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Kazatomprom and Cameco take opposite positions on uranium supply

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One of the world’s biggest uranium producers says that it is going to continue to dial down uranium production into 2022, with severe implications for the uranium price.

Kazatomprom has confirmed that it will maintain its already announced 20% reduction in uranium in 2021, but in addition will also ‘flex’ down production by 20% in 2022.

The decision means that the global uranium market is going to be short over 5000 tU of primary uranium supply in 2022.

As outlined in The Armchair Trader’s recent webinar on uranium (see below), this comes at a time when many US nuclear power plants are reaching the end of their existing contracts and looking to negotiate new ones, just as more nuclear plants are being brought online in other parts of the world, like the Middle East.

Kazatomprom CEO Galmyzhan Pirmatov said the move was prompted by oversupply in the global uranium market which had forced down prices. “We are simply not seeing the market signals and fundamental support needed to ramp up mine development in 2021 and take our low cost, tier one production centres back to full capacity in 2022,” he said.


Kazatomprom accounted for 25% of global uranium production in 2019 on its own, with Kazakhstan accounting for 43% in total.

Meanwhile Cameco has said that it will be restarting production at Cigar Lake in Canada, the world’s largest uranium mine. It originally put output on hold at the end of March due to the spread of the coronavirus, but Cameco now says production should resume in September.

The uranium price has dropped over 3% following the Cameco announcement, although it was anticipated that the Canadian producer would look to resume production once the COVID wave in Canada receded somewhat over the summer.

Supply shortfall of uranium

However, according to CIBC World Markets, there is still a supply shortfall of uranium caused by the shutdown, which is likely to extend into next year.

According to a research note from Scotiabank, issued at the end of July, the annual uranium global supply deficit is anticipated to average 23 million pounds through 2022. That is a 13% shortfall when measured against global demand for the metal.

“Despite the earlier restart, we continue to forecast the U308 market to remain in a relatively large structural deficit position for the forseeable future, supporting stronger prices ahead,” said Orest Wowkodaw, metals and mining analyst at Scotiabank.

The uranium price was at $32.95 at the time of writing – prices are still close to the high reached in May. Uranium is still up 22.5% over a 12 month period, making it one of the better performing commodity markets since last summer.

Yellow Cake, a specialist uranium holding company and a participant in the recent Armchair Trader webinar on uranium, announced on 29 July that the uranium U308 that it holds had risen in value from $263m to $303m over the quarter to 30 June.

“The supply/demand risk imbalance is in line with our investment thesis and we continue to see more risk to the supply side than the demand side,” said Andre Liebenberg, CEO of Yellow Cake.

Yellow Cake noted that aggregate spot market volumes for uranium approached 40m lbs of U308 in 2Q, which is a record level.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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