Despite strong financial results in the first half of 2024, the world’s largest uranium producer, Kazatomprom, has cut its 2025 production guidance by 17% to 25,000–26,500 tonnes, down from the previous 30,500–31,500 tonnes, falling short of market expectations. This news has spurred North American investors to flock into uranium mining stocks, causing their prices to soar.
Analysts point out that while this production guidance is higher than 2024 levels, it is notably below the extraction levels permitted under subsoil use agreements in the Central Asian country. Kazatomprom, a state-owned enterprise in Kazakhstan, is responsible for exporting uranium ore and related rare metals, as well as nuclear fuel and special equipment. In 2022, its natural uranium production accounted for about 22% of the global total.
According to the International Energy Agency (IEA), aided by the return of nuclear power, nuclear energy generation is expected to reach an all-time high by 2025. By the end of 2026, nuclear power generation is projected to grow at an average annual rate of about 3%, boosting uranium demand. Bank of America reports that the tight supply situation in the uranium market might persist until 2025, suggesting prices are set to continue rising this year.
“This lowers the entire production curve guidance for several years,” said Adam Rodman, founder of Segra Capital Management, last Friday. He labeled the outlook as “a miss” and stated he would be buying North American uranium mining stocks as a result. Segra Capital is already a shareholder in NexGen Energy and other mining companies. Rodman added that Kazatomprom’s guidance was so low that he expects the miner will need to seek regulatory approval to reduce annual production at several key sites.
In early August, Kazatomprom announced a 6% year-on-year increase in uranium production for the first half of the year and projected 2024 uranium production between 22.5 and 23.5 million tonnes, up from the previous forecast of 21 to 22.5 million tonnes. However, BMO Capital Markets analyst Alexander Pearce noted that the uranium market will still remain in a supply deficit.
Earlier this year, uranium prices soared to a 15-year high of $104/lb due to tight supply and rising demand.
As of August 23, 2024, here are the price performances of some U.S. uranium stocks and ETFs:
