Turmoil in Kazakhstan pushes uranium and oil prices up

Instability in Kazakhstan, the world’s largest uranium producer, threatens to curb production and raise prices as nuclear fuel supplies tighten.

Western traders and mining companies say the protests could make it difficult to transport workers and equipment to mining sites when shifting shifts, and could hamper exports out of the country.

Kazakhstan, an ally of Russia, produces about 40% of the world’s uranium production and sells it to utilities in the United States and other Western countries, as well as to China. He has built a reputation as a reliable supplier.

Uranium prices have jumped since protests erupted in Kazakhstan’s western Mangistau region on Sunday over rising energy prices, prompting the government to resign. A lightly processed form of uranium known as U3O8 is expected to change hands above $ 46 a pound on Thursday, traders said. That’s against $ 45.25 Wednesday and $ 42 at the start of the year.

The protests also pushed up crude oil prices. Kazakhstan is a member of the OPEC + alliance and produced around 1.7 million barrels of oil per day in November, according to the International Energy Agency, just under 2% of what the world consumed. every day last year.

Chevron Corp.

, which owns 50% of the joint venture that manages Kazakhstan’s Tengiz oil field, said it had cut production after protests at the facility.

“Production operations continue, but there has been a temporary adjustment in production due to logistics,” a Chevron spokesperson said. “A number of contract workers are gathered on the Tengiz grounds to support the protests taking place across Kazakhstan.”

The unrest could affect uranium shipments if not resolved quickly, traders and mining companies have said. Most mining activities in Kazakhstan are carried out through a process called in situ leaching which requires a constant supply of pipes to line up wells drilled in the ground, as well as sulfuric acid to pump uranium to the surface.

The violent protests in Kazakhstan prompted a Russian-led military coalition to send troops to the country. Protesters stormed government buildings and streets in several cities. Photo: Mariya Gordeyeva / Reuters

Instability struck at a vulnerable time for the uranium markets. Prices are more than 50% higher than 12 months ago, according to UxC LLC. The recovery ended a long slowdown triggered by Japanese reactor mergers in 2011, which led Japan and Germany to shut down nuclear power plants, eroding demand.

Shares of National Atomic Co. Kazatomprom JSC, the state-owned uranium miner, fell 6.7% in London on Thursday.

Supplies have declined in part because investors bought the fuel in the bet that governments will embrace nuclear power to reduce carbon emissions. Kazatomprom and the Canadian Cameco Corp.

, the second-largest producer, cut production to drain the glut that emerged after the Fukushima nuclear power plant disaster in Japan in 2011.

Cameco, which owns 40% of a uranium joint venture with Kazatomprom in Inkai, south-central Kazakhstan, was unable to communicate with its employees there during a time when the internet went down , said a person familiar with the matter. The company has reconnected with its team. Logistical difficulties could reduce production, the person said.

Nuclear reactors, run by utilities that typically buy uranium years in advance, will not be immediately affected by the price hike. But reliance on Kazakh and Canadian uranium could cause utilities to diversify their supplies, said Arthur Hyde, partner of uranium-focused hedge fund Segra Capital Management.

“Over the past 15 years, Kazakhstan has been an incredibly stable supplier,” said Mr. Hyde. “If Kazakhstan is starting to be seen as less stable, there aren’t many places to go. “

—Benoit Faucon contributed to this article.

Write to Joe Wallace at joe.wallace@wsj.com

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Felix J. Dixon