INTEGRATED ANNUAL REPORT 2013
APPROVED by the Annual General Meeting of Shareholders of JSC Atomredmetzoloto on June 30, 2014 (Minutes No. 18) The Report has been preliminarily approved by Decision No. 119 of the Board of Directors of JSC Atomredmetzoloto dated May 28, 2014
INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO FOR 2013
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Table of Contents
Chapter 2. Strategy and Management System
Information about the Report
4
2013 Key Performance Indicators 2013 Main Events Address by the Chairman of the Board of Directors Address by the Director General
7 8
Chapter 1. About the Company 1.1. General Information about JSC Atomredmetzoloto 1.1.1. General Information 1.1.2. Historical Background 1.1.3. Holding Organisation 1.1.4. The Company’s Role in Rosatom’s Production Cycle 1.2. Presence in Markets 1.3. Value Chain and Business Model 1.3.1. Value Chain 1.3.2. Business Model Miners on the way to their work site, JSC PIMCU
2
10 11
13 14 14 14 16 17 17 18 18 18
2.1. Business Strategy 2.1.1. Corporate Mission and Values 2.1.2. Natural Uranium Market Overview and Outlook 2.1.3. Marketing and Sales Policy 2.1.4. Long-Term Strategy and Current Status of the Company 2.2. Management System 2.2.1. Corporate Governance 2.2.2. Report of the Board of Directors on Priority Lines of Business 2.2.3. Risk Management 2.2.4. Internal Monitoring System: Asset Protection 2.2.5. Procurement Management 2.3. Strategic Assets 2.3.1. CJSC RUSBURMASH Activities 2.3.2. JSC VNIPIpromtechnologii Activities
21 22 22 23 25 25 27 27 32 32 37 38 39 40 45
4.1. Discussions with Stakeholders in the Course of Report Preparation
106
4.2. Taking into Account Stakeholder Suggestions 4.3. Statement of Public Assurance
107 110
63
Strategy and Management System
65 67 68 69
98 100 101 102 104
Effective Capital Management
71 74 74 74 76 79 80 82 84 84 85 86 88 88 90 90 92 97 97
Address by Chief Executives
105
About the Company
52 52 52 58 60 60 61
Appendices Appendix 1. Matrix of Company’s Activities and Sustainable Development Data Significance Appendix 2. Table of Standard GRI Disclosures Appendix 3. Table of Disclosures as per the Reporting Standard of Rosatom State Corporation Appendix 4. Auditor’s Opinion on Financial Statements Accuracy Appendix 5. Report on Compliance with the Code of Corporate Conduct Appendix 6. Terms and Abbreviations Feedback Questionnaire Contact Information
113
Stakeholder Engagement
3.1. The Company’s Capital 3.2. Financial Capital Management 3.2.1. Financial Management 3.2.2. Investment Activities 3.3. Production Capital Management 3.3.1. Raw Material Base Development 3.3.2. Uranium Production Methods 3.3.3. Uranium Production by JSC Atomredmetzoloto Russian Entities 3.3.4. Uranium Production by the Entities of Uranium One Inc. 3.3.5. New Projects 3.3.6. Other Entities 3.3.7. Non-Nuclear Projects 3.3.8. Rosatom Production System: Complying with Product Quality Requirements 3.4. Human Capital Management 3.4.1. Management System 3.4.2. KPI System 3.4.3. Human Capital Features 3.4.4. Remuneration System 3.4.5. Social Policy of the Company 3.4.6. Training and Development 3.4.7. Work with Students and Youth 3.4.8. Support for Veterans and Pensioners 3.4.9. Trade Unions and Collective Agreements 3.4.10. Occupational Health and Safety 3.5. Intellectual Capital Management 3.5.1. Innovative Activities 3.6. Social Capital Management 3.6.1. Stakeholder Engagement 3.6.2. Developing Regions of Operation 3.7. Natural Capital Management 3.7.1. Environmental Policy of the Company 3.7.2. Protection of Land and Biological Diversity 3.7.3. Protection of Water Resources 3.7.4. Air Protection 3.7.5. Waste Treatment 3.7.6. Expenses Related to Environment Preservation
51
Chapter 4. Stakeholder Engagement in the Course of Report Preparation
114 115
Appendices
Chapter 3. Effective Capital Management
121 123 124 128 131 133
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Information about the Report
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Information about the Report ■■
The 2013 public Annual Report (hereinafter referred to as the “Report”) is the sixth report by ARMZ Uranium Holding Co. (hereinafter referred to as “JSC Atomredmetzoloto”, “ARMZ Uranium Holding Co.”, the “Holding”, or the “Company”) summarising financial, production, and non-financial results that give a general idea of the Company’s activities in sustainable development in particular. Due to the diversified activities of CJSC RUSBURMASH and JSC VNIPIpromtechnologii, their activities are described in separate sections of this Annual Report (unlike in the previous one). In each section, stakeholders can find the companies’ key competencies and development prospects. For more details see Section 2.3.1. CJSC RUSBURMASH Activities and 2.3.2. JSC VNIPIpromtechnologii Activities.
Report Scope This Report deals with JSC Atomredmetzoloto’s main activities in Russia, Kazakhstan, Canada, and a number of other countries for the period from January 1, 2013 through December 31, 2013, the Company’s plans for 2014, and the Company’s long-term plans. The Report covers all major subsidiaries and associates (hereinafter referred to as “S&A”) of the Holding. Since Rosatom State Corporation’s uranium mining assets were restructured in 2013, JSC Atomredmetzoloto will further focus on the development of Rosatom’s uranium assets in Russia. A new company, Uranium One Holding N.V., was established to manage the foreign uranium assets of Rosatom State Corporation during its initial nuclear fuel cycle stages. With this connection, the production and raw material base data for 2013 in this Report will be given in total for both Russian and foreign assets; however the development strategy and prospects will only cover assets in Russia. In later reports, the data will be consolidated within the scope of ARMZ Uranium Holding Co. management. Performance indicators disclosed in the Report are based on the following: ■■ production performance is based on the assets of JSC PIMCU, JSC Dalur, JSC Khiagda, Uranium One Inc., JSC EGMK-Project, JSC Gornoye UMC, JSC Olovskaya MCC (Mining and Chemical Company), JSC Lunnoye, CJSC RUSBURMASH, JSC VNIPIpromtechnologii, and ARMZ Service LLC;
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environmental performance — JSC PIMCU, JSC Dalur, and JSC Khiagda; HR and occupational safety performance — JSC Atomredmetzoloto, JSC PIMCU, JSC Dalur, JSC Khiagda, CJSC RUSBURMASH, and JSC VNIPIpromtechnologii; financial indicators — based on consolidated statements in compliance with IAS.
Regulatory Requirements and Standards Used in the Report The Report was drawn up according to Russian laws on open joint-stock company statements. Financials are based on consolidated statements prepared according to IAS requirements. You can find all IAS statements at the JSC Atomredmetzoloto website (www.armz.ru). International standards related to public reports: ■■ AA1000 Stakeholder Engagement Standards (Institute of Social and Ethical Accountability); ■■ Sustainability Reporting Guidelines, Global Reporting Initiative (GRI rev. G4.0); and ■■ International Integrated Reporting Framework (IIRC, International <IR> Framework).
The Report was prepared in accordance with the Core GRI G4.0 application option Rosatom State Corporation regulatory documents: ■■ Public Reporting Policy of Rosatom State Atomic Energy Corporation; ■■ Public Annual Report Template for key (for the purpose of public reporting) entities of Rosatom State Atomic Energy Corporation; and ■■ Code of Conduct of Rosatom State Atomic Energy Corporation.
GRI Guidelines Application Option The Report was prepared in accordance with the Core GRI G4.0 application option.
Report Preparation and Contents Stage 1: Development of the Report concept, including: ■■ analysis of stakeholder suggestions/comments provided during the previous reporting campaign;
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updated methodological framework based on GRI, IIRC and Rosatom State Corporation requirements and other documents regulating the Report and analysis of global best practices related to public reporting.
Address by Chief Executives
Priority topics of the Report: ■■
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Stage 2: Selection of priority topics of the Report, including: ■■ analysis of Company’s activities over 2013 and stakeholder recommendations received during the 2012 Report preparation; ■■ list of significant topics; ■■ checking the significance of the topics selected by the Report Preparation and Audit Team; ■■ discussing priority topics with stakeholders (through questionnaires) and ■■ the Company’s management approving the priority topics.
organisational changes within the Rosatom Mining Division and enhancing the efficiency of the Mining Division part located in Russia and key production performance as of the end of the year.
Stage 3: Development of Report contents, taking into account: ■■ JSC Atomredmetzoloto mission; ■■ JSC Atomredmetzoloto strategy; ■■ JSC Atomredmetzoloto current status; ■■ Rosatom priorities; and ■■ key stakeholders’ interests. We also took account of requests received from stakeholders while preparing this annual report and previous ones.
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Appendices
■■
Stakeholder Engagement
Effective Capital Management
Strategy and Management System
About the Company
Eduard Shcherbina, Face Miner at underground uranium mine No. 1, JSC PIMCU
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
On March 26, 2014, two dialogues were held dedicated to: ■■ JSC Atomredmetzoloto 2013 Basic Performance and Efficiency Enhancing Measures and ■■ Organisational Changes within the Rosatom Mining Division and JSC Atomredmetzoloto Development. On May 20, 2014, the Report draft was publicly discussed in absentia. The public discussion involved stakeholder representatives. For more details see 4.1. Discussions with Stakeholders in the Course of Report Preparation. In the course of the discussions, 16 suggestions and recommendations were received from stakeholders, and 9 of them were implemented in this Report, while the rest are still being reviewed by the Holding’s management in the course of ongoing operations. For more details, see 4.2. Taking into Account Stakeholder Suggestions.
The Report includes some forecasted production, financial, economic, and social values to give an idea about further development of the Company
Identifying the Significance of Information In compliance with the International Integrated Reporting Framework and the GRI G4.0 Guidelines that require the disclosure of significant information only, while preparing the Report, the significance of the Company’s activities and sustainable development data were verified by questionnaires filled out by stakeholder representatives. The questionnaires contained a list of topics that could be included in the Report, including topics selected in the GRI Guidelines, the Rosatom Public Report Template, and by the Company. Shareholders were to rate each topic on a 5-point scale and give their own suggestions regarding significant topics to be included in the Report. For more details see Appendix 1. Matrix of Company’s Activities and Sustainable Development Data Significance. Stage 4: Verifying information: ■■ statement of public assurance (for more details see 4.3. Statement of Public Assurance); ■■ Review Commission’s opinion and
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auditor’s report on financial statements accuracy (for more details see Appendix 4. Auditor’s Opinion on Financial Statements Accuracy). The auditor of ARMZ Uranium Holding Co. is ZAO KPMG. The final revision of the Report was approved by the Company’s Director General, the Board of Directors, and the General Meeting of Shareholders. ■■
Disclaimer Regarding Forecast The Report includes forecast statements regarding production, financial, economic, and social performance in order to outline the Company’s future development. Implementation of our assumptions and intentions directly depends on the political, economic, social, and regulatory situation. For this reason, the actual Company’s performance may be different from the forecast.
Address by Chief Executives
2013 Key Performance Indicators 2011
2012
2013
2013 compared to 2012,%
For more details see
Uranium production, tons
7,091.20
7,572.20
8,220.50
+8,6
3.3.3. Uranium production by JSC Atomredmetzoloto Russian entities, 3.3.4. Uranium production by the Entities of Uranium One Inc.
