Kazatomprom (KAP.UK) is the world's largest uranium producer, listed on the London Stock Exchange. In 2021 the company accounted for nearly 40% of the world's total raw material supply. The company has recently experienced problems due to the tense political situation in Kazakhstan, the war in Ukraine and the quest for energy self-sufficiency gaining supporters in the US Senate:
- Kazakhstan has not recognised the two separatist republics of Luhansk and Donetsk in the Donbass, nor has it agreed to provide military aid to Russia, which has requested it from the Astana-based government;
- Kazatomprom can count on China's support due to Kazakhstan's strategic location within Beijing's 'One Belt and Road' initiative, and it remains China's main contractor for supplying the uranium needed to make nuclear fuel;
- At the same time, however, Kazakhstan is landlocked and uranium has been transported west primarily via Russia and its northern seaports;
- China plans to build more than 150 nuclear reactors across Eurasia by 2030. The construction of such a number of reactors would have to entail a massive increase in production and demand for uranium;
- The USA is attempting to free itself from dependence on supplies of strategic raw materials by relying on 'domestic production', i.e. the development of domestic production. We can see this trend among others in the USA, which has so far been fully dependent on foreign sources for uranium and nuclear fuel (mainly Kazatomprom and enriched uranium supplied by Russia's Rosatom)
- The change in policy towards uranium imports in the USA and the discussed embargo on Russian enriched uranium have resulted in declines for Kazatomprom and increases for North American mining companies, primarily Uranium Energy Corp, which has reached record deposits located in Wyoming;
- At the same time, Kazatomprom remains the world's leading supplier with the most competitive prices in the market, which has access to 'renewable' sources of uranium in situ, found almost exclusively in Kazakhstan;
- A potential change in European energy policy may result in the reopening and even construction of new nuclear power plants in Europe, and supplies from western producers may not meet demand;
- China and India, which plan to generate 22,480 MW of nuclear power by 2031, may become Kazatomprom's main markets in the future. Over the past three years, Kazatomprom's uranium imports to India have totalled 4,557t against 2,988t imported from the world's second largest mining company, Canada's Cameco (CCJ.US);
- India plans to commission 4 new nuclear reactors later this year and 36 new reactors by 2028, some of which have already received construction permits
Stock chart of Kazatomprom (KAP.UK), W1 interval. Kazatomprom shares have been in a downtrend since mid-November 2021, the attempt to unwind the declines was first halted by protests in Kazakhstan. The sell-off then deepened following Russia's attack on Ukraine. The declines in February slowed down around 23 USD per share, which coincides with the August 2021 price bottom, followed by dynamic increases in Kazatomprom's valuation. The share price is still almost half below the peak near 47 USD and is in an interesting technical situation as it tries to overcome the resistance of the local peak of June 2021. The increases may accelerate towards the 38.2 retracement of the downward wave according to Fibonacci. The hope for growth bulls may also see in double bottom formation. Source: xStation 5
