022 at levels 20% below the maximum amounts permitted in the country’s subsoil use contracts. The production, which was expected to be between 27,500 and 28,000 mtU by 2022, is now reduced to 22,000 and 22,500 mtU for 2022. A similar amount is expected to be produced in 2021, as previously announced.
According to Galymzhan Pirmatov, (The CEO of Kazatomprom), the market signals and fundamental support is not visible in order to ramp-up mine development in 2021 and take the centres back to full capacity in 2022. In response to the COVID-19 pandemic, the number of employees in the mines were reduced between April and July 2020, and Kazatomprom had announced earlier this month that it had planned to return staffing levels at its uranium mines back to normal by around the end of August. Kazatomprom producers have given a hint that the company will soon start working with joint venture partners to gauge the impact and implement the plan across all of Kazakhstan’s uranium mines. According to the producers, the loss of production through 2022 represents over 50 million lb, which has a direct, although not immediate effect, on the spot market, since a lot of Kazakh material finishes on the market, and there is really no substitute. This could affect the stability of price in the long term.
Due to the unforeseen circumstances in the year 2020, no decision has been taken regarding production levels beyond 2022. “We cannot rule out the possibility of further disruptions due to COVID-19 and safety of our employees remains our top priority” said the producers. The surplus supply of uranium in 2020 is one of the vital causes of the un-stabilized market scenario. According to the World Nuclear Association, Kazakhstan has 11% of the world's uranium resources and, in 2019, produced about 22,808 tU. It has been the world's leading uranium producer since 2009, with a 43% share of world production in 2019. Kazatomprom's 2019 production of 13,291 tU was 25% of world production.