Rating among the TOP-3 biggest uranium mining companies
III
III
III
–
1.2. Presence in Markets
Uranium raw material base (Russian assets), thousand tons
515.80
550.50
541.90
-1.6
3.3.1. Raw Material Base Development
Uranium raw material base of Uranium One Inc., thousand tons
120.90
155.00
229.45
+48
3.3.4. Uranium production by the Entities of Uranium One Inc.
Number of employees
10,668
11,850
11,645
-1,7
3.4.3. Human Capital Features
Personnel turnover, %
23.00
17.00
23.40
+37.35
3.4.3. Human Capital Features
Average monthly salary, RUB
39,085
48,475
55,019
+13.5
3.4.4. Remuneration System
Personnel engagement (division), %
45
50
55
+5
3.4.3. Human Capital Features
Fatal injury frequency rate (FIFR)
0.02
0.01
0.02
+100
3.4.10. Occupational Health and Safety
Lost-time injury frequency rates (LTIFR)
2.23
0.39
0.55
+41
3.4.10. Occupational Health and Safety
192.90
263.20
393.38
+49.5
3.7.6. Expenses Related to Environment Preservation
1,037.01
1,804.09* +53.5
Strategy and Management System
Operational performance
About the Company
Table. 1. Key Financial and Economic Performance of JSC Atomredmetzoloto
Stakeholder Engagement
Effective Capital Management
Personnel
Occupational health and safety
Environmental protection expenses, million RUB
Appendices
Environmental protection
Social and economic area Taxes paid by ARMZ Uranium 1,055.15 Holding Co. key entities to regional budgets, million RUB
3.6.2.1. Economic Impact in Regions of Operation
* including the income tax paid by the consolidated group of taxpayers (hereinafter referred to as the “CGT”)
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2013 Main Events January ■■
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Registration and licensing for the Khokhlovskoye field (JSC Dalur) with the Russian Federal Subsoil Resources Management Agency. An ISO 9001 quality management system and an ISO 14001 environmental management system were introduced at JSC Dalur. The joint project of JSC Atomredmetzoloto and JSC PIMCU won the open public competition Developing a Complex Geotechnology-Based Processing Method for Low-Grade Uranium Ore that had been mounted by the Russian Ministry of Education and Science and the Company was granted the right to be subsidised to implement relevant complex highend production projects.
February ■■
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The book “Uranium in Geology, Mining and Economy” was published; it was written by Vadim Jivov (Chairman of the ARMZ Uranium Holding Co. Board of Directors and Uranium One Inc. President), Aleksandr Boytsov (Uranium One Inc. Vice-President), and Mikhail Shumilin (Subsoil Use Adviser at JSC Atomredmetzoloto). JSC Dalur launched a pilot plant for mining by-product rare earth element (REE) bulk concentrate from product solutions obtained in the course of uranium mining.
March ■■
The Uranium One Inc. Extraordinary General Meeting of Shareholders, the Supreme Court of Ontario (Canada), Russian, US, and Australian regulators approved the reverse split of 100% of ARMZ Uranium Holding Co. stock.
April ■■
The automatic downtime and failure recording system was put into commercial operation at JSC PIMCU.
May ■■
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JSC PIMCU launched the Rosatom production project Sinking Operations Enhancement and achieved a sinking rate of 160 m in a single drive ahead of schedule. Playgrounds and sports grounds for a kindergarten at Uksyanskoye settlement (Kurgan Region, Dalmatovo Area) were completed within the framework of the CSR policy and the scheme of developing regions of operation.
June ■■
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Rosatom uranium mining assets were restructured to ensure separate management of Russian and foreign uranium assets. ARMZ Uranium Holding Co. took part in International Forum ATOMEXPO 2013. JSC Atomredmetzoloto took part in the Conference on Nuclear Power in the 21st Century mounted by IAEA and the Russian Government together with the OECD Nuclear Energy Agency and Rosatom State Corporation. Uranium reserves at the Kolichikanskoye, Namaruskoye, Koretkondinskoye, Dybrynskoye, and Vershinnoye fields (Khiagda ore field) were approved before the Russian State Commission on Mineral Reserves.
August ■■
Delegation headed by V. Verkhovtsev (JSC Atomredmetzoloto General Director), K. Ilkovsky (Transbaikal Territory Governor) and S. Shurygin (JSC PIMCU General Director) during a National Miner’s Day celebration at JSC PIMCU
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■■ ■■
Fortum conducted a witness audit at JSC PIMCU. JSC PIMCU’s 45th anniversary was celebrated. An international certificate was obtained and an information security management system building was completed in compliance with ISO/IEC 27001:2005.
Address by Chief Executives Strategy and Management System
About the Company ■■
NRNU MEPhI (National Research Nuclear University of Moscow Engineering Physics Institute), JSC VNIPIpromtechnologii (Design Prospecting and Scientific Research Institute of Industrial Technology), and JSC VNIIHT (Scientific Research Institute of Chemical Technology) signed a collaboration agreement. Sports competitions for the personnel of ARMZ Uranium Holding Co. and its entities were held.
October ■■
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The Uranium One Inc. 100% reserve split transaction was closed. Uranium reserves at the Vershinnoye field (Khiagda ore field) were approved before the Buryatia Territory Commission on Mineral Reserves.
November ■■
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JSC PIMCU was rated as the most environmentally friendly company in the Transbaikal Territory at the Russian Industrial and Environmental Forum RosPromEco. Winners of Young Talents and the ECOLINE-2013 3rd Youth Educational Forum were awarded grants and other prizes.
The JSC Atomredmetzoloto 2012 integrated annual report was ranked TOP-10 in terms of quality among the 100 biggest Russian and CIS companies by Expert RA Rating Agency. The report also won in the category “Best Annual Report Concept and Design” at the 10th FPS Annual Report Competition.
December ■■
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Diversifying its production, JSC PIMCU launched the project Coal Pit Optimisation and Logistics aimed at increasing brown coal production at the Urtuysky pit. CJSC RUSBURMASH and JSC Kazgeology signed a collaboration agreement. JSC PIMCU introduced a new complex processing technology for low-grade uranium ore. JSC Atomredmetzoloto successfully completed the YaT-1-1 project to develop a geological database for the Streltsovskoye ore field (commercial operation performed by JSC PIMCU). Uranium reserves at the Koretkondinskoye field (Khiagda ore field) were approved before the Buryatia Territory Commission on Mineral Reserves.
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Effective Capital Management
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Stakeholder Engagement
September
Appendices
Aleksandr Stremilov, Operator and Hydrometallurgy Specialist at the Product Solution Processing Area of the In Situ Leaching Shop. Process pipeline installation, JSC Khiagda
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Address by the Chairman of the Board of Directors
Dear readers, During 2013 Rosatom State Corporation continued to actively increase its presence on the global nuclear technology market. In worldwide terms, one of our biggest advantages is offering our partners the complete package of technology solutions for nuclear power production, which, apart from NPP construction, includes uranium enrichment, nuclear fuel production, building NPP equipment, NPP operation, and waste management. This chain was built due to our access to natural uranium, which serves as the key fuel for the nuclear industry. Over several years, Rosatom State Corporation closed a number of M&A transactions and developed its projects in Russia based on JSC Atomredmetzoloto, which have resulted in the organisation of an ore mining division that since 2011 has been among the world’s TOP-3 biggest uranium mining companies. The key element of this strategy was the 100% reverse split of Uranium One Inc. (a Canadian public company). In spite of the ongoing construction of NPPs in a number of countries, 2013 saw a decrease in prices on the global uranium market, triggered by the 2011 Fukushima Daiichi nuclear disaster. Spot quotations went down by more than 20% to USD 34.5 per pound. Over 2013 uranium assets were consolidated worldwide, with many uranium mining companies giving up new projects. Being a strategic investor and striving to develop its Mining Division, in 2013 Rosatom State Corporation acquired 100% of Uranium One Inc. We believe that private ownership is better for effective develop-
10
ment based on our long-term interests in the Russian nuclear industry. At the same time, Uranium One Inc. will preserve best global practices in corporate governance (including the majority of the Board of Directors members being independent) and public reporting. The other key event for the Mining Division was the decision made by the industry management due to the complicated situation on the global uranium market. Foreign assets were moved out of JSC Atomredmetzoloto to serve as the basis for Uranium One Holding N.V., which is meant to facilitate Rosatom’s global growth at initial nuclear fuel cycle stages. The new company owns entities boasting nearly the lowest production costs; so, in spite of the current market conditions, it will effectively compete with global uranium leaders and completely provide a large-scale Rosatom presence enhancement programme with raw material. Thus, starting from the second half of 2013, the key objective of JSC Atomredmetzoloto was to develop Russian assets employed in the first place to provide for Rosatom’s needs in Russia. In 2013, JSC Dalur and JSC Khiagda, which mine uranium with the effective and eco-friendly in situ leaching method, increased their production volume by 6% and 38%, accordingly. A lot was done to enhance the efficiency of PIMCU, the key Russian uranium company. Enhancement measures will continue to move forward with production diversification, financial recovery, and operational efficiency optimisation. CJSC RUSBURMASH and JSC VNIPIpromtechnologii, ARMZ geological survey, and a variety of engineering companies have been facing the challenge of increasing the amount of their orders outside the Russian nuclear industry. In 2013 they realised the first results in this work. To achieve the set objectives, ARMZ Uranium Holding Co. should, as previously, follow sustainable development principles, actively cooperate with stakeholders, and make managerial decisions while taking into account of stakeholder opinions. I am sure that Rosatom’s work carried out in 2013 to ensure the long-term development of its Mining Division will lead to the most effective employment of the staff’s unique competencies, thus tapping into the full potential of JSC Atomredmetzoloto. Chairman of the Board of Directors V. Jivov
In spite of the difficult situation with the uranium market, we are determined to practice social conscience in business restructuring, environmental protection, and industrial safety
Director General V. Verkhovtsev
A lot of work was done. Heavy cost cutting allowed all the entities to fulfil 100% of their production plans. JSC Khiagda managed to start operating a pilot plant without losses. JSC Dalur achieved self-financing of its operational and investment activities. The programme for JSC PIMCU’s profitable operation was
11
Address by Chief Executives About the Company Strategy and Management System Effective Capital Management
The year 2013 brought two major events for JSC Atomredmetzoloto. First, in August 2013 the Russian flagship uranium company JSC PIMCU (Priargunsky Industrial Mining and Chemical Union) celebrated its 45th anniversary. Second, in September 2013, uranium market quotations went below USD 90 (RUB 2,800) per kilo, i.e. to the level of 8 years ago. This caused 30% of all the operating uranium mines all over the world (including JSC PIMCU) to become unprofitable. The situation on the natural uranium market shows that in the reporting year, ARMZ Uranium Holding Co. faced a big challenge.
Stakeholder Engagement
Dear shareholders, partners and colleagues,
developed and will be implemented by 2016. With this connection, we increased production of coal and sulphuric acid at the Urtuysky pit and the sulphuric acid plant included in the Holding. Further innovations were introduced, including the unique and cost-beneficial 3D hydrogeological modelling system for uranium fields employing downhole in situ leaching. Business diversification was also implemented. CJSC RUSBURMASH revenue outside the Holding activities increased by more than tenfold. JSC VNIPIpromtechnologii achieved a stronger position on the radioactive waste management market (also outside Russia) due to its participation in EAEC and EU projects. The First Ore Mining Company started to develop the Pavlovskoye field on Novaya Zemlya, one of the world’s biggest lead and zinc deposits. First investment agreements were signed for the development of new business activities based on JSC PIMCU and JSC Khiagda. There is still a lot to be done in 2014. We see our key objective as decreasing production costs and enhancing our competitive edge within the Russian uranium mining industry. I would like to point out that the challenges we face can only be met if we balance the interests of all stakeholders. In spite of the difficult situation with the uranium market, we are determined to practice social conscience in business restructuring, environmental protection, and industrial safety. We believe that the 2013 Annual Report gives a well-balanced and reasonable view of JSC Atomredmetzoloto’s strategic initiatives, social and economic impact on regions of operation and environmental concerns, and includes both challenges and achievements. The labour and enthusiasm of thousands of Holding employees back up every page of this Report and every practical example provided within it. These are technicians and underground surveyors from Transbaikal, engineers and designers from Moscow, field workers from Novaya Zemlya, and many others. They are true professionals and patriots. I am sure that with their help ARMZ Uranium Holding Co. can address any challenge.
