Russia’s Uranium One may reduce production in Kazakhstan

26 March 2017

Russian state nuclear corporation Rosatom said on 22 March that it could reduce production at some uranium mines in Kazakhstan without violating licensing and contractual obligations. Rosatom’s international mining division, Uranium One, may reduce production in Kazakhstan this year.

"The current market situation requires flexibility in production planning, including a possible reduction in production at some mines in Kazakhstan in 2017", according to a press release. Until 2013, Canadian company Uranium One held the six largest uranium deposits in Kazakhstan: Akdala, South Inkai, Karatau Akbastau and Zarechnoye Kharassan. Since then, the company has been 100% owned by Rosatom, which now mines uranium jointly with Kazakhstan’s national atomic company, Kazatomprom. Uranium One has a diversified portfolio of assets in Kazakhstan, the USA and Tanzania. In the USA, Uranium One owns the Willow Creek mine. The company also operates the Mkudzhu River uranium project in Tanzania.

According to Uranium One’s financial results for 2016, the total volume of natural uranium produced was to 4,919t . The cost of sales of uranium oxide fell from $12/lb to $9/lb compared with 2015. This was mainly due to lower production costs in the mining joint ventures in Kazakhstan – down from $9.7/lb to $6.4/lb. Total revenue was $570m in 2016, of which $325m was from foreign operations – 34% up on 2015. Operating profit for the year was $180m.

In order to reduce costs and control the cost of production an efficiency programme was  implemented, which helped to reduce the transaction costs through the use of new approaches to construction of mining technology wells, the use of innovative methods for well repair work, the use of energy-saving equipment, the introduction of automatic regulation of heating and lighting systems, optimisation of freight forwarding costs, and reducing the cost of raw materials acquisition.

"In the current market conditions - the continuing stagnation of the global natural uranium market – the focus is on preserving of the company's competitiveness and retaining of its leading position in terms of production efficiency among global uranium producers, said  Uranium One Group president, Vasily Konstantinov. He added that the prevailing market situation requires flexibility in production planning, including a possible reduction in production at some mines in Kazakhstan in 2017. This approach will be implemented in partnership with the NAC  Kazatomprom, he said. In 2017, the company intends to maintain the momentum of growth of key business indicators and to “further increase the proportion of foreign revenue through increased commercial activity in traditional and new markets for the company”. 

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