Uranium miners and sector-related ETFs surged Monday after Kazakhstan’s state-owned uranium producer Kazatomprom stated it will reduce production over the next three years in light of a global supply glut of the nuclear fuel.
The Global X Uranium ETF (NYSEArca: URA), which tracks global uranium miners, surged 12.6% Monday.
Bolstering the uranium market, Kazakhstan said its state-owned uranium miner will cut production by 20% over the next three years. which amounts to 11,000 metric tons of uranium with the reduced output next year equivalent to 7.5% of total global supply, reports Henry Sanderson for the Financial Times.
“Given the challenging market conditions, and in light of continued oversupply in the uranium market, we have taken the strategic decision to reduce production in order to better align our production levels with market demand. We believe that these measures strongly underline our commitment to ensuring the long-term sustainability of uranium mining; a critical component in the generation of clean, carbon free electricity around the globe,” Galymzhan Piramatov, chairman of the management board at Kazatomprom, said.
Analysts at Cantor Fitzgerald said the three-year cut was a surprise since the company typically reveals production guidance on a year-by-year basis.
“Today’s announcement was a positive surprise as the world’s largest producer assumes greater market leadership,” Cantor Fitzgerald analysts said.
Kazahkstan’s cuts come off the heels of Canadian Cameco’s decision to suspend production at one of its key mines last month in response to an oversupplied market.
Ever since the Fukushima nuclear power incident in march 2011 and the subsequent diminished demand for nuclear power, uranium prices have plunged over 70%.
Analyst Rob Chang of Cantor Fitzgerald projected that spot uranium prices, which plunged to near 13-year lows in 2016, are now expected go up as much as $30 a pound, Reuters reports.
Uranium prices now hovering around $22.0 per pound.
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