Appendices
Address by the Director General
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
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1.1. General Information about JSC Atomredmetzoloto
1.2. Presence in Markets
1.3. Value Chain and Business Model
Appendices
Stakeholder Engagement
ABOUT THE COMPANY Effective Capital Management
Strategy and Management System
About the Company
Address by Chief Executives
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
1.1. General Information about JSC Atomredmetzoloto 1.1.1. General Information Main Activities ARMZ Uranium Holding Co. is the mining division of Rosatom and one of the leaders in the global uranium market. The company engages in a number of projects related and unrelated to uranium that are currently at various implementation stages, from geological exploration to active commercial operation. JSC Atomredmetzoloto boasts unique competencies in the uranium mining sector; it has long-term and wide experience in developing fields with various geoclimatic conditions. Regions of Operation Upon restructuring in 2013, JSC Atomredmetzoloto is now managing Russian uranium mining assets. The biggest ARMZ Uranium Holding Co. entity is JSC PIMCU (Priargunsky Industrial Mining and Chemical Union) located in the Transbaikal Territory. JSC Khiagda is registered in Buryatia. JSC Dalur, the first Russian company to mine uranium with in situ leaching, operates in the Kurgan Region. Key Laws and Regulations Applicable to the Company’s Activities The Company is regulated by its Charter, internal documents, and the following regulatory acts: ■■ Federal Law No. 208-ФЗ On Joint Stock Companies dated December 26, 1995; ■■ Federal Law No. 129-ФЗ On State Registration of Legal Entities and Individual Entrepreneurs dated August 8, 2001; ■■ Federal Law No. 13-ФЗ On Management and Disposal of Property and Shares of Companies Related to Nuclear Power and on Amending Certain Statutes of the Russian Federation dated February 5, 2007; ■■ Federal Law No. 135-ФЗ On Protection of Competition dated July 26, 2006; ■■ Federal Law No. 39-ФЗ On Securities Market dated April 22, 1996; and ■■ Russian FFMS Decree No. 11-46/пз-н On Approving the Regulations on Disclosure by Equity Security Issuers dated October 4, 2001. Membership JSC Atomredmetzoloto is a member of the World Nuclear Association and the IAEA.
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External Charters, Principles and Other Initiatives The Holding exists in accordance with the Russian Business Social Charter.
1.1.2. Historical Background State Concern Atomredmetzoloto was founded in 1991 to succeed the former First Chief Directorate of the USSR Ministry of Medium Machine Building and later operated within the structure of the Ministry for Atomic Energy of the Russian Federation. The
JSC Atomredmetzoloto boasts unique competencies in the uranium mining sector; it has long-term and wide experience in developing fields with various geoclimatic conditions Concern was an industrial complex of mining and processing enterprises located in six counties within the Commonwealth of Independent States — Russia, Ukraine, Uzbekistan, Kazakhstan, Tajikistan, and Kyrgyzstan. State Concern Atomredmetzoloto was involved in the exploring, mining, and processing of uranium, gold, and rare and rare earth element ores. It was also engaged in the design of mines, ore processing facilities, and machine engineering plants. In 1995, State Concern Atomredmetzoloto was reorganized to become a joint stock company of the open type. By mid-2008, within the framework of the nuclear industry restructuring, JSC Atomredmetzoloto received control over the following domestic uranium mining assets: JSC PIMCU, JSC Dalur, and JSC Khiagda, which had been formerly owned by JSC TVEL, a producer of fuel for nuclear power plants. Furthermore, TENEX (JSC Techsnabexport), Russia’s exporter of enrichment services and enriched uranium, transferred to ARMZ its stakes in uranium exploration and mining joint ventures outside of Russia. Along with that, JSC Atomredmetzoloto received from TENEX licenses for the right to use the subsoil
Address by Chief Executives About the Company Strategy and Management System
joined the Board of Directors of Uranium One Inc. and took up senior positions in the company’s management. In 2010, JSC Atomredmetzoloto consolidated a controlling stake in Uranium One Inc. In 2011, JSC Atomredmetzoloto acquired 100% of the Australian publicly traded company Mantra Resources Limited, which owns the Mkuju River project in Tanzania. In 2012, ARMZ Uranium Holding Co. purchased 99.5% of The First Ore Mining Company’s shares. In 2013, taking into consideration natural uranium market trends, ARMZ Uranium Holding Co. consolidated a controlling stake in Uranium One Inc. Under the agreement, all Uranium One Inc. ordinary shares were purchased that at that time were not possessed by JSC Atomredmetzoloto and its affiliated companies. Rosatom State Corporation authorised Uranium One Holding N.V. to manage its foreign assets. Since December 2013, JSC Atomredmetzoloto has been controlling all Russian uranium mining assets.
Appendices
Stakeholder Engagement
Effective Capital Management
of the reserve uranium deposits, including those of the world’s largest Elkon uranium ore province. After completion of all re-organisation activities, JSC Atomredmetzoloto assumed full authority over procurement for the domestic and international feedstock requirements of Russia’s nuclear industry and became one of the global leaders in uranium production. In 2008, with a view of rendering the company’s name compliant with its business objectives, as determined by Rosatom State Corporation, the management of JSC Atomredmetzoloto made a decision to rebrand the company, changing its name to ARMZ Uranium Holding Co. In 2009, JSC Atomredmetzoloto purchased Effective Energy N.V., thereby consolidating the Russian stake in Kazakhstan-based uranium mining joint ventures. As a result of an asset swap deal, JSC Atomredmetzoloto acquired a 19.95% stake in the Canadian uranium mining company Uranium One Inc. Representatives of ARMZ Uranium Holding Co.
Aleksey Grigoryev, Boring Machine Operator at the Tool Area of the Machine Assembly Shop, Repair and Engineering Works, JSC PIMCU
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
1.1.3. Holding Organisation Figure 1. Diagram of JSC Atomredmetzoloto S&A as of December 31, 2013
JSC Atomredmetzoloto
16
JSC PIMCU
JSC VNIPIPROMTECHNOLOGII
Itmanovo Agroindustrial Company LLC
Mantra Resources Pty Ltd. (Australia)
89,85%
100%
100%
86,09%
JSC Dalur
JSC Lunnoye
United Uranium Companies LLC
Uranium One Holding N.V. (Netherlands)
98,89%
50,03%
50%
43%
JSC Khiagda
JSC Olovskaya MCC
JSC South Yakutia Complex Development
RUNEX URANIUM Pty Ltd. (Namibia)
100%
100%
25,1%
50%
CJSC RUSBURMASH
JSC Gornoye UMC
JSC Uranium Mining Company
100%
100%
100%
Armenian-Russian Mining Company CJSC (Armenia) 50%
JSC EGMKProject
ARMZ Namibia Pty (Namibia)
100%
100%
The First One Mining Company
Vostok Power Resources (Great Britain)
99,6%
100%
Address by Chief Executives
Figure 2. JSC Atomredmetzoloto’s Role in Rosatom Production Cycle
About the Company
06
01
09
07
10
08
ARZM
Rosatom
01 – geological exploration, 02 – mining, 03 – ore processing,
04 – conversion, 05 – enrichment, 06 – fuel production, 07 – NPP, 08 – spent nuclear fuel storage, 09 – spent nuclear fuel treatment, 10 – spent nuclear fuel disposal, 11 – МОХ fuel production
1.1.4. The Company’s Role in Rosatom’s Production Cycle ARMZ Uranium Holding Co. controls and unites all Russian uranium mining assets. Along with Uranium One Holding N.V. controlling uranium assets abroad, it is included in the Rosatom Mining Division and ensures natural uranium supplies.
1.2. Presence in Markets ARMZ Uranium Holding Co. mainly operates on the natural uranium market. In 2013, Rosatom State Corporation, controlling JSC Atomredmetzoloto and Uranium One Holding N.V., ranked second among the world’s biggest companies in terms of its controlled raw materials base and third in terms of uranium production.
Rosatom’s position in the uranium market is secured through guaranteed demand from global nuclear companies, a geographically diversified production and raw material base, effective mining costs, and the implementation of sustainable development measures for operating entities and future projects. JSC Atomredmetzoloto’s development is also stimulated by secondary businesses (coal mining, thermal and electrical power generation, sulphuric acid production, building mining equipment at JSC PIMCU, rendering drilling, design, survey, and engineering services, etc.). The above services and products are used by JSC Atomredmetzoloto’s production entities, other companies within Rosatom State Corporation, and independent Russian and foreign companies. For more details see 2.1.2. Natural Uranium Market Overview and Outlook and 3.3. Production Capital Management.
17
Effective Capital Management
02
Stakeholder Engagement
ARMZ U1H
Strategy and Management System
11
Appendices
05
04
03
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Figure 3. ARMZ Uranium Holding Co. Value Chain
Exploration
Obtaining subsoil use rights
Geological exploration
R&D and innovations
Pre-design engineering
Design of facilities
Construction of facilities
Operation of facilities: uranium mining and processing
Reclamation and decommissioning
1.3. Value Chain and Business Model 1.3.1. Value Chain
1.3.2. Business Model
The ARMZ Uranium Holding Co. value chain is based on the production cycle model including a range of interconnected processes. ARMZ Uranium Holding Co. has the whole array of competencies to implement all value chain stages, from geological exploration and design to reclamation and decommissioning. These competencies are used to assess and implement business diversification projects.
The business model is a short-, medium-, and long-term value delivery system that is also used to achieve strategic goals. The Holding’s business model is based on its mission and long-term strategy. The business model includes: ■■ available capital (for more details see Chapter 3. Effective Capital Management); ■■ a management system employed for the most effective use of available capital (for more details see 2.2. Management System); ■■ value delivery based on the transformation of available capital (Holding’s main activity); and ■■ value delivery results (the Holding’s main products). The Holding’s business model is specifically focused on the environment since ■■ a part of its resources come from nature and a big part of its results also relate to it (e.g. social and natural capital); and ■■ the environment is the source of the Holding’s main opportunities and risks (for more details see 2.1.1. Corporate Mission and Values and 2.2.3. Risk Management).
ARMZ Uranium Holding Co. has the whole array of competencies to implement all value chain stages, from geological exploration and design to reclamation and decommissioning
18
Address by Chief Executives Appendices
Stakeholder Engagement
Effective Capital Management
Nikolay Poponin, General Director, verifies compliance with product solution processing procedures at JSC Dalur
About the Company
Effective management of the above types of capital is realised through the management system (for more details see 2.2. Management System). Sustainability of the business model is ensured through: ■■ integration into the Rosatom value chain (the biggest vertically integrated company in the global nuclear sector); ■■ employment of experience and technologies of the highest Russian and international levels at all value delivery stages; ■■ effective implementation of corporate projects (enhancing efficiency, Rosatom Production System, etc.); and ■■ a complex and systematic approach to risk management.
Strategy and Management System
The business model deals with transforming six types of capital, with changes described in the relevant parts of the Report: ■■ financial capital (for more details see 3.2. Financial Capital Management); ■■ production capital (for more details see 3.3. Production Capital Management); ■■ human capital (for more details see 3.4. Human Capital Management); ■■ intellectual capital (for more details see 3.5. Intellectual Capital Management); ■■ social capital (for more details see 3.6. Social Capital Management); and ■■ natural capital (for more details see 3.7. Natural Capital Management).
