Canadian uranium producer Cameco (CCOTO)(CCJ) says it’s “disappointed and surprised” by a production halt on New Year’s Day at a mine jointly owned with Kazakhstan’s national atomic company.
Saskatoon-based Cameco owns a 40 per cent stake in Joint Venture Inkai (JV Inkai). Kazatomprom, which owns a 60 per cent stake, informed its Canadian partner on Wednesday that it had not been granted an extension by Kazakhstan’s energy ministry to file project documents due by the end of 2024.
“As majority owner and controlling partner of the joint venture, on Dec. 30, 2024, Kazatomprom directed JV Inkai to plan for a halt of operations as of Jan. 1, 2025, to avoid potential violation of Kazakhstan legislation,” Cameco stated in a press release on Thursday.
“We are disappointed and surprised by this unexpected suspension and will be seeking further clarification on how this transpired, as well as the potential 2025 and 2026 production and financial impacts (including on future dividends), and what Cameco can do to help Kazatomprom and JV Inkai restart mining operations.”
The company says reports it received as recently as Dec. 26 made no mention of the risk of a production suspension related to JV Inkai’s “Project for Uranium Deposit Development” documentation.
Cameco shares rose at the start of trading in Toronto and New York on Thursday. Toronto-listed shares added 1.75 per cent to $75.17 as at 11:12 a.m. ET.
Kazatomprom says it produced about 20 per cent of the global uranium supply in 2023. However, it slashed production targets for 2024 and 2025, blaming uncertain sulphuric acid supplies and construction delays at newly developed deposits.
In November, Cameco raised its 2024 outlook for uranium production attributable to the company from 22.4 million pounds to as much as 23.1 million pounds. The company estimated 2024 output from JV Inkai would be 600,000 pounds lower versus last year, due to the acid supply challenges.
RBC Capital Markets analyst Andrew Wong says while Kazatomprom and the Kazakh government are motivated to restart production, the situation is “largely out of Cameco’s control.”
“The issue further highlights risks to global uranium supply presented by uncertainty in Kazakhstan following significant management turnover at Kazatomprom in the past couple years, and an uncertain operational environment over the past two years that have included ongoing challenges in securing sufficient supplies of sulphuric acid, multiple production guidance cuts, logistical delays, and a country-wide protest,” he wrote on Thursday.
