Paladin Energy (ASX: PDN) shares tumbled over 28% on Tuesday after announcing cuts to production.
The uranium miner said on Tuesday it has revised fiscal 2025 production guidance for its Langer Heinrich Mine in Namibia, alarming investors and marking the worst trading performance in seven years.
The Western-Australian based company said guidance has been revised to 3.0–3.6 million pounds (Mlb) of uranium, down from the previously projected 4.0–4.5 Mlb, amid lower-than-expected production results for October 2024.
Production for October reached 186,667 pounds of uranium with Paladin citing operational challenges, including water supply disruptions and variability in ore feed grade, the reasons behind the decline in production.
The company is planning a two-week shutdown later in November to implement upgrades, including filling water storage facilities to alleviate future supply disruptions and ensuring a more reliable water supply.
Paladin has also withdrawn all other guidance for fiscal 2025 and said it expects production to be higher in the second half of FY25 as it continues to work through the current challenges at Langer Heinrich Mine.
Chief executive Ian Purdy said: “The operational variability we’ve encountered underscores the importance of optimising our infrastructure. We are focused on enhancing plant throughput and recovery rates to achieve our long-term production goals.”
Global demand for the naturally occurring radioactive element has increased as countries move towards nuclear power, in the interests of national energy security.
Paladin's infrastructure challenges demonstrate the weaknesses in uranium industry's supply chains, as reliable nuclear fuel supply chains become vital.
Back in May the U.S. Department of Energy said it will spend nearly US$3 billion (A$4.8 billion) in building the domestic supply of uranium to counteract the ban on Russian nuclear fuel imports, amid the Ukraine invasion.
Russia holds approximately 44% of the world’s uranium enrichment capacity and supplies approximately 35% of America’s imports for nuclear fuel.
Meanwhile, China is leading the global nuclear renaissance, with the country building nuclear reactors faster than any other country, after confirming 22 of 58 global reactors are being built.
Here in Australia, Peter Dutton and the Liberal National Coalition said if they are victorious in the next Federal Election, they will establish nuclear reactors throughout Australia, with some energy market analysts forecasting the cost to taxpayers as high as $100 billion.
Elsewhere, the increased interest in nuclear power has also extended to big technology, with Microsoft, Amazon and Google all moving to nuclear power to provide the emissions-free electricity needed to run artificial intelligence and fuel data centers.
Kazakhstan, Canada and Australia make up the top uranium producers worldwide.
As at 5:03 pm (AEDT) Tuesday 12 November, Paladin Energy's stock price was $6.88, down −$2.80 (28.93%). The previous close was $9.68. It has a market cap of $2.06 billion.
