Uranium mining stocks soared on Wednesday after a surprise hike in extraction taxes in Kazakhstan, the world’s largest uranium-producing country, which BMO Capital Markets said will limit future supply growth. As Interfax first reported, the government in Kazakhstan introduced a new Mineral Extraction Tax MET for uranium, replacing the existing 6% flat rate MET introduced in 2023. Per the new code, the new MET rate is to increase to 9% from 6% in 2025.
Pearce calculates the potential impact to cash flow and concludes that the new MET could impact Kazatomprom's NPV10% by 5-10% and 2025 EBITDA by up to 5%, and that 'from 2026 onwards the EBITDA impact could be 8-12%.' More significantly, however, he warns that the new rates 'appear to provide less incentive for Kazatomprom to increase production, in our view, with less penalty for higher uranium prices than production, which could add to support for the uranium price.
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