Kazatomprom, a uranium producer in Kazakhstan, has decreased its expected figures for uranium production for this year because of delays in well-field exploration and development activity. The company points to supply chain issues related to the coronavirus pandemic that have had a significant impact on its schedules for production.
The company’s announcement came a few days after Cameco, a Canadian-based company, also decreased its prediction for fuel services production, pointing to issues with the supply chain.
For the first three quarters of this year, Kazatomprom’s production of uranium was 6% higher in comparison to the same period last year. However, the company explained that despite these improvements, issues related to the supply chain had limited access to specific key operating equipment and materials, including drilling rigs, specialized equipment and production reagents, which had a significant influence on its production schedule.
Kazatomprom expects this year’s production to be roughly 12,000 tU on an attributable basis and about 22,000 tU on a 100% basis. The company expects to recover this production shortfall over the life-of-mine at the affected assets.
On the other hand, Cameco stated that the potential for post-pandemic effects on labor, equipment and construction materials could worsen production risk in the future in both its fuel services and mining operations. The Canadian company modified its prediction for its production of fuel services for this year, noting that this was because of the temporary restrictions imposed on the supply of hydrogen to its conversion facility in Port Hope.
The company expects to produce roughly 12 million kgU in 2021, with officials expecting that this supply constraint will be resolved by the end of 2021’s fourth quarter. In addition, company officials note that while customer deliveries for 2021 will not be impacted, the potential for post-pandemic impacts on materials, among other factors, remained uncertain and could introduce risk to next year’s rate of production.
In the third quarter, the company’s attributable production from Cigar Lake was 770 tU of packaged pounds of uranium, which equates to about 2 million pounds. The total amount of packaged pounds of uranium produced in the first three quarters of the year was 3.3 million pounds.
Cameco expects the Cigar Lake mine to produce a total of 12 million packaged pounds of uranium by the end of the year, one-half of which will be its share. Currently, Cameco is not planning to resume production at its Key Lake/McArthur River operation, whose activities were suspended early in 2018.
If those supply chain disturbances continue for longer than they already have, we could see prices of uranium increasing even if sector players such as Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) hope wih to avoid such an eventuality.
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