Kazatomprom facing acid test

Above: Sulphuric acid shortages are hitting uranium production

Uranium mining company Kazatomprom has warned that production may be limited in 2024 and 2025 by problems with the availability of sulphuric acid, as well as delays in completing construction works at newly developed deposits.

Kazatomprom described sulphuric acid as a “critical operating material” and it is used in the leaching process. The steps in processing uranium ores are crushing and grinding of the ore, leaching, solid-liquid separation, solvent extraction and precipitation of yellow cake (U3O8). In the leaching process, the uranium is first oxidised to make it more soluble (using manganese oxide, sodium chlorate or hydrogen peroxide) and improve the leaching ability of uranium in water. Leaching with sulphuric acid allows for leaching recovery allows recovery of 85 - 95 %.

Chemicals industry observers have been warning for several years that the availability of sulphuric acid is set to decline. This is partly due to changes in supply. An analysis in Chemanalyst News in October saw a “surge” in buying in the European sulphuric acid market, “due to which the traders are sold out for October-November loading”. Upstream, it said the price of sulphur displays was rising due to crude oil prices rising, driven by factors such as conflict in the Middle East. Logistics issues – drought at the Panama Canal and attacks on shipping at the Suez Canal, for example – were also having an effect. It also highlighted new markets such as Chile competing for supplies.

There are long-term warnings about sulphuric acid availability because sulphur is produced during processing of crude oil and natural gas. A recent report from University College London noted that in future there will be a diminished supply of both fossil fuels and sulphur. Meanwhile demand is trending upwards. Sulphuric acid is required in manufacturing phosphorus fertilizers and it expects an increase in agricultural demand. It also expects higher demand for the extraction of other metals, including ores such as cobalt and nickel that are crucial to the green economy. It expected demand for sulfuric acid to near- double from 246Mt now to 400Mt by 2040. It said, “The result is an annual supply shortfall of between 100 and 320Mt, or between 40 and 130% of the current supply”.

The shortfall is already hitting Kazatomprom. In August 2022 its Board approved plans to increase production volumes from 80% of its potential (determined from ‘subsoil use agreements’) in 2023 to 90% in 2024. The increase was required to meet mid- and long-term contracts with new and existing customers.

Kazatomprom first highlighted “the risks associated with increasing the production due to the challenges related to global supply chains and limited availability of certain key operating materials and reagents,” in August 2022, and has reiterated them during 2023. It said it is “putting its best efforts and is continuing to work on securing the supply of critical operating materials and reagents. However the challenging situation around sulphuric acid is evolving in Kazakhstan and in the region. Given the growing demand from agricultural and industrial enterprises and shortages on both domestic and foreign regional markets, preliminary agreements with suppliers resulted in securing lower than required volume of sulphuric acid for 2024”. On the basis of its secured supplies “projections indicate that the Company’s intention to achieve 90% production volume as per Subsoil Use Agreements in 2024 may be challenging”.

Kazatomprom nonetheless says it remains committed to its 2024 delivery obligations. The company is “actively pursuing alternative sulphuric acid supplies” but said the impact on the Company’s operational performance is still being assessed. It promised more details in upcoming production guidance for 2024, which will be published by 1 February, as NEI goes to press, as part of its Q4 2023 Trading Update.

Kazatomprom said it, “remains committed to fulfilling contractual obligations towards all existing customers throughout 2024”. But the 2025 production plan may also be affected, if access to sulphuric acid continues to be limited throughout this year, and if delayed construction works at newly developed deposits are not brought back on schedule during 2024.

The company said “Updated 2025 production plans are expected to be communicated around the H1 2024 results disclosure but successful return to a 100% of the Subsoil Use Agreements can be viewed as at risk.”