The world's largest uranium producer Kazatomprom will continue to 'flex down' production by 20% through 2021 due to oversupply, Kazakhstan's National Atomic Company Kazatomprom announced on Tuesday.

"The decision to extend production curtailment reflects the fact that the uranium market is still recovering from a period of oversupply, and uranium prices remain low," according to the company's statement.

"The full implementation of this decision would remove up to 5,600 tons uranium (tU) from anticipated global primary supply in 2021, while Kazatomprom's 2021 production would remain below 23,000 tU, which is expected to be in line with production in 2019 and 2020," the statement read.

The company said it announced the plan well before the year-end to ensure its mining subsidiaries and joint ventures can incorporate the required changes into their 2020 capital expenditure budgets, accounting for the revised production levels in 2021.

Kazatomprom noted that no decision has been taken regarding production levels beyond 2021 but the company will continue to monitor market conditions.

However, Kazatomprom does not expect to return to full production until a sustained market recovery is evident, and demand and supply conditions signal a need for more uranium, the company said.

"Uranium recovered somewhat from the lows of 2016, but the market is still signaling that there is no need to bring back existing production capacity," said CEO of Kazatomprom Galymzhan Pirmatov.

"Keeping production levels flat for now supports a return to long-term sustainability in the market, which will benefit all stakeholders. Delaying the return to planned output levels also demonstrates our commitment to the value-over-volume philosophy at the core of our strategy," Pirmatov said.

Kazatomprom is the world's largest producer of uranium, representing approximately 23% of total global primary uranium production in 2018. The group sells uranium and uranium products under long-term and short-term contracts, as well as in the spot market, directly from its headquarters in Nur-Sultan or through its Switzerland-based trading subsidiary.

On Dec. 4, 2017, the company announced that starting from January 2018 it would cut uranium production by 20% over the next three years, as the market struggles with oversupply that leads to lower prices.

By Firdevs Yuksel

Anadolu Agency

energy@aa.com.tr