19
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Figure 4. JSC Atomredmetzoloto Business Model
Capitals
Management system
Natural capital
Value chain
Capital changes
ENVIRONMENT
Natural
Natural capital
COMPANY
Main Activities
Main Products
Exploration Financial capital
capital
management
Uranium concentrate
Financial capital management
COMPANY
Financial
Obtaining subsoil Brown coal
use rights
capital
(thermal coal)
Production capital
Human capital
Electric power
R&D and innovations
Thermal power
Pre-design engineering
Sulphuric acid
Production capital
capital
management
Design of
Geological survey
facilities
support and drilling
Construction of
(RUSBURMASH)
Human capital management
Production
services
Human capital
facilities Design and engineering
Intellectual capital
Intellectual
Operation of facilities:
services
uranium mining and
(VNIPIPROMTECHNOLOGII)
processing Mining
capital management
Reclamation and
equipment
Intellectual capital
decommissioning
Social and Social capital
social & economic capital
SOCIETY
Social capital
management
Risks and opportunities
20
Strategy Strategic objectives Mission
Risks and opportunities
STAKEHOLDERS
STAKEHOLDERS
Geological exploration
2.1. Business Strategy
2.2. Management System
2.3. Strategic Assets
Appendices
Stakeholder Engagement
STRATEGY AND MANAGEMENT SYSTEM Effective Capital Management
Strategy and Management System
About the Company
Address by Chief Executives
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2.1. Business Strategy 2.1.1. Corporate Mission and Values ARMZ Uranium Holding Co.’s mission is to provide raw materials for the development of cutting-edge technologies. Its strategy is to maximise business value for shareholders, while at the same time: ■■ ensuring highly efficient uranium production; and ■■ increasing business volume and diversification by developing new mining and smelting business lines. Being the only Russian mining company totally controlled by the state, JSC Atomredmetzoloto intends to use its public-private partnership oppor-
tunities for project developmentin the best ways possible. The Company’s advantages are its highly qualified team with diverse mining experience under various natural and climatic conditions, and its full range of competencies to manage the complete exploration, operation, and waste management cycle (also for radioactive waste). For more details see 1.3. Value Chain and Business Model. Key Corporate Values ARMZ Uranium Holding Co. carries out its activities on the basis of its corporate values.
Table 2. ARMZ Uranium Holding Co. Corporate Values and Code of Conduct Corporate Values
Principles of Conduct
Security
■■
■■
■■
Ensure industrial and labour safety for the employees and inhabitants in the regions of operation; maintain balance of local eco-systems and comply with work method statements for natural uranium extraction and processing, including nuclear and radiation safety norms; and comply with environmental norms and make production as eco-friendly as possible.
Caring about our customers
■■
Provide Russian and foreign consumers with products complying with Russian and international quality standards under long-term agreements and on market conditions.
Business initiative
■■
Best use of opportunities in regions of operation to: ■■ ■■
■■
■■
22
successfully employ the ARMZ Uranium Holding Co. potential; ensure sustainable development, also by using Russian and foreign state-of-the-art methods in geological exploration, production, and corporate governance; and look for new development prospects in the uranium industry.
Implement business diversification projects to ensure increasing volumes and better sustainability.
2011
2012
2013
20
15
thousand tons U
10
5
0
Kazakhstan
Canada
Australia
Niger
Namibia
Russia
Uzbekistan
USA
Malawi
Sources: JSC Atomredmetzoloto assessment based on press releases and corporate reports, US EIA.
The total amount of uranium produced by nine major companies (over 2,000 tons) comprised about 82% of the global output. The biggest uranium company is still JSC NAC Kazatomprom (National Atomic Company Kazatomprom), which extracted 12.6 thousand tons of uranium. Cameco is in second place, with about 9.1 thousand tons. Rosatom State Corporation controlling
JSC Atomredmetzoloto and Uranium One Inc. (shown separately in Figure 6) ranked third with more than 8.2 thousand tons. In 2013, some growth in uranium production was demonstrated by Uranium One (by more than 8%), Cameco (nearly 8%), and JSC NAC Kazatomprom (6%). The biggest decline in production was shown by Rio Tinto (18%) and AREVA (4%).
Figure 6. Uranium Production by Major Companies, thousand tons
14
2011
2012
2013
ARMZ
Rio Tinto
Navoi NMMC
12 10
тыс. тонн U
8 6 4 2 0
NAC Kaz
Cameco
AREVA
Uranium One BHP Billiton Paladin
atomprom
Energy
Sources: Press releases and corporate reports. Data for Navoi Mining and Metallurgical Combinat (NMMC) assessed by JSC Atomredmetzoloto. Extraction volume calculated as a proportion to the ownership ratio.
23
Address by Chief Executives About the Company Strategy and Management System
25
Effective Capital Management
Figure 5. Uranium Extraction by Countries, 2011–2013, thousand tons
Stakeholder Engagement
Overview of Global Natural Uranium Market In 2013, 59.1 thousand tons of uranium were mined worldwide, which demonstrates a 3% year-on-year increase. In 2013, nine of the biggest countries leading in uranium production (producing over 1,000 tons per year)
accounted for 93% of all produced uranium. Kazakhstan with 38% is still the first among uranium suppliers. In Canada, which ranks number two (15%), the production volume demonstrated a slight increase, and in Australia (No. 3 with 11%) a decrease was observed. The biggest increase in uranium production (over 15%) was shown by the USA (due to production increase at existing plants and the launch of two new plants).
Appendices
2.1.2. Natural Uranium Market Overview and Outlook
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
A number of new uranium mills were put into operation in 2013: ■■ in May 2013 Cameco (Canada) started downhole in situ leaching (hereinafter referred to as “DISL”) uranium production in North Butte (Wyoming, USA). With the full capacity reached, they will mine 269 tons of uranium annually; and ■■ in August 2013 Ur-Energy Inc. (USA) put its Lost Creek facility in operation (Wyoming, USA). At full capacity DISL uranium production, they will reach 385 tons per year. Geological exploration companies carried on their review of projects that may be on demand in the future. Geological exploration is actively being performed in Canada, the USA, Africa, South America, and Australia. Greenland can be recognized a prospective region again since in October 2013 the ban on radioactive extraction was lifted.
■■
Mergers and Acquisitions in the Uranium Industry The total M&A transactions volume in the industry in 2013 was USD 1.5 billion, which is approximately at the level of 2011 and more than three times lower than in 2012 (when it exceeded USD 5 billion). This was caused by unfavourable market trends. In 2013 the only big transaction was the consolidation of 100% of Uranium One Inc. shares by Rosatom State Corporation (about USD 1.3 billion). Other major players (including Chinese companies that had made some major acquisitions in previous years) were not active in the M&A transactions. Most transactions were closed by junior companies to consolidate potentially efficient assets and raise funds.
■■
Developments Outside the Reporting Period Over 2013 Paladin Energy Ltd. (Australia) negotiated on strategic investors acquiring a stake in the Langer Heinrich (Namibia) capital. In January 2014 Paladin Energy announced the sale of a 25% stake to China Uranium Corporation Ltd. (controlled by CNNC, China) for USD 190 million. Development of Current and Future Projects Due to unclear prospects of the nuclear power industry in 2013 and a price fall on the uranium market, in 2013 and early 2014, major companies reconsidered their plans for current and future projects: ■■ in August 2013, Navoi NMMC suspended construction of three new mining facilities in Uzbekistan (Meylisay, Aulbek, and North Mayzak) for unprofitability reasons. The construction of Aulbek was continued in October, and nothing is known about whether construction of the two other facilities will be resumed;
24
■■
■■
■■
■■
■■
■■
■■
in September 2013 Cameco Corp. postponed the commissioning of the Cigar Lake mine (Canada) for six months due to additional works and the unavailability of the McClean Lake processing facility. In March 2014 mining started at Cigar Lake. In 2014 it is planned to produce 700 to 1,000 tons of uranium, and full capacity (6,924 tons per year) will supposedly be achieved by 2019. At the same time the company announced that it was going to suspend two projects in the USA (Gas Hills and Reynolds Ranch); in autumn 2013, JSC NAC Kazatomprom announced it was going to cut its uranium mining plans in Kazakhstan. The company did not mention whether production at Central Moinkum had started (previously it had been planned to mine the first 50 tons of uranium by the end of 2013). According to its assessment, uranium production volume in 2014 would be the same as in 2013; in November 2013 it was decided to temporarily shut down Honeymoon operated by Uranium One Inc. due to problems with reaching design capacity and high operational costs; in December 2013–January 2014 Talvivaara Mining Company (Finland), which had planned to start ancillary uranium mining at Sotkamo, Finland, in 2014 (together with Cameco Corp.), announced that its financial position had worsened significantly due to the fall of nickel prices (their main product) so they had to downsize by 50%. The project was suspended; in February 2014 Paladin Energy (Australia) decided to temporarily shut down its Kayelekera mine in Malawi. The reason was low uranium prices and lack of funds for further mine optimisation and coverage of losses from its operation; in April 2014 General Atomics launched uranium production at Four Mile, Australia (operated by Quasar Resources). Uranium will be mined with the DISL method and processed at Beverley, another facility from the same company. Four Mile’s full annual capacity will be 769 tons of uranium; Uranerz Energy started to operate Nichols Ranch (Wyoming, USA). During the first several years the facility will produce 230–310 tons of uranium, and its full capacity is 700 tons per year; Peninsula Energy is planning to launch mining under its Lance Project (Wyoming, USA) in the second half of 2014. Once at full capacity, it will produce 577 tons of uranium annually; and in 2013 infrastructure construction and personnel recruiting were started and orders for basic equipment were placed under the Husab Project at the Rossing South field, Namibia, owned by CGNPC
2.1.3. Marketing and Sales Policy According to the Rosatom decision on Holding restructuring, the marketing and sales of uranium produced in Russia will now be undertaken by JSC Atomredmetzoloto, and that of uranium produced abroad — by Uranium One Holding N.V. (U1H). In 2014, joint venture United Uranium Companies LLC was established and served as the single point of contact for consumers to ensure effective sales and maintain the existing sales infrastructure in compliance with the needs of JSC Atomredmetzoloto and U1H customers. In 2013 all contractual obligations to supply customers were discharged in full. JSC Atomredmetzoloto entered into a number of medium-term agreements with current and new counterparties. Quality Management In 2013 JSC Atomredmetzoloto and its subsidiaries JSC PIMCU and JSC Khiagda started certification of the quality management system to ISO 9001:2008 as well as certification of the environmental management system to ISO 14001:2004. Vattenfall Nuclear Fuel AB (Sweden) performed an external audit of the quality and environmental management system of JSC Dalur. In 2013 Fortum (Finland) performed a witness audit at JSC PIMCU, pointing out significant improvement measures as
The strategic objective is realised with an account of tasks set by the state and Rosatom’s corporate aims. In 2013 shareholders decided to restructure ARMZ Uranium Holding Co. by separating Russian and foreign assets. International projects are managed by Uranium One Holding N.V. JSC Atomredmetzoloto is focused on more efficient uranium production at Russian fields to cover the needs of the industry in the first place. The Holding’s strategy is based on a realistic assessment of the benefits and restrictions in the Russian uranium industry depending on the raw material quality, available competencies of managing the entire deposit life cycle, and potential funds to be raised for development. National uranium production has strategic significance and covers about half of Rosatom’s demand for raw materials. At the same time, the entities engaged in DISL uranium production (JSC Dalur and JSC Khiagda) will have a global competitive edge once they have reached full production capacity, regardless of economic trends. As for the biggest national uranium company, JSC PIMCU, it demonstrates high production costs due to its mining of uranium at low concentration fields and it is therefore prone to market risk. The 2013 global uranium price drop left two-thirds of Russian uranium production outside the market. In the short-term prospective, JSC Atomredmetzoloto will focus on cost and production capacity management in order to minimise its losses. It will increase operational efficiency and take care of financial recovery and the restructuring of JSC PIMCU. Investment projects will be adjusted to ensure rapid ISL production growth. The medium-term key task is to ensure the profitability of all uranium mining companies and the Holding in general by 2016. Long-term financial stability will be achieved through business diversification and increased pro-
25
Address by Chief Executives About the Company Strategy and Management System
In 2014 an increase in uranium production in Canada, the USA, and other countries is expected to compensate for the anticipated production drop in Australia and Malawi
Effective Capital Management
2.1.4. Long-Term Strategy and Current Status of the Company
Stakeholder Engagement
2014 Outlook In 2014 an increase in uranium production in Canada, the USA, and other countries is expected to compensate for the anticipated production drop in Australia and Malawi.
compared to the results of the previous audit conducted 5 years earlier. The Holding labels its products according to Federal Law No. 170-ФЗ on Nuclear Energy Use dated November 21, 1995. JSC Atomredmetzoloto entities are licensed for the safe handling of nuclear materials by Rostekhnadzor. In 2013 a Rosatom committee verified compliance with nuclear material control requirements at JSC PIMCU. The results were satisfying.
