ENGRUS

Kazakhstan: Uranium Miner Slashes Output Ahead of Privatization

Kazakhstan’s state-run uranium producer has said it plans to cut back output by 20 percent to help prop up depressed global prices for uranium.

KazAtomProm’s announcement comes ahead of a planned share listing that is the latest effort by Kazakhstan to float stakes in a spate of its leading state companies.  

The miner said in a November 4 statement that the decision was intended to address a glut of uranium on the global market. The company said the cutback would remain in place for three years, starting from this coming January. 

Uranium production at KazAtomProm will be scaled back by 4,000 tons in 2018, which is more than 7 percent of the output that had been forecast by UxC, a publication focusing on the industry. The reduction over three years will amount to 11,000 tons.

KazAtomProm accounts for more than one-third of global production. While committing to reducing output, the company has said it will abide by its outstanding supply agreements.

The company said the production cut will also extend the life of the uranium mines in Kazakhstan. Executives at KazAtomProm have said that this is an important factor in ensuring the future development of clean energy. 

“We believe that these measures strongly underline our commitment to ensuring the long-term sustainability of uranium mining; a critical component in the generation of clean, carbon-free electricity around the globe,” company chairman Galymzhan Pirmatov said in a statement.

For all the talk of commitment to green energy, which is on paper very much in fashion in Astana, KazAtomProm’s focus has over the past few months been on refocusing its attention to its core activities. In that spirit, it has been busily seeking to divest itself of such companies as Astana Solar, Kazakhstan Solar Silicon and KazSilicon. Those outfits were all devised as would-be drivers of Kazakhstan’s planned industrial diversification and to help develop the country’s renewable energy technologies sector, but performance at the companies has been lackluster. 

Kazakhstan Solar Silicon, an Oskemen-based manufacturer of silicon photovoltaic cells, was a particular disappointment. Authorities in Oskemen, a city in northeast Kazakhstan, announced in May that production was being suspended due to a lack of funding from KazAtomProm.

The combination of efforts to jack up uranium prices and the trimming away non-core activities appear intended to set the stage for a smooth privatization exercise in 2018. There is a lot riding on making KazAtomProm as appetizing as possible to prospective investors, given that Berik Beisengaliyev, managing director for asset optimization at the Samruk-Kazyna sovereign wealth fund, has warned the sale could be called off if there is weak demand.

Kazakhstan intends to sell around one-quarter of its stake in KazAtomProm, according to the Financial Times business daily.