Kazatomprom, the world’s largest uranium producer, has significantly lowered its production target for 2025 due to project delays and shortages of sulphuric acid, raising concerns about a potential supply crunch for the crucial fuel used in nuclear power.
The Kazakh company, responsible for about 20% of the global uranium supply, has cut its production forecast for next year by 17%, setting a new range of 25,000 to 26,500 tonnes of yellowcake.
This reduction is expected to drive up uranium prices, which, while having eased from a 16-year high of over $100 per pound earlier this year, still remain elevated at over $80 per pound, according to pricing data provider UxC.
Meirzhan Yussupov, CEO of Kazatomprom, explained that “the uncertainty around sulphuric acid supplies for 2025 and delays in construction at newly developed deposits have necessitated a reassessment of our 2025 plans.”
Nuclear power has experienced a resurgence following the global energy crisis triggered by Russia’s full-scale invasion of Ukraine, but uranium supplies have struggled to keep pace with the increased demand after a decade of underinvestment in new production.
“This is a structural issue—they cannot ramp up,” said Nick Lawson, CEO of Ocean Wall, an investment firm optimistic about uranium. “It’s not just the West that will view this as a problem; Russia and China will also see it as a challenge for their new nuclear power plants.”
Utilities, which maintain large uranium stockpiles to fuel their reactors, are prepared to pay nearly any price to secure the necessary fuel, creating conditions for potentially volatile price surges in yellowcake.
Per Jander, director of nuclear fuel at WMC, a trading firm, noted that Kazatomprom’s production downgrade “should be a cause for concern for Western utilities.”
He also pointed to the growing geopolitical closeness between Russia and Kazakhstan as a potential issue.Analysts at Canaccord Genuity expect Kazatomprom to produce around 23,000 tonnes in 2025, suggesting a tight market next year.
They also noted that the company likely set a higher target “to stay in the government’s good graces,” given the need to meet output levels specified in subsoil use agreements with the Kazakh government. Kazatomprom has requested the government to lower the targeted output volumes in its agreements, especially at Budenovskoye, one of its new uranium mines, where production is expected to fall below the 80% threshold over the next two years. Similar requests have been made for other sites.
Despite earlier warnings in February about potential production cuts, Kazatomprom’s uranium inventories are at their lowest level ever, down 31% from the previous year to 4,142 tonnes, according to Canaccord Genuity.The shortage of sulphuric acid, essential for extracting uranium from deposits, has been exacerbated by delays in constructing new acid plants, competition from the fertilizer industry, and trade restrictions in Kazakhstan.
Shares of rival uranium producers Cameco and NexGen Energy surged by 7% and 11%, respectively, on Friday, driven by expectations of higher uranium prices and increased demand from utilities seeking alternative supplies.Adding to market uncertainty is Russia’s dominant role in the conversion and enrichment of raw uranium into nuclear fuel, where it controls nearly 50% of global enrichment capacity.Kazatomprom has also faced internal challenges, including a wave of executive departures. Notably, Chief Financial Officer Sultan Temirbayev resigned this month after just one year in the position.
Notable uranium players on ASX
Deep Yellow (ASX:DYL)
Deep Yellow is a leading uranium exploration and development company with a dual-pillar strategy to establish a multi-mine operation. The company's two advanced projects, Tumas and Mulga Rock, are located in prime uranium regions and have significant production potential. Deep Yellow is actively progressing these projects towards development, aiming to meet the growing global demand for uranium as the world transitions to cleaner energy sources.
Paladin Energy (ASX:PDN)
Paladin Energy is a major global uranium producer with a 75% stake in the Langer Heinrich Mine in Namibia. The company also owns a diverse portfolio of uranium exploration and development projects. Paladin is committed to responsible and sustainable mining practices, adhering to strict environmental, social, and governance standards. Through Langer Heinrich, Paladin provides reliable uranium supply to nuclear utilities worldwide, contributing to global decarbonisation efforts.
Boss Energy (ASX:BOE)
Boss Energy is an Australian uranium company focused on ramping up production at its Honeymoon Uranium Project in South Australia. This project is expected to reach an annual output of 2.45 million pounds of U3O8 (yellowcake uranium). Boss Energy also has a 30% stake in the Alta Mesa uranium project in Texas, USA, which is targeting annual production of 1.5 million pounds of U3O8.
NexGen Energy (ASX:NXG)
NexGen Energy is a Canadian company dedicated to providing clean energy fuel for the future. The company's flagship Rook I Project is being developed as the world's largest low-cost uranium mine, adhering to the highest standards of environmental and social governance. Supported by a comprehensive feasibility study, Rook I boasts exceptional environmental performance and industry-leading economics. NexGen's team of experienced uranium and mining professionals brings expertise across all stages of the mining lifecycle, ensuring the project's social, technical, and environmental leadership. Located in northern Saskatchewan, the Rook I Project and NexGen's exploration portfolio will deliver long-term economic, environmental, and social benefits for Saskatchewan, Canada, and the global community.
Cauldron Energy (ASX:CXU)
Cauldron Energy is a mineral exploration and development company focused on supporting the clean energy transition. The company is actively building a new portfolio of assets through mergers, acquisitions, and exploration activities. In addition, Cauldron is generating value from its existing legacy assets. Current projects include the Yanrey Uranium Project in Western Australia, the recently acquired Melrose Project, and three sustainable silica (river sand) projects. Following a recapitalization and leadership change in late 2022, Cauldron adopted a new strategy aligned with the growing demand for minerals essential to the low-carbon economy. The company's growth potential is driven by strategic planning, high-quality exploration projects, a strong network of advisors and investors, and responsible decision-making by its board and management.
