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World’s top uranium producer Kazakhstan to cut output by 10%

16 Jan 2017 12:30 PM | Anonymous, 10.01.2017

Kazakhstan, the world's top uranium producer, is cutting output of the commodity by 10% this year due to poor market conditions triggered mostly by a global oversupply of yellowcake. State-owned  uranium  company  and  global  production  leader,  Kazatomprom,  said  production  for 2017  will  be  reduced  by  2,000  tonnes,  which  is  about  3%  of  the  total  global  output,  according Cantor Fitzgerald Canada Research’s figures. “These strategic [uranium] assets are far more valuable to our shareholders and stakeholders being left  in  the  ground  for  the  time  being,  rather  than  adding  to  the  current  oversupply  situation,” Kazatomprom Chairman Askar Zhumagaliyev said in the statement. "Analysts see the move as a “game changer” that should boost the global uranium market in the very short term." He added the production would pick up pace once market conditions improve.

Cantor  Fitzgerald’s  analysts  Rob  Chang  qualified  the  move  as  a  “game  changer,”  adding  he expected  to  see  across  the  board  strength  in  the  uranium  space  very  soon.  “Kazatomprom’s relentless  increases  in  production  over  the  years  was  one  of  the  top  causes  for  uranium  price weakness,” Chang said in a note to investors. He added market observers had given up on expecting Kazakhstan to exercise production restraint as  its  mines  were  the  world’s  lowest  cost  operations  and  constant  output  hikes  appeared  to  be  a cultural focus for the country. “This news is a definite surprise and may be the inflection point for the uranium space to head higher across the board,” he said. Kazakhstan’s  uranium  is  produced  by  Kazatomprom,  its  subsidiaries  and  joint  ventures  with international  partners.  The  exact  change  in  production  levels  vary  by  mine  and  were  approved through  the  respective  management  boards.    This  includes  joint  ventures  with  Cameco’s (TSX:CCO-TSX, NYSE:CCJ) Inkai mine that was expected to produce 5.8 million pounds this year prior to today’s announcement. Kazatomprom said that even with the announced output cuts, the company will continue to be the world’s No.1 uranium producer. Kazakhstan climbed to the top position on the uranium production ranking in 2009 with almost 28% of the total world’s output, then 33% in 2010, rising to 41% in 2014, and 39% in 2015.