Reflections on Uranium
Translated from Russian with the help of AI. Original: Russian version
Reflections on uranium: the value of the Budenovskoye deposit and the sale of a stake to Rosatom at an apparently understated price.
In 2009–2011 I worked as Deputy Director General for Economics and Finance at JV Zarechnoye JSC, a uranium-mining joint venture between Kazatomprom and Rosatom. In terms of reserves and production costs, the deposit was among the poorest of Kazatomprom's comparable operations. The higher the uranium content in the pregnant solution, the lower the cost of the uranium produced. That was when I began writing a great deal about uranium taxation: our poor mines paid more tax than the rich ones, and the rule was changed only in 2023. But this post is not about that.
We had the same shareholders as LLP Karatau and JSC Akbastau, which developed the Budenovskoye deposit. As I understand it, Budenovskoye is to uranium what Tengiz is to oil. It has the highest uranium content in the pregnant solution, which makes it the most profitable deposit. The deposit is so vast that it was divided into sites. For comparison, Karatau earned KZT 60 billion in 2021 on revenue of KZT 94 billion, with output of around 2,500 tonnes. I remember that at Zarechnoye we always felt a touch of good-natured envy toward the people at Karatau and Akbastau: high profits, low costs, and huge reserves of easily accessible uranium.
I have just read the news that a stake in the Budenovskoye JV has been sold to Rosatom. Its reserves stand at 114,000 tonnes of uranium, and output is expected to reach around 6,000 tonnes a year, which would make it the largest producing enterprise. Applying Karatau's efficiency, profit per tonne of uranium produced comes to at least USD 50,000, or USD 6 billion over the whole production period. Even allowing for discounting and the necessary investment in construction and geological exploration, it is safe to assume that such a site is worth a couple of billion US dollars.
I dug through the open data and found that the JV was created in 2015, which is when 49% of the deposit was handed over to private owners. And according to Budenovskoye's own financial statements, the Russians appeared among the shareholders in 2022. Somebody has done very nicely out of this, Kazakhstan-style.