National Atomic Company “Kazatomprom” JSC (“Kazatomprom”, “KAP” or “the Company”) expects its 2024 production to be adjusted due to the challenges related to the availability of sulphuric acid, a critical operating material, as well as delays in completing construction works at the newly developed deposits, however remains committed to its 2024 delivery obligations.
In August 2022, Kazatomprom’s Board of directors has approved the Company’s intention to increase production volumes in 2024 to a 90% level relative to Subsoil Use Agreements. The decision to shift production from 80% in 2023 to approximately 90% in 2024 (against Subsoil Use Agreements) was based primarily on Kazatomprom’s continued success in signing mid- and long-term contracts with new and existing customers.
In August 2022, the Company has also highlighted, and reiterated in its communications throughout 2023, 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.
Kazatomprom has been 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.
While actively pursuing alternative sulphuric acid supplies, current projections indicate that the Company’s intention to achieve 90% production volume as per Subsoil Use Agreements in 2024 may be challenging.
The exact impact on the Company’s operational performance is now being assessed and will be detailed in the upcoming production guidance for 2024 as part of the Q4 2023 Trading Update, which is expected to be released no later than 1 February 2024.
Kazatomprom remains committed to fulfilling contractual obligations towards all existing customers throughout 2024. If limited access to sulphuric acid continues throughout this year, and should the Company not succeed in catching up with the construction works schedule at the newly developed deposits in 2024, Kazatomprom’s 2025 production plan may also be affected, subject to considerable supply chain risks. 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.
The Company continues its efforts to solve the aforementioned issues and will update its stakeholders accordingly as the situation with the sulphuric acid availability and its impact on production continues to develop.
Uranium reserves remaining in the ground as a result of deviation from production schedules will be available for production as a source of revenue in the future, creating long-term value for our shareholders.