Russia Still Has a Chokehold on the World's Biggest Uranium Supplier

Last week, Kazatomprom's (KAP) shareholders did not approve the proposed contract to supply natural uranium as U₃O₈ to Russia's Uranium One Group, part of state-owned nuclear firm Rosatom. Only 5% voted in favour and 88% abstained, meaning the proposal failed to secure the simple majority required. The abstentions have evidently come primarily from KAP's majority shareholder, the Kazakh state (75%).

By contrast, shareholders approved a spot-term contract to buy and sell natural uranium concentrates with China's State Nuclear Uranium Resource Development Company. In its August EGM notice, KAP stated that the volumes and delivery schedules for both contracts could not be disclosed for confidentiality reasons, at the insistence of the respective counterparties.

Historically, KAP has brought major contracts to a shareholder vote where their value exceeded 50% of book value. With book value at approximately US$5bn, this would suggest a transaction value of US$2.5bn or more, although we understand this could represent the aggregate value of both contracts rather than either contract individually. If we assume a ten-year duration, the implied volumes associated with the Russian contract could be in the region of 1-2Mlbs per year. This is our own rough estimate and remains speculative, given that the actual contract value, duration and volumes have not been disclosed.

Unless this situation is resolved in some form, it is difficult to see how Kazakhstan could secure or benefit from a waiver to Russia's ban on sulphuric acid exports, which remains in place until year-end. Our previous view was that the ban was unlikely to affect KAP, precisely because a deal of this scale would presumably have required the necessary arrangements to be in place.

Recall that we estimated that, if the ban were to affect KAP, the company could face a production shortfall of approximately 3Mlbs in 2027: bullish.

KAP and Kazakh sulphuric acid requirements, and estimated Russian freeze impact

Source: Asymmetric Research, inbusiness.kz, Kursiv Media

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We think this has real consequences for Kazakh supply, for the uranium equities and for the uranium price. The models, the valuation work and our positioning are available to subscribers. Full note on Asymmetric Research: asymmetricresearch.substack.com

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Disclaimer: This article is for informational purposes only and does not constitute investment advice or a personal recommendation. Past performance is not indicative of future results. The value of investments can go down as well as up. Uranium and related equities are highly volatile. Readers should seek independent professional financial advice before making any investment decision. The author and Asymmetric Research hold positions in uranium and related equities.