Appendices
(China). Preparation for mining operations was carried out in Q1 2014. The first consignment of finished product is planned to be ready in Q4 2015 and full capacity (5,770 tons of uranium per year) will be reached in 2018.
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
ceeds from non-uranium projects. In 2013 the Holding developed a concept for establishing new mining and smelting and adjacent operations involving external investors on industrial partnership terms. The concept will be implemented in two stages: ■■ Stage 1 (2014–2016): moderate diversification — projects on enhanced efficiency and the processing depth of the Company’s own raw materials and mining stockpiles with the use of existing competencies and infrastructure; ■■ Stage 2 (2016–2020): large-scale development of new business areas — major projects related to the Transbaikal mining and smelting cluster and high-margin projects outside the uranium sites currently being operated. The core idea of the concept is to establish a JSC PIMCU based industrial park with high production, and technical and workforce potential. Successful implementation of these projects, involving investment partners, will help diversify the business and provide employment in the region.
Figure 7. Strategic Project Roadmap
5
4
Develop potentially productive uranium projects (JSC PIMCU Mine 6, Kaldera, and Elkon) for long-term effective supplies to Rosatom
Establish a mining and smelting cluster in the Transbaikal Territory (Bystryanskoye and Copper Mills projects at JSC PIMCU site)
■■
Ensure raw material supplies for the construction of WWER reactors: an effective raw material base not prone to any geopolitical risks and lasting for over 40 years
■■
Additional cash flow and financial stability in 2019–2020 Minimise risks of a single product company Support social and economic development in the regions of presence
■■
3
Diversification at JSC PIMCU site ■■
2
ISL asset development (JSC Khiagda and JSC Dalur)
■■
■■
1
JSC PIMCU optimisation
■■
2014
26
2016
2020
2030
Effectively distribute investment resources Achieve uranium production profitability Assets are competitive on the global market
2.2.1.2. ARMZ Uranium Holding Co. Authorised Capital and Shareholders As of December 31, 2013: ■■ JSC Atomredmetzoloto’s authorised capital was RUB 23,507,954,710; ■■ the Company placed 23,507,954,710 registered ordinary shares with the nominal value per share being RUB 1.00 (issue registration numbers: 1-01-03912-А and 1-01-03912-А-005D); and ■■ all three shareholders are registered in the Register of Shareholders (Rosatom State Corporation, JSC Atomic Energy Power Corporation, and JSC TVEL).
Effective Capital Management
Figure 8. Shareholding Structure as of December 31, 2013
ROSATOM State Corporation
100%
100%
JSC Atomic Energy Power Corporation
Stakeholder Engagement
1.378%
81.370%
17.252%
JSC Atomredmetzoloto
Address by Chief Executives
2.2.1.1. Corporate Governance Approach JSC Atomredmetzoloto has the following priority corporate governance objectives: ■■ to comply with Russian and international corporate governance standards; ■■ to enhance the efficiency of governing bodies; and ■■ to increase transparency for investors, companies from the same industry, business partners, employees, and other stakeholders. The Company ensures strict compliance with the law. The corporate governance system is improved with the use of best Russian and global practices and OECD corporate governance principles. On the Company’s website (http://www.disclosure. ru/issuer/7706016076/) you can find the Charter and
internal documents regulating activities of management and supervising bodies, and disclosure of significant facts and events related to ARMZ Uranium Holding Co.
About the Company
2.2.1. Corporate Governance
Strategy and Management System
2.2. Management System
Appendices
JSC TVEL
Table 3. Shareholding Structure Dynamics in 2013, % No.
Shareholder
Stake in JSC Atomredmetzoloto’s authorised capital as of December 31, as of December 31, as of December 31, 2011 2012 2013
1
JSC Atomic Energy Power Corporation
79.489
80.475
81.370
2
JSC TVEL
18.994
18.081
17.252
3
Rosatom State Corporation
1.517
1.444
1.378
27
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Changes to Equity Holding Structure in 2013 In 2013, the Company privately traded an additional issue of shares to raise funds for the investment programme; 1,077,586,207 ordinary shares were placed for the benefit of JSC Atomic Energy Power Corporation. The total funds raised through the 2013 additional issue were RUB 5.0 billion. 2.2.1.3. Management System The corporate management system serves as the basis for the Holding’s activities and has several layers.
Changes to the Company’s Management in 2013 ■■ In October 2013, 50% of the United Uranium Companies LLC’s authorised capital, owned by JSC Atomredmetzoloto, was carved out; ■■ in October 2013 Uranium One Holding N.V. consolidated 100% of Uranium One Inc. (Canada), and Uranium One Inc. shares were delisted from the Toronto and Johannesburg stock exchanges; and ■■ in December 2013, the controlling stake (57%) in Uranium One Holding N.V. owned by JSC Atomredmetzoloto was carved out.
Figure 9. Structure of ARMZ Uranium Holding Co. Managing and Supervising Bodies
Meeting of Shareholders
Board of Directors
Internal Audit Commission
Director General
2.2.1.4. Management and Supervisory Bodies General Meeting of Shareholders The General Meeting of Shareholders is the superior governing body of JSC Atomredmetzoloto. In 2013 three General Meetings of Shareholders were convened to discuss managerial issues: ■■ approval of the new version of the Charter; ■■ establishment of management and supervisory bodies of the Company; ■■ approval of the 2012 annual report and annual accounting statements and distribution of profits; and ■■ appointment of the executive body of the Company (Director General). Board of Directors The Board of Directors is responsible for general management of the Company’s activities and plays a key role in strategic management. The Board of Directors includes five people not employed by the Company. All members of the Board of Directors have extensive experience in the nuclear industry. In 2013 the Board of Directors included: ■■ Vadim Jivov (Chairman); ■■ Kirill Komarov; ■■ Vladislav Korogodin; ■■ Yekaterina Lyakhova; and ■■ Yury Olenin.
28
Auditor
Advisor to Director General, First Deputy Director General for Raw Material Management, First Deputy Director General, and First Deputy Director General and Head of the TENEX Raw Material Supply Directorate
06.2007 – 05.2011
First Deputy Director General, Director General of JSC Atomredmetzoloto
04.2011 – to date
Advisor to Director General, member of the Management Board, and Deputy of Deputy CEO and Director of
member of the TENEX Board of Directors
12.2010 – to date
President of Uranium One Inc.
05.2013 – to date
President of Uranium One Holding N.V.
Effective Capital Management
10.2012 – to date
Strategy and Management System
Rosatom Development and International Business Block
Kirill Komarov Member of the Board of Directors since June 30, 2011 Born in 1973 in St. Petersburg, graduated from the Urals State Law Academy 04.2007 – 12.2007
Director General of OJSC Atomenergomash
12.2007 – to date
Deputy Director, Executive Director, and Director of JSC Atomic Energy Power Corporation
03.2010 – to date
Executive Director of the NPC Directorate, Deputy CEO and Director of Rosatom Development and International Business Block Member of the Rosatom Management Board
Appendices
05.2011 – to date
Vladislav Korogodin Member of the Board of Directors since September 7, 2007 Born in 1969 in Moscow, graduated from the Moscow Institute of Physics and Technology 06.2004 – 10.2007
Deputy Head of the Nuclear Material Industry Administration, Deputy Head of Nuclear Power and Nuclear Fuel Cycle Administration of the Federal Atomic Energy Agency.
10.2007 – 03.2010
Director of the Marketing and Target Market Department, Deputy Director of JSC Atomic Energy Power Corporation
03.2010 – to date
Stakeholder Engagement
03.2006 – 08.2007
Address by Chief Executives
Member of the Board of Directors since September 7, 2007, Chairman since May 4, 2011 Born in 1963 in Moscow, graduated from the Moscow Power Engineering Institute
About the Company
Vadim Jivov
Deputy Director of the NPC Directorate, Director for NFC and NPP Life Cycle Management at Rosatom
29
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Yekaterina Lyakhova Member of the Board of Directors since June 30, 2011 Born in 1975 in Yekaterinburg, graduated from the Urals State Law Academy and the Universiteit Antwerpen Management School 07.2008 – 02.2010
Director General of JSC Koltsovo-Invest
02.2010 – 03.2011
Vice-President of JSC TVEL
04.2011 – to date
Deputy Director of JSC Atomic Energy Power Corporation
07.2011 – to date
Deputy Director of the NPC Directorate, Director for Investment Management and Operating Efficiency of Rosatom State Corporation
Yury Olenin Member of the Board of Directors since September 7, 2007 Born in 1953 in Kirovabad, Azerbaijan, graduated from the Yerevan Polytechnic Institute and Penza State Technical University 01.2004 – 03.2007
Director General of FSUE FRPC PC Start (Zarechny, Penza Region)
03.2007 – to date
First Vice-President, President of JSC TVEL
02.2012 – to date
Member of the Rosatom Management Board
The members of the Board of Directors own no JSC Atomredmetzoloto shares. The Chairman of the Board of Directors does not act as an executive manager of the Company at the same time. Sole Executive Body Daily operations of the Company are managed by the sole executive body, the Director General. The Director General of the Company is Vladimir Verkhovtsev. Vladimir Verkhovtsev was born on January 27, 1955 in Uzbekistan. 1977: graduated from the Felix Dzerzhinsky Military Academy, qualified as Electronic Engineer. 1999: graduated from the Military Academy of the Russian Central Command of Armed Forces. Lieutenant-General, PhD in Technical Sciences, Professor at the Russian Military Science Academy. 1977–2011: held various positions within the USSR and Russian Armed Forces. 2005–2011: ran the 12th Central Administration of the Russian Ministry of Defence responsible for nucle-
30
ar supplies and nuclear safety of the Russian Armed Forces. July 2011: appointed Deputy Director General for Special Projects at JSC Atomredmetzoloto. Since May 28, 2013: Director General of JSC Atomredmetzoloto. V. Verkhovtsev does not own JSC Atomredmetzoloto shares. Remuneration The 2013 remuneration paid to the executive body and members of the Board of Directors was RUB 40.7 million. Management As of December 31, 2013, significant information has been updated outside the reporting period.
Internal Audit Commission The Internal Audit Commission acts as a corporate management body to improve the efficiency and transparency of managerial processes. The Internal Audit Commission is responsible for financial and business monitoring, including: ■■ review of financial documents, inventory results, compliance with standards, and validity of signed contracts; ■■ analysis of the Company’s financial position, liquidity, and solvency; and ■■ review of decisions made by management bodies for effectiveness and compliance with the Charter. The following members were elected to the Internal Audit Commission at the Annual General Meeting of JSC Atomredmetzoloto Shareholders (Minutes No. 16 dated June 28, 2013): ■■ Viktoriya Andriyenko, Chief Accountant at Rosatom State Corporation; ■■ Marina Atmazhitova, Chief Specialist of the NFC Production Planning Unit, NFC Coordination and Development Department, NPC Directorate of Rosatom State Corporation; and ■■ Yelena Vlasova, Advisor at the Internal Audit Unit of Rosatom State Corporation.
