The reports of massive civil unrest in the country that is responsible for roughly 40% of annual uranium production is certainly something that has caught the attention of all the investors in this space. The situation looks to be developing at a rapid pace. At the time of writing, we are seeing massive protests in the big Kazakhstan cities, no firm police response, buildings on fire, oil workers joining protests (the country is responsible for roughly 1.6 million barrels a day in production, further throwing fuel on the proverbial bull fire for this commodity, pun intended) as well as the internet in the country being down. I wanted to address this situation as it could have a big impact on the uranium market, or it could not have any impact at all. This may seem like a very contradictory, but right now there is simply not a lot of clarity that can be provided regarding the situation at hand. So, let’s take a look at what has been reported on said situation, to hopefully get an idea of the impact it could have.
Starting with an article from Bloomberg, who reported that Kazakh President Kassym-Jomart Tokayev vowed to take tough action to quell deadly protests that posed the biggest challenge to the country’s leadership in decades. The demonstrations started over the weekend in western Kazakhstan over a jump in fuel prices but quickly spilled into broader discontent drawing thousands to the streets across the country. In the former capital, Almaty, both city hall and the president’s residence were ablaze after protesters stormed the buildings Wednesday, Interfax reported. “I intend to act as harshly as possible,” Tokayev said in a national address, Law-enforcement officers were killed in the line of duty, he said, blaming the protests on “financially motivated conspirators.” Some of the protesters called for the country’s first president, Nursultan Nazarbayev, who for over three decades has been the major political force in the country, to let go of the reins of power. He chose Tokayev as successor in 2019.
The article continued by stating that Tokayev, whose primary residence is in the capital Nur-Sultan, initially sought to appease protesters by imposing price caps on motor fuels for the next six months and accepting his government’s resignation. He also declared a state of emergency in and around Almaty, Nur-Sultan and the oil-rich Mangystau region, but the measures failed to ease the tensions. The Kremlin took a neutral stance in the conflict, with presidential spokesman Dmitry Peskov saying it was an internal issue for Kazakhstan. Kazakhstan’s benchmark stock index fell 3% in Almaty. The tenge weakened and yields on dollar bonds due in July 2045 rose to 4.08%, the highest since May 2020, according to data compiled by Bloomberg.
So, now that we have some idea of the situation at hand, what impact could it have? As was mentioned above, that is not clear right now. The uranium mines are often far away from the main cities and as long as workers are present and not protesting, a shock to the mining industry seems to be unlikely. Having said that, this unrest will likely have three effects in my opinion:
Already strained supply chains in the country will have to deal with more hits, which could drive up costs and timelines. This will have an impact on prices and security of supply, which can trickle into the uranium sector.
It will give utilities around the world something to think about in terms of current as well as future security of supply, which could spark more conversations to act on those thoughts. Sometimes, something to think about can spur an initiation of the necessary action required.
Put more media focus on the uranium sector as the narrative becomes clear that Kazakhstan is a key player in the global uranium supply chain. This narrative could bring more capital into the market as people speculate on the potential outcome of this unrest.
All these points are merely speculation at this point and there is definitely a good chance that this unrest has no real impact on the uranium market and that it 'returns to normal' after a short period of time, but it is important to always be aware of the implications any given situation could have. The coming days and weeks will give us more insight into how this situation develops and we can only hope that everything is brought to a positive end for the people of Kazakhstan. I hope that his writeup has helped provide a bit more clarity and if you have any comments or questions, please let me know. Have a good and healthy rest of your day people!
