ALMATY, Jan. 10 (The Conway Bulletin) — Kazakhstan, the world’s top uranium producer, pledged to cut uranium output, immediately pushing up the price of the metal by 10%.
The production cut promise, and subsequent price rise, demonstrated just how much influence Kazakhstan has over the global uranium market. It currently produces around 40% of the world’s uranium.
Announcing the 10% cut in production, Kazatomprom chairman Askar Zhumagaliyev, said that 2017 had been scarred by a global oversupply of uranium.
“It will be better for our shareholders and stakeholders to leave these strategic uranium resources in soil, rather than use them in the current situation of oversupply,” media quoted him as saying. “The uranium will be produced when the situation improves in the markets in the coming years.”
Uranium prices collapsed in 2017, hitting a 12-year low of $18/pound in mid-December. This represented a drop of 25% since September.
Analysts blamed a number of factors.
A tsunami in 2011 knocked out the Fukushima nuclear power plant in Japan. Fukushima had been a major buyer of uranium before the accident and knocking it out of the market had triggered an immediate oversupply. The accident at Fukushima also dented the reputation of nuclear power as a safe and reliable energy source and a drop in global oil prices also switched attention away from nuclear power and back to hydrocarbon-fired power which has dropped in price.
Kazakhstan has also contributed to the glut of uranium as it moved to become the world’s biggest supplier. Kazakh uranium production shifted from 18,000 tonnes in 2010 to 24,000 tonnes in 2016. In 2007, Kazatomprom mined 5,000 tonnes.
After the Kazakh cut announcement, which represents around 3% of global supply, Uranium’s spot price rose to $24.25/pound, its highest since September.
>>This story was first published in issue 312 of the weekly Conway Bulletin newspaper.