Stanislav Anikeev Acting Director for Personnel, appointed Personnel Director in January 2014
Address by Chief Executives About the Company
Yury Tokmachev Deputy Director General for Safety
Strategy and Management System
Ilya Korolyov Advisor to Director General, appointed Deputy Director General for Administrative Issues in April 2014
Marina Liborakina Deputy Director General for Strategy, appointed Deputy Director General for Strategy and Business Development in April 2014
Ilya Yaroshevich Director for Russian Projects Legal Support, appointed Director for Corporate and Legal Relations in April 2014
The members of the Internal Audit Commission own no Company shares. In 2013 no remuneration was paid to the Internal Audit Commission. Committees Activities of the Investment Committee In 2013 the Investment Committee of JSC Atomredmetzoloto (hereinafter referred to as the “Committee”), the key investment decision making body of the Holding, convened 13 meetings. Three committees were established in the form of joint attendance for joint discussion of issues related to the 2013 by-project financing of ARMZ Uranium Holding Co. and making decisions on further implementation of the Olovskoye and Elkon investment projects. Ten votes by correspondence were conducted with regard to the projects. A total of 51 investment decisions were made. In July 2013 the new Regulations on the Committee were brought to effect and the composition of the Committee chaired by V. Verkhovtsev changed. For more details see 3.2.2. Investment Activities.
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Effective Capital Management
Vladimir Vysotskiy Deputy Director General for Special Projects
Stakeholder Engagement
Vera Sorokina Chief Accountant
Igor Zhilkin First Deputy Director General and Executive Director
Appendices
Vladimir Verkhovtsev Director General
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Activities of the Risk Committee ■■ Draft regulating documents related to reputation risk management and interest risk and the Procedure for Group-Wide Financing of the Holding were approved; ■■ JSC Atomredmetzoloto’s exchange risk was recognized as being critical; ■■ the Holding Exchange Risk Management Strategy and the 2013–2015 Hedging Programme were approved, and it was recommended to close hedging transactions in accordance with the approved documents; ■■ current S&A lending limits were approved; and ■■ the Production Facilities Insurance Programme was analysed and adjusted with an account of the risk level changes, etc. For more details see 2.2.3. Risk Management. 2.2.1.5. Dividend Policy The JSC Atomredmetzoloto dividend policy is set by the management bodies with an account of the required investment in compliance with the Company’s strategy. From 2008 through 2013, according to the Company’s development strategy, JSC Atomredmetzoloto’s management bodies made decisions to abstain from dividend payments for reinvestment purposes in order to finance the investment programme. For this reason there were neither declared nor unpaid dividends. As of the time of the Report preparation the Company’s management bodies had not made any decision about how to use 2013 earnings. 2.2.1.6. Major Transactions and Related Party Transactions In order to protect stakeholders’ rights and interests and to maintain its reputation in investment and industrial circles, the Company closes all major transactions in strict compliance with Russian law. In 2013 the Company closed no major or related party transactions that would require approval from managerial bodies according to the Federal Law on Joint Stock Companies. 2.2.1.7. The Company’s Registrar The Company’s Register of Shareholders is kept by Open Joint Stock Company R.O.S.T. Registrar. Registrar’s details: OGRN (Primary State Registration Number) 1027739216757, INN (Taxpayer Identification Number) 7726030449. Located at: 18 Stromynka Ul., Bldg. 13, Moscow, Russia T/F: (495) 771-73-36.
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2.2.2. Report of the Board of Directors on Priority Lines of Business In 2013 the Board of Directors convened 18 meetings and made decisions on some managerial issues critical to the Company, including: ■■ approval of ARMZ Uranium Holding Co.’s target performance (KPI); ■■ approval of the Code of Corporate Conduct; ■■ coordination of Chief Accountant appointment; ■■ setting remuneration for the top management; and ■■ making decisions on the alienation of a 50% stake in United Uranium Companies LLC and a 57% stake in Uranium One Holding N.V.
2.2.3. Risk Management 2.2.3.1. Risk Management System Key results in risk management at JSC Atomredmetzoloto in 2013 were as follows: ■■ the Corporate Risk Management System (hereinafter referred to as “CRMS”) was integrated, including key planning and managerial decision processes (“budgeting”, “mid-term planning”, “strategic management”, and “investment activities management”); the risk assessment procedure for the planning stage was introduced; ■■ method development and relevant management of separate financial risks (financial, interest, commodity risks, etc.); ■■ introduction and regulation of business processes for managing certain types of risks (reputation risk, compliance risk, etc.); ■■ the “JSC Atomredmetzoloto risk safety” was determined, limits for critical risks were set, and risk management measures were taken; and ■■ the risk hedging programme was implemented.
Address by Chief Executives
Figure 10. Risk Management Structure at ARMZ Uranium Holding Co.
ARMZ level
summary
S&A Risk Owner
information about risk
monitoring
Strategy and Management System
ARMZ Risk Officer
ARMZ Risk Owner
monitoring
Effective Capital Management
summary
information about risk
S&A level S&A Risk Officer
Stakeholder Engagement
Risk Management Committee
ARMZ Risk Register and Corporate Roadmap
approval
2.2.3.2. Key Risks and Key Risk Management Table 4. JSC Atomredmetzoloto’s Critical Risks and Critical Risk Minimisation Measures in 2013 Type of risk
Risk minimisation method
Operational risk Property risk, asset loss/damage risk (risk of incurring property damage, property loss resulting from production emergencies, and a reduction of the Holding’s proceeds due to disruption of production)
■■
■■
■■
■■
The Holding employs a special system for regular production para meter checks for monitoring entities’ activities and making proper decisions based on the current stage of production programme implementation; the Holding takes preventive measures to avoid emergency situations and ensure safety; the Holding insures its property at market value and third-party corporate civil liability with Russian leading insurers according to approved Rosatom provisions and standards; and in late 2013 the Holding decided to reduce its insurance programme in the course of entity budget review and setting milestones. The Company’s management ceased insuring management liability risks (that had been maintained by JSC Atomredmetzoloto for several previous years)
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Appendices
preparation
About the Company
Director General
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Type of risk
Risk minimisation method due to separation of the international block that significantly reduced such risks related to ARMZ Uranium Holding Co. managers. Based on the results of a risk assessment, the insurance programme for a number of property risks was reduced due to significantly lower probabilities.
International political and regulatory risk (for foreign assets managed by Uranium One Holding)
■■
■■
■■
Reputation risk
■■
■■ ■■
JSC Atomredmetzoloto and its S&A continuously monitor changes in applicable law related to subsoil use, nuclear power use, environmental requirements and tax regulation, and the peculiarities of the Russian corporate law and the jurisdiction of its presence; they use recommendations of the supervising and regulating bodies in the course of the Holding’s main activities at the international and national levels; and contracts are signed after coordination with legal services of the Company (in certain cases independent advisers might be involved). The Holding has reputation risk monitoring regulations in place outlining basic risk management procedures; there are guidelines for relations with mass media in place; and together with Rosatom State Corporation, the Holding analysed compliance risks and introduced relevant regulating documents.
Social risks Personnel-related risks
The Holding actively implements its personnel management policy and employs a motivation scheme: ■■ experienced mining specialists are attracted from other regions and a highly qualified workforce is attracted from adjacent industries; ■■ personnel retention is ensured through a progressive system of remuneration, privileges, and social security; ■■ at all levels employees are offered training (including the future leaders programme); and ■■ the Holding engages in infrastructure development in regions of operation.
Safety and occupational safety risks
In 2013 the state of affairs in the nuclear industry was monitored closely. The Holding focused on increasing safety and occupational safety at production facilities and in regions of operation. This includes: ■■ complex measures on increasing the safety of employees and local communities in the regions of operation and maintaining the balance of local eco-systems; and ■■ reducing factors that have an impact on the number of emergencies and that threaten employees’ life and health.
Environmental risks: Nuclear and radiation safety risks Technological risks, including nuclear and radiation safety
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Technological risk management in the course of uranium extraction and processing, including nuclear and radiation safety. Ensured through a number of special measures, including: ■■ industrial equipment upgrades at the Holding entities; ■■ compliance with effective standards for the production and technological process;
Financial risks Exchange risk
Exchange risks are traditionally managed through risk concentration at the parent company of the Holding so that JSC Atomredmetzoloto entities can focus on production. Exchange risks are reduced through: ■■ management of the Holding’s open foreign exchange position that leads to adjustment of the credit portfolio structure to balance exchange assets and liabilities of the parent company; and ■■ derivatives. Due to hedging transactions for 2013–2015, closed in 2013, JSC Atomredmetzoloto received about RUB 400 million from banks, and 2014–2015 cash flows were balanced.
Tax risks
Tax risks related to new transfer pricing provisions introduced in the Russian Tax Code are managed through the following measures: ■■ including major Holding entities into the Rosatom CGT; ■■ group-wide financing, security in the form of warranties/guarantees is provided with an account of the market relations principle (interest rate/ remuneration relevant to prices for similar arm’s-length transactions and to the situation within interest risk management programmes); and ■■ supervising transactions closed on market terms.
Interest risk
This type of risk is minimised in the following way: ■■ external funds are raised with a fixed interest rate (no floating rates are used due to the high volatility of current market conditions); and ■■ group-wide financing within set (budget-based) financing limits to ensure annual budget performance.
Insolvency (liquidity) risk
In 2013 JSC Atomredmetzoloto was not greatly affected by liquidity risk due to the policy regulating this very type of risk and including: ■■ setting limits for JSC Atomredmetzoloto’s group of companies with several banks; ■■ the introduction of a cash pulling system for effective use of the account balance of the entities included in the group; and ■■ regular monitoring of the Group companies’ liquidity.
Credit risk (risk of default by counterparties)
■■
■■
Products manufactured by the Holding entities are mostly purchased by Rosatom, which significantly reduces credit risks; credit risks related to procuring raw and other materials for the Holding entities are minimised through abstaining from advance payments under contracts with counterparties (advance payments are only possible in the amount set in regulatory documents and subject to counterparty’s obligation to pay them back in case of default); and
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Address by Chief Executives
The Holding entities involved at different stages of uranium production comply with all statutory environmental standards. The Holding makes its best effort to decrease its environmental footprint and improve production eco-safety.
About the Company
Environmental risks
monitoring by Holding subdivisions and external companies; and insurance of civil liability to third parties and employees.
Strategy and Management System
■■
Effective Capital Management
■■
Stakeholder Engagement
Risk minimisation method
Appendices
Type of risk
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Type of risk
Risk minimisation method ■■
Commodity risk
the Holding entities cooperate with leading Russian credit institutions and insurers with requirements to them being set in the regulatory documents of JSC Atomredmetzoloto and Rosatom State Corporation.
This risk is managed and minimised in the following way: ■■
■■
■■
maintaining JSC Atomredmetzoloto’s stable position in the uranium market, as secured by Russian and global demand; balancing price policy and management of available raw material sources with account of international practice; and product diversification and search for new products (for this reason the Holding takes part in managing entities involved in the production of gold and non-uranium materials).
Specific risks: Mining production risk Risk of incorrect assessment of deposit quality and capacity
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JSC Atomredmetzoloto takes the following measures to obtain the most comprehensive and high-quality information about existing fields and to minimise the risk of geological exploration data differing from actual capacity: ■■ employment of latest reserve balance recording and resource estimation methods, used as part of a best practice in Russia and globally, and latest geological exploration methods, including geologic and mathematical models.
