Uranium major Kazatomprom would continue flexing down production by 20% through 2022 to help the market recover from a “long period of oversupply”, CEO Galymzhan Primatov announced on Wednesday.
“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 in a statement, outlining the group’s production plans.
The full implementation of this decision would remove up to 5 500 t of uranium from anticipated global primary supply in 2022, with uranium production in Kazakhstan staying similar to the level expected in 2021.
Total consolidated production is expected to be reduced by more than 20 000 t, from its previous 2020 to 2022 production plans under subsoil use contracts.
Kazatomprom also said that it was not planning additional production to replace volumes lost in 2020, owing to measures taken to combat Covid-19.
"The market uncertainty attributed to the Covid-19 pandemic is significant, but despite the anticipated supply deficit in 2020, uranium prices and long-term contracting activity, while higher than in 2019, remain unsustainably low. Consequently, in line with our market-centric strategy, we intend to continue with the level of spending and operational activity commensurate with a 20% reduction to Subsoil Use Contract levels that we have maintained since 2018,” said Primatov.
He also stressed that the uranium producer could not rule out the possibility of further production disruptions, owing to the coronavirus pandemic.