Kazatomprom KZAP.KZ, KAPq.L, the world’s No. 1 uranium miner, has started buying the metal on the spot market and may purchase more this year to replenish its stock after the coronavirus pandemic upended the global market, it said on Thursday.
Supply disruptions have accelerated the rebalancing of the nuclear fuel market, pushing up the spot price and prompting greater interest in medium- and long-term contracts, Kazatomprom executives said.
“The theme of uncertainty in the uranium market persisted through the first half of 2020,” CEO Galymzhan Pirmatov said on a conference call.
“However, the general sense is that there has been a shift in sentiment – from participants wondering ‘when’ the market will transition to support current and future primary production, to now talking of ‘how soon’ that transition could take place.”
Some 20 million pounds of supply has been lost this year, Chief Commercial Director Riaz Rizvi told the same call, which has accelerated discussions between utilities and miners about contracts that will ensure future supply.
“We are starting to see more interest in medium- and long-term contracts,” he said.
However, although the spot price is up by more than 25% this year at about $31 per pound, it is still “not a price at which there is an incentive to reinvest capex”, Rizvi said.
In the meantime, Kazatomprom has already made some “opportunistic” purchases on the market through its trading arm this year, executives said, and could need to buy more significant amounts of uranium in the coming months.
Kazatomprom usually maintains an inventory of about half its annual output and it currently stands at about 9,000 tonnes, but a heavy shipment schedule in the second half of this year would reduce that to 4,000 tonnes without additional purchases, Pirmatov said.