Address by Chief Executives
2.2.4. Internal Monitoring System: Asset Protection 2.2.4.1. Internal Monitoring System The JSC Atomredmetzoloto Internal Monitoring System ensures the more efficient operation and achievement of basic objectives and detects deviation from set objectives. Internal monitoring covers JSC Atomredmetzoloto and its S&A.
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Effective Capital Management
Strategy and Management System
About the Company
2.2.3.3. 2014 and Mid-Term Plans In the future, risk management will be focused on risk identification and optimisation related to operational efficiency enhancement and uranium business restructuring. Holding business diversification risks will be one of the top priorities due to the high capital-output ratio and mining project ROI.
Main monitoring activities: ■■ monitoring of procurement and logistics processes at ARMZ Uranium Holding Co.; and ■■ inspections of construction, production, financial, and business activities and funds application at ARMZ Uranium Holding Co., internal audit commissions, and internal audits to identify business process risks. Under the Integrated Monitoring Plan of Specialised Internal Inspection and Audit Bodies of Rosatom State Corporation, 25 inspections were conducted in 2013, including: ■■ inspections of the Company’s financial and business activities, investment programme implementation, and construction organisation at S&A; ■■ 14 internal audits; ■■ 1 internal audit of personnel management processes and 1 inspection of the power-saving and enhanced power efficiency programme for S&A being implemented; and ■■ 2 centralised inspections. Besides that, specialised internal inspection bodies of JSC Atomredmetzoloto and S&A carried out 66 unscheduled inspections and internal audits. Based on the monitoring results, corrective measures were developed and their implementation is being followed up.
Stakeholder Engagement
The Holding risk management system will be further developed through practical application of the risk management experience accumulated. Risk management units mainly focus on risk identification and cooperation with risk owners to minimise risks with an account of the close connection between relevant business processes and planning and managerial decisions (“budgeting”, “mid-term planning”, “strategic management”, and “investment activities management”).
Appendices
Dmitry Gretsky, Operator and Hydrometallurgy Specialist at the Product Solution Processing Area of the In Situ Leaching Shop, JSC Khiagda
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2014 Plans The following priority activities were set for 2014: ■■ planning and carrying out inspections and internal audits according to the approved Integrated Monitoring Plan of Specialised Internal Inspection and Audit Bodies of Rosatom State Corporation. 2.2.4.2. Safety Management System 2013 Results ■■ Commercial operation of the integrated physical security system (IPSS) was launched at the JSC PIMCU hydrometallurgical mill; IPSS construction, installation, and start-up were completed at the main JSC Khiagda production site under the Rosatom analytical programme called “Enhancement of Physical Protection of Nuclear Materials, Nuclear Plants and Nuclear Storages up to 2015”. ■■ Compliance was insured with the Regulations for Physical Protection of Nuclear Materials, Nuclear Plants and Nuclear Storages as approved by Russian Government Decree No. 456 dated July 19, 2007. No faults were found in the course of verifying the validity of licenses for nuclear equipment operation on the part of physical protection carried out by the Federal Service for Environmental, Technological, and Nuclear Supervision (Rostekhnadzor). ■■ Certification audit at JSC Atomredmetzoloto confirmed compliance with ISO/IEC 27001:2005 (information security); JSC Atomredmetzoloto was the first one of the Rosatom entities to be granted an international information safety certificate. ■■ The JSC Atomredmetzoloto LAN was prepared to be certified in terms of compliance with information security requirements of the Russian FSTEC; ■■ Messages coming through the Rosatom hotline were checked thoroughly. 2014 Plans ■■ To upgrade and enhance physical protection systems at certain facilities of JSC PIMCU, JSC Khiagda, and JSC Dalur. To delegate the function of providing security to all Holding facilities to Atom-Okhrana (Federal Budgetary Unitary Enterprise); ■■ to certify informational support objects of JSC Atomredmetzoloto for compliance with information security requirements of the Russian FSTEC; ■■ to train employees in information security; and ■■ to improve the system for economic safety, asset protection, and combating corruption, and to provide better procurement monitoring to reduce the economic damage risks of the Company and its S&A.
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2.2.4.3. Anti-Larceny Programme JSC Atomredmetzoloto continued to ensure economic safety and asset protection and to combat corruption and other violations. 2013 Results Contracts were checked for signs of corruption and JSC Atomredmetzoloto counterparties’ good faith was verified. 2014 Plans Procurement monitoring to diminish economic damage risks related to the establishment of an authorised procurement body (ARMZ Service LLC).
2.2.5. Procurement Management 2.2.5.1. Procurement JSC Atomredmetzoloto and its S&A use the following documents regulating their procurement policies, procurement parties’ functions and authorities, procurement methods and types, additional elements of procurement procedures, the general procurement procedure, etc.: ■■ Federal Law No. 223-ФЗ on Goods, Work and Service Procurement by Certain Types of Legal Entities dated July 18, 2011 (as amended by Federal Laws No. 401-ФЗ dated December 6, 2011, No. 324-ФЗ dated December 30, 2012, No. 115-ФЗ dated June 7, 2013, No. 160-ФЗ dated July 2, 2013, and No. 396-ФЗ dated December 28, 2013); and ■■ the Integrated Industry Procurement Standard (hereinafter referred to as the “Procurement Regulations”) developed by Rosatom State Corporation and approved by the JSC Atomredmetzoloto Board of Directors. You can find the above documents at the official website www.zakupki.rosatom.ru, designed for the purposes of the placement of orders for goods, work and services for Rosatom. For more details on the Holding’s key procurement principles and objectives, see the 2012 JSC Atomredmetzoloto Annual Report, p. 89. 2.2.5.2. Procurement Monitoring The efficiency of JSC Atomredmetzoloto’s procurement is ensured through a bilateral procurement monitoring and control system. On the one hand, the procurement system, price relevance, and quality are subject to public control. Information about the Holding’s procurement activities is published at official websites www.zakupki.rosatom. ru and www.zakupki.gov.ru for public access. On the other hand, procurement is monitored by the Holding’s internal structures and Rosatom’s spe-
Address by Chief Executives
2014 Plans It is anticipated that the Company will hold about 1,500 procurement bids. An authorised procurement body (ARMZ Service LLC) was established on the basis of ESK ARMZ for more efficient procurement of goods, work, and services by S&A controlled by JSC Atomredmetzoloto. One of its priority activities is to develop a category management system.
Appendices
Stakeholder Engagement
Effective Capital Management
Strategy and Management System
2013 Results Rosatom SAP SRM was completely integrated at the Holding entities. Based on 2013 results, over 2,000 bids were held to cover the Holding’s needs. Of the bids, 98.94% were electronic, which provides for better procure-
ment transparency. Based on the results of the bids, the cost advantage (the difference between initial price and the winner’s offer price) was RUB 1.004 billion.
About the Company
cial units to ensure that procurement complies with the requirements of regulatory documents and does not violate participants’ rights and interests. For more details on the internal control system see the 2012 JSC Atomredmetzoloto Annual Report, p. 90.
Anton Shumkin, Operator and Hydrometallurgy Specialist at the Product Solution Processing Area of the In Situ Leaching Shop. Labelling, JSC Khiagda
2.3. Strategic Assets Due to ARMZ Uranium Holding Co.’s business diversification, in 2013, several projects were implemented to ensure its scale and sustainability. CJSC RUSBURMASH and JSC VNIPIpromtechnologii, the
Holding’s geological survey and engineering companies, faced the strategic challenge of increasing the amount of their orders outside the Russian nuclear industry.
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2.3.1. CJSC RUSBURMASH Activities
2.3.1.1. History of and Other Information about CJSC RUSBURMASH CJSC RUSBURMASH (CJSC RBM) was founded in 1998 and was included in JSC Atomredmetzoloto in 2007 to drill process wells at the Holding’s operating entities. Since 2009, ARMZ Uranium Holding Co. has been the sole shareholder of CJSC RUSBURMASH. In 2009 the Geological Exploration Service was established within CJSC RUSBURMASH to carry out uranium geological exploration (GE) at the Olovskoye, Beryozovoye, Istochnoye, Kolichikanskoye, and Elkon fields. Apart from process and technical drilling and construction, CJSC RBM
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started drilling exploration wells at the Kolichikanskoye field (Khiagda ore field) using its own resources. Since 2009 the company has been providing 14–16 types of drilling services for JSC PIMCU. In 2012, CJSC RUSBURMASH started participating in ARMZ Uranium Holding Co.’s international project in Africa (South Tanzania and Mozambique). In 2012 a branch of CJSC RUSBURMASH was opened in Kazakhstan to perform geological exploration. CJSC RUSBURMASH is a rapidly developing geological exploration company that offers drilling and exploration services. The company has its branches in Russia and Kazakhstan and boasts over 700 highly qualified employees.
– Mr Savelyev, what do you think about RUSBURMASH’s performance in 2013? What was special about this year? – In general 2013 turned out to be a difficult year for us because of a drop in orders within the Holding. This challenge gave us an impetus for structural reorganisation and diversification to enter external markets. It was in 2013 that we first participated in third-party bids, and I must say, we were quite successful. We got the biggest long-term order from the government for lode gold exploration at the Verkhne-Bryantinskoye ore cluster (Amur Region), an order for drilling geological exploration wells at the Ozyornoye lead and zinc field (Buryatia), an order for hydrogeological and geotechnical survey at the Borguliuansskoye ore field, and an order for subsurface water hydrogeological survey for service,
– What are your current priority activities and potential projects? – We are now focussed on becoming one of the leaders in the Russian geological exploration service market. To achieve this, we are planning to further increase our activities and regions of operation, maintain our work quality at a high level, fulfil our obligations to our customers, and further increase our efficiency.
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Address by Chief Executives About the Company Strategy and Management System Effective Capital Management
2.3.1.2. Interview with CJSC RUSBURMASH Director General Igor Savelyev
– Could you expand on your competencies and unique technologies? – CJSC RUSBURMASH is a geological exploration company, and we do not depend on any specific facilities. Our employees are highly-qualified geologists and drilling specialists. One of our unique technologies is constructing wells for uranium in situ leaching; this is one of our primary types of work. I would also like to mention the new-generation integrated hardware and methodical logging system for direct uranium identification in wells with the prompt neutrons method. This system is currently under pilot operation, but there is already demand for it in Russia and Kazakhstan.
Stakeholder Engagement
– Has your Efficiency Enhancement Programme yielded any results yet? – In 2013 we launched the Efficiency Enhancement Programme (EEP). Under this programme, we introduced 19 measures and projects with the economic effect of RUB 26.9 million confirmed by a third-party expert. And this is only the start.
Appendices
potable, and process water supply of the Power of Siberia pipeline. Naturally we need to get more mobile and efficient to attract more third-party orders. We have optimised the management system, established a drilling department (in Chita), a mobile drilling office, subdivisions responsible for business development, external relations, and marketing and sales. The new subdivisions will analyse the market of drilling, geological exploration, and other services in Russia, Kazakhstan, and other countries and expand our customer database.
