Kazatomprom reports 18% decline in sales despite soaring production
Kazatomprom, the national nuclear company in Kazakhstan, and its subsidiaries reported an 18% decline in sales of uranium oxide concentrate, from 9,500 tons to 7,800 tons, in the first half of the year compared to the same period last year. At the same time, the company reported a 6% increase in production year-on-year, reaching 10,800 tons.
Even though Kazatomprom’s sales rose by 81% to 4,400 tons in the second quarter compared to the same period in 2023, its sales over the first six months of the year dropped by 22% to 6,700 tons. As for the entire group’s sales, they rose by 48% to 5,000 tons in the second quarter compared to last year.
«Sales results for both the group and Kazatomprom during the first six months of 2024 were lower than last year due to a lower sales forecast for 2024 in general and a smaller volume of sales in the first quarter of the year. Sales can vary significantly for each quarter, depending on specific requests from clients and timelines for physical product delivery,» the company explained.
The production volume grew by 7% to 5,800 tons over the first six months of 2024. In the second quarter, both the group and Kazatomprom reported a 5% increase in output, reaching 5,800 and 3,000 tons, respectively. According to the company, these results were driven by a slight increase in production plans to meet its obligations under subsoil use contracts for 2024.
«Increased standard volume of production was due to a rebounding drilling program in 2023 and the company’s efforts to keep up with the production schedule. The company has managed to supply sulfuric acid necessary for the production process in 2024 at a level 20% below the volumes defined in subsoil use contracts,» Kazatomprom said.
In the second quarter of the year, the average sale price for the group and Kazatomprom grew by 44% to $68.33 and $65.96 per pound of uranium oxide concentrate, respectively. This rate increased slightly less over the first six months of the year – by 41% ($66.22) and 34% ($62.5), respectively. At the same time, average spot prices surged by 61% ($87.88) in April-June and by 73% ($91.10) in January-June.
«The growing spot price for uranium has had a positive impact on the average sale price for Kazatomprom in the second quarter of 2024, as it has grown compared to the same period in 2023. Even though the current contract portfolio of the company correlates with spot prices for uranium, some deliveries in the first quarter of 2024 were conducted under contracts with fixed prices, including price ceilings formed during a period when spot prices were relatively low,» the company highlighted.
In September 2023, Kazatomprom announced that it would boost its uranium production in 2025. At the time, the company said that it would produce the exact same amount of product as mentioned in the subsoil use contracts the company signed. Before this statement, Kazatomprom didn’t rule out meeting just 90% of that threshold. In numerical terms, this correction was about 5,500 to 6,500 tons. Commenting on plan changes, the uranium producer cited a «strong portfolio of contracts and growing sales.»
However, in January 2024, Kazatomprom, the leading uranium company in the world, warned that it could downgrade its production plans for 2024 due to difficulties in purchasing sulfuric acid, the key component for uranium production. Nevertheless, the company reassured its clients that it would fully meet its obligations under its existing contracts.
Kazatomprom is controlled by Samruk-Kazyna (75%), while Citibank is a nominee holder of the company’s shares (24.34%). In 2023, the company reported $2.9 billion in consolidated proceeds (+43% year-on-year), $1.4 billion in operational income (+49%) and $1.2 billion in net profit (+23%). The company’s assets grew to $5.4 billion as of late 2023, compared to $4.6 billion the year prior.
