Uranium market jumps as Kazakhstan plans mineral extraction tax hike

By Colin Hay - July 12, 2024

News that global uranium powerhouse Kazakhstan is aiming to increase its mineral extraction tax (MET) for the energy metal from has sent the market into a frenzy.

The country’s national atomic company Kazatomprom, the world’s largest uranium producer, revealed that the government had introduced amendments to the tax code that include changes to the MET rate for uranium.

MET is incurred and paid by the mining entities.

Uranium is currently trading at around US$85.95 per pound, with some analysts predicting that the reduced supply incentive, coupled with increasing uncertainty, could drive it as high as US$90/lb by year-end.

Differentiated approach

In 2023, the uranium tax in Kazakhstan was determined on the basis of the weighted average price of natural uranium concentrate (U3O8) according to public price reporting sources, multiplied by the amount of uranium mined and a tax rate of 6% applied.

While the same methodology will stay in place thru 2025, the applicable MET rate for uranium will increase to 9%.

From 1 January 2026, a differentiated MET approach will be introduced whereby the tax rate will depend on the actual volume of annual U3O8 production under each subsoil use agreement.

Furthermore, if the U3O8 price exceeds certain specified levels, the tax rate may rise as high as 18%.

Kazatomprom impact

The tax changes are also expected to have an impact on Kazatomprom’s forward earnings.

As the amendments come into force from 1 January 2025, Kazatomprom said that they will not impact the company’s guidance or expectations related to taxation in 2024.

The company also stated that the changes mean its various joint ventures and subsidiaries are expected to have different applicable MET rates from 2026.