The suspension of drilling operations due to the Covid-19 pandemic will have a significant impact on uranium production this year, the company also said in a press release on Thursday.
The company said the uranium spot price rose in response to the initial announcements of Covid-related supply impacts at the beginning of the second quarter, with intermediaries buying in anticipation of a potential supply deficit, and some producers entering the spot market to replace lost production.
Until just recently, there has been very little contracting activity by end-user utilities, who have been far more focused on managing their nuclear plants through the pandemic.
“The absence of those end-users and any serious term contracting, tells us that we have not yet reached a turning point, though the potential pressure on supply for the second half of the year is starting to gain attention,” the company said.
Kazatomprom said it will continue to keep its output reduced by 20% until 2022 to help the market recover from a “long period of oversupply”, chief executive officer Galymzhan Primatov said recently.
“The decision to keep production similar year-over-year, and extend production curtailment into 2022, is indicative of a global uranium market that is still recovering from a long period of oversupply,” he said in a statement, outlining the group’s production plans.
“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.”