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Kazatomprom Faces Production Challenges in 2024 Amidst Supply Chain Disruptions

National Atomic Company “Kazatomprom” JSC, the world’s largest producer of uranium, disclosed that its 2024 production plans are expected to face adjustments due to challenges related to the availability of sulphuric acid, a critical operating material. Despite the hurdles, the company remains committed to meeting its 2024 delivery obligations.

Back in August 2022, Kazatomprom’s board of directors approved an ambitious plan to increase production volumes in 2024 to 90% relative to subsoil use agreements. This decision was driven by the company’s success in securing mid- and long-term contracts with both new and existing customers.

However, throughout 2023, the company consistently highlighted the risks associated with ramping up production, citing challenges related to global supply chains and the limited availability of key operating materials and reagents. Despite their best efforts to secure supplies, the situation around sulphuric acid in Kazakhstan and the region is evolving.

Preliminary agreements with suppliers have resulted in a lower-than-required volume of sulphuric acid for 2024, and while alternative supplies are actively being pursued, the company acknowledges that achieving the intended 90% production volume may prove challenging. The exact impact on operational performance is currently under assessment and will be detailed in the upcoming production guidance for 2024 as part of the Q4 2023 trading update, set to be released by February 1, 2024.

Kazatomprom emphasizes its commitment to fulfilling contractual obligations to existing customers throughout 2024. However, if the limited access to sulphuric acid persists and the construction works schedule at newly developed deposits is not met, the company’s 2025 production plan may also be at risk, subject to significant supply chain uncertainties.

Updated 2025 production plans are expected to be communicated around the H1 2024 results disclosure, but a successful return to 100% of the subsoil use agreements is viewed as at risk.

The company assures stakeholders that efforts are ongoing to resolve these challenges. It pledges to keep stakeholders informed as the situation with sulphuric acid availability and its impact on production continues to evolve.

Despite the potential setbacks, Kazatomprom highlights that uranium reserves remaining in the ground due to deviations from production schedules will be available for future production, serving as a source of revenue and creating long-term value for shareholders.

As the national atomic company in the Republic of Kazakhstan, Kazatomprom’s primary customers are operators of nuclear generation capacity. The principal export markets for the group’s products include China, South and Eastern Asia, Europe, and North America. The company’s attributable production represented approximately 22% of global primary uranium production in 2022.

Information for this story was found via the sources mentioned within the article. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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