Kazakhstan Emerges as Powerhouse in Uranium Production
Kazakhstan, the ninth-largest country in the world, may not be well-known to many, but it has quietly become a superpower in the uranium industry. This former Soviet state is home to seven of the twelve largest producing uranium deposits globally. Over the past two decades, with the help of American technology, Kazakhstan has transformed from producing 1 million pounds of uranium annually to over 46 million pounds, becoming the world’s largest producer of uranium. In 2022, it accounted for 43% of the world’s uranium production, surpassing the combined output of the next four countries.
However, despite its uranium riches, Kazakhstan has faced challenges in securing a pathway to monetize its resources. It needed uranium refinement and enrichment infrastructure, as well as trade agreements to access uranium sales to utilities worldwide. Russia swiftly took advantage of this situation, providing trade routes and uranium processing infrastructure. Some Western companies, like Cameco, also capitalized on Kazakhstan’s predicament.
For the past three decades, Rosatom, the state-owned Russian company created under President Vladimir Putin’s watch, has controlled one-third of the global uranium supply. This control over uranium enrichment services and supply poses a significant national security threat to the United States, as Russia has repeatedly demonstrated its willingness to use this leverage. In 2014, Russia threatened to cut off nuclear fuel access, and in 2022, it halted natural gas supplies to Europe.
Adding to the concern is China’s increasing influence in the uranium market. China has experienced a 400% growth in nuclear power generation over the past decade and plans to build at least 100 more nuclear reactors. However, China struggles to produce enough uranium to fuel these reactors, with its domestic uranium resources rapidly depleting. At the current rate, China’s uranium resources will last less than a decade, even without building new reactors.
The United States heavily relies on imported uranium, with 54% of its purchases in 2021 coming from Russia or former Soviet states. Canada and Australia, the other main producers, have already sold and hedged their production in long-term contracts, limiting the U.S.’s options. If the U.S. fails to develop a domestic uranium industry, Russia and China could potentially cripple its secure supply of nuclear power.
Recognizing the urgency and national security implications, the U.S. government introduced the National Opportunity to Restore Uranium Supply Services In America Act of 2022. This bipartisan bill aims to expel Russia’s influence from the U.S. uranium market. Senator Joe Manchin introduced Bill S.452 in February 2023, which requires the Secretary of Energy to establish a Nuclear Fuel Security Program. The bill has passed the House and is now awaiting a vote in the Senate.
With the reset of the domestic uranium industry, the U.S. aims to power its 91 nuclear power reactors, which require over 50 million pounds of uranium to operate and meet its military nuclear fuel needs. The government’s actions have created an opportunity for value investors, with a company’s enterprise value currently valued at less than $30 million, despite its assets being worth much more.
One of the company’s uranium assets alone, located in the highest-grade producing region globally, would be valued at $75 million based on comparable peer valuations. This presents a unique investment opportunity in low-risk jurisdictions that will benefit from America’s Nuclear Renaissance and Energy Transition.
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