Australian uranium stocks up following Kazatomprom update

Shares in Australian uranium companies rose on Friday, following a significant update from Kazakhstan-based Kazatomprom, which is the world's largest producer.

Due to a shortage of sulphuric acid, Kazatomprom said it would be forced to reduce its 2024 production guidance to 21,000 tonnes to 22,500 tonnes of elemntal uranium, from 25,300tU. 

This development also resulted in the spot price for uranium remaining above $US100 per pound, hitting $US106.40/pound as of 3.24pm AWST. 

Kazatomprom said its 2025 production could also be affected, should the supply shortage continue.

"Kazatomprom is actively engaged in discussions with sulphuric acid manufacturers in the neighbouring countries to augment the supply volumes for 2024," it said.

"The company is committed to addressing this matter diligently and will keep stakeholders informed about the evolving situation regarding sulphuric acid availability and its potential influence on production metrics.

"If the limited access to sulphuric acid continues throughout the current year and the company does not succeed in reducing the delay in the construction schedule at the newly developed deposits in 2024, this could unfavourably influence Kazatomprom's production plans for 2025.

"Should there be any adjustments to the 2025 production plans, these are expected to be announced in the report of the company's financial results for the first half of 2024. However, a swift return to a 100 per cent production volume level relative to subsoil use agreements may be at risk." 

When uranium ore is mined, it is crushed and soaked in sulphuric acid, which ensures it forms into yellowcake. Once each piece of yellowcake has dried and been purified, each piece approximately contains 90 per cent uranium. 

Kazatomprom said strong demand from Kazakhstan's agriculture sector had affected overall supply levels. 

"Approximately sixty per cent of the world's sulphuric acid is utilised in the production of fertilisers," it said.

"Consequently, the agricultural sector wields a substantial influence on the demand for sulphuric acid. This phenomenon extends to the domestic Kazakh sulphuric acid market, where the agricultural industry is regarded as a vital element in ensuring food security and, as such, is subject to substantial subsidies, further propelling the demand for fertiliser production.

Given the significant increase in the domestic consumption and the demand for sulphuric acid for fertiliser production over the past few years, a shortage of sulphuric acid has developed in the domestic market.

"Regional markets are also experiencing a deficit due to growing demand from agricultural sector and a combination of factors such as supply chain disruptions and geopolitical uncertainty.

"As a result, current demand affects both availability and pricing of sulphuric acid." 

Following this news, stocks in several Australian uranium companies - including Boss Energy, Bannerman Energy, Paladin Energy and Peninsula Energy - rose by the close of trade on Friday.

Boss Energy gained 8 per cent to $6.11 per share, Paladin rose 7 per cent to $1.37, Bannerman added 5 per cent to $3.68 per share and Peninsula was up 7 per cent to 14 cents per share. 

Australia has the largest uranium reserves in the world.