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2.3.1.3. 2013 Key Events March–April ■■ CJSC RUSBURMASH performed assessment geologic survey at the Arbinskoye molybdenum and copper and porphyry ore deposits (Amur Region), analysed the hydrogeological and geotechnical conditions of the field, and prepared materials for a reserves estimate and geologic and economic assessment (for UK INTERGEO LLC). June ■■ CJSC RUSBURMASH successfully completed exploration and hydrogeological works in the Arbinskaya area (Amur Region) and attested the final report (for UK INTERGEO LLC). August ■■ Under the R&D project related to the New-Generation Integrated Hardware and Methodical Logging System for Direct Uranium Identification in Wells with the Prompt Neutrons Method, CJSC RUSBURMASH successfully completed field pilot run of the System at Dalmatovskoye (Khokhlovskoye field). September–November ■■ Technological uranium ore sampling performed in situ with the Push-Pull method at the Nyota field
■■
■■
■■
(for Mantra Tanzania Limited). Commercial uranium content in product solutions was determined, and the possibility of sulphuric DISL uranium production confirmed. Pilot testing of the hardware and methodical logging system was successfully conducted at JV KATCO (Kazakhstan, Tortkuduk field). Under contract with TECHGAZSTROY LLC, CJSC RUSBURMASH commenced a prospect evaluation survey (continuing through 2014) for service, potable, and process water supply of the Power of Siberia pipeline. CJSC RUSBURMASH implemented the Soil and Environmental Surveying programme within the SRO SOYUZATOMGEO advanced training scheme.
December ■■ Under the state contract with the Amur Region Subsoil Use Administration (Amurnedra), CJSC RUSBURMASH performed lode gold exploration at the Verkhne-Bryantinskoye ore cluster (Amur Region) and prepared an annual informative report. ■■ CJSC RUSBURMASH provided technological support for drilling 279 wells (136 exploration and 143 process wells) (for JV RBM-Kazakhstan). CJSC RUSBURMASH developed a programme for the significant enhancement of drilling performance at the Budyonovskoye and Khorasan fields (up to 40%).
Figure 11. CJSC RUSBURMASH Project Map
South area Power Khiagda ore field of Siberia Elkon Severnoye pipeline Olovskoye Neprokhodimoye Ozyornoye Dalmatovskoye Lunnoye Beryozovoye Verkhne-Bryantinskoye Khokhlovskoye Arbinskoye Pogromnoye Streltsovskoye ore field Budyonovskoye Kharasan Zarechnoye
Uranium ore, uranium-gold ore, and uranium-vanadium ore deposits Porphyry copper deposits
Mkuju River Capeca
Nyota
Gold and gold-silver ore deposits Complex ore deposits Subsurface water deposits
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Actual KPI 2012
Actual Deviation (actual in 2013 to actual 2013 in 2012), %
1,633
1,760
127
8
Prime cost of goods, work, and services
1,537
1,544
6
0
96
217
121
127
0
0
0
0
Management expenses
183
177
-6
-3
Sales profit/(loss)
-87
40
127
-145
Gross margin Business expenses
561.14
Stakeholder Engagement
446.72
Appendices
2013
2012
2011
216,790 2013
95,377 2012
270,206 2011
2013
2012
2011
Revenue, thousand RUB
Figure 13. Total Metreage Drilled, thousand m
465.12
1,760,209
1,633,024
1,977,563
Figure 12. CJSC RUSBURMASH Revenue and Gross Margin
Effective Capital Management
Revenue from goods, work, and services
Gross margin, thousand RUB
2.3.1.5. 2013 Operational Performance The GE Service performed all works planned in full. The total scope of drilling by CJSC RUSBURMASH entities went up to 561.14 thousand metres.
Address by Chief Executives
Table 5. 2012–2013 Key Performance Indicators, million RUB, %
About the Company
In 2013 CJSC RUSBURMASH revenue went up by 8% up to RUB 1,760.21 million. The company ensured effective prime cost management and increased its financial performance.
Strategy and Management System
2.3.1.4. 2013 Key Performance Indicators
In 2013 the Geological Exploration Service performed the following works: ■■ completion of all planned exploration drilling, including: ■■ technological and process and exploration drilling for JSC Khiagda ahead of the drilling sched-
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
ule and with a 5% drilling performance increase; an additional work schedule for operational diversification: geophysical operations, monitoring of operating geophysical in situ leaching sites, and backfill and recovery operations at the process wells of JSC Khiagda; ■■ prospect and appraisal drilling performed at the Bezymyanskaya block and the Pavlovskoye field (Novaya Zemlya) and the annual informative report preparation; and ■■ completion of customers’ investment programmes for the geologic support of geological exploration. increased revenue from GE by 9% year-on-year; and under the R&D project related to the New-Generation Integrated Hardware and Methodical Logging System for Direct Uranium Identification in Wells with the Prompt Neutrons Method, CJSC RUSBURMASH successfully completed a field pilot run of the System at Dalmatovskoye (Khokhlovskoye field) and at JV KATCO (Kazakhstan, Tortkuduk field). ■■
■■ ■■
2.3.1.6. Efficiency Enhancement Programme In 2013 the Efficiency Enhancement Programme was introduced to increase work performance, reduce cost per unit and ensure loss-free operation. The programme was launched in August 2013. Every three months the management committee of the programme reviews a new pool of measures and projects. Implementation of the approved measures
44
and projects is verified on a daily basis. Eighty-two measures and projects were implemented successfully. Their total economic effect was RUB 26.9 million. 2014 Plans: Further implementation of the Efficiency Enhancement Programme occurred in the following directions: ■■ enhanced performance and cost reduction (economic effect); and ■■ stabilisation of efficiency enhancement processes (development of the System).
2.3.1.7. 2014 and Future Plans The Company will focus on the following priority activities: ■■ fulfilment of all obligations in drilling and geological exploration to ARMZ Uranium Holding Co. entities; ■■ continuous improvement of operational efficiency, work quality, and proper performance. Implementation of the Efficiency Enhancement Programme; and ■■ business diversification: expanding presence, also on international markets (Kazakhstan and Africa), and increasing goods and service competencies (new activities within the company’s portfolio: engineering survey, environmental monitoring, etc.). Long-Term Strategic Objectives of the Company: ■■ by 2017, to increase the revenue from projects outside ARMZ Uranium Holding Co. up to 50% (also due to engineering survey/environmental monitoring within Rosatom State Corporation).
Address by Chief Executives
2.3.2. JSC VNIPIpromtechnologii Activities
Stakeholder Engagement
JSC VNIPIpromtechnologii (Design Prospecting and Scientific Research Institute of Industrial Technology) is engaged in R&D concerning the integrated design of uranium mining and ore processing facilities and radioactive disposal facilities. The company can offer turnkey services due to the wide range of its competencies.
Figure 14. JSC VNIPIPROMTECHNOLOGII Main Activities Engineering surveys and research Development of mineral raw materials mining and processing Industrial facility design Construction of turn-key mining facilities Scientific and technical and technological operational support of facilities Land reclamation at production sites Treatment of radioactive and other waste from production facilities
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Appendices
2.3.2.1. General Information
Effective Capital Management
Strategy and Management System
About the Company
Visualization of the local sorption unit to produce uranium from solutions which designed by JSC VNIPIpromtechnologii employees
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
– What can you say about your company’s prospects? What projects are your top priorities? – In my opinion, we should work on our penetration into new markets. Now NW treatment projects account for a significant share of our portfolio. If we participate in federal target programmes and in EAEC and EU programmes, we will stabilise ourselves on the nuclear waste management market that demonstrates good prospects. Environmental engineering is another progressive type of activity in our sphere. Here we can cooperate with big leaders like Gazprom and Rosneft. We have specialists literate in unique technologies and have broad experience in the disposal of various types of industrial waste. We will deal with uranium and gold and also with rare earth and non-ferrous metals on the main mining market. Now we take an active part in programmes related to the ancillary mining of rare earth metals, and I think we have quite good chances in disposing man-made waste resulting from production activities, such as re-processing sulphur waste and producing ferrous, non-ferrous, and precious metals from them. Construction Department employees, JSC VNIPIPROMTECHNOLOGII
2.3.2.2. Interview with JSC VNIPIpromtechnologii Director Viktor Svyatetsky – Mr Svyatetsky, what were the main objectives of VNIPIpromtechnologii in 2013? Have you managed to achieve them? – We are facing quite a big challenge. We are to ensure efficiency and profitability and be on demand with a wide range of customers. To facilitate that, in 2013 we approved a development programme specifying short-term measures to be taken and outlining basic programme directions up to 2030. It is very important for us that the programme is a product of the joint effort of our employees; the personnel engagement level increased by nearly 20% while working on the programme. In 2013 our main production objectives were to design mines for JSC PIMCU and infrastructure facilities for JSC Khiagda and JSC Dalur. These will be completed in 2014. We completed our plan for the first stage of our contract with National Operator for Nuclear Waste Management and designed the first stage of final nuclear waste isolation facilities.
46
In terms of our current production programme, the projects most important for us are those related to the optimisation of existing uranium production (JSC PIMCU, JSC Khiagda, and JSC Dalur). Apart from traditional design, we now also engage in EPCM contracts. This implies complete project management, including procurement of equipment, construction, and start-up and follow-up maintenance. An example of this type of work is the turn-key project Basic Uranium Raw Material Specifications for JSC Dalur.
August ■■ The JSC Atomredmetzoloto management approved the Step-by-Step Development of JSC VNIPIpromtechnologii up to 2030.
2.3.2.3. Historical Background JSC VNIPIpromtechnologii was established over 60 years ago to design uranium production facilities under the USSR nuclear programme. Over 10 major ore mining and processing facilities were built in the former USSR territory under VNIPIpromtechnologii design, such as Leninabad IMCP (Integrated Mining and Chemical Plant), Navoi NMMC, Priargunye IMCP, Kyrgyzstan MC (Mining Company), Eastern OMDP (Ore Mining and Dressing Plant) (Ukraine), Tselinograd IMCP, Prikaspiysky IMCP, Navoi NMMC, Bukinay Mining Company (uranium ISL), Transbaikal MC, and Muruntau Gold Mining Company. It also took part in designing facilities in Mongolia, China, Germany, and Czechoslovakia. In addition to mining companies, VNIPIpromtechnologii designed many infrastructure facilities, including heavy-duty hydrometallurgical and repair and engineering works; motor transport establishments with repair facilities, thermal power stations, and boiler houses; external and internal utilities; communications infrastructure, automated storage facilities; and whole towns and settlements. VNIPIpromtechnologii developed the construction project of the shielding plate under the 4th Chernobyl NPP power generating unit and tube construction options.
September ■ ■ The JSC Atomredmetzoloto management approved the Plan for Establishment of the ARMZ Uranium Holding Co. Engineering Company Based on JSC VNIPIpromtechnologii. ■ ■ JSC VNIPIpromtechnologii entered into a collective agreement with shop-floor union organisation for 2013–2015. ■ ■ NRNU MEPhI, JSC VNIIHT, and JSC VNIPIpromtechnologii signed a collaboration agreement. October ■■ NRNU MEPhI, National University of Science and Technology MISiS, and JSC VNIPIpromtechnologii were among the winners of a pilot project competition for establishing and developing engineering centres in Russia based on leading technical universities. The competition was mounted by the Russian Ministry of Education and Science and the Russian Ministry of Industry and Trade. November ■■ A dryer construction pilot project (JSC Dalur) was launched under an ЕРСМ contract. December ■■ The committee of nuclear SROs recognized JSC VNIPIpromtechnologii as the Best Design Company among Nuclear SROs.
47
Address by Chief Executives About the Company Strategy and Management System
May ■■ JSC VNIPIpromtechnologii was certified according to the new GOST ISO 9001-2011 (certificate of compliance issued).
Effective Capital Management
2.3.2.4. 2013 Key Events
Stakeholder Engagement
Lately VNIPIpromtechnologii has focused on reclamation of land polluted with radionuclides and the construction of nuclear waste storages and repositories. Today JSC VNIPIpromtechnologii is included in the Rosatom Uranium and Mining Division and is a subsidiary of JSC Atomredmetzoloto.
Appendices
Viktor Svyatetsky, Director of JSC VNIPIPROMTECHNOLOGII
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
JSC VNIPIPROMTECHNOLOGII: 63 years of successful project implementation ■■
■■
■■
■■ ■■
■■
Integrated services employing innovative technologies in mining, processing, nuclear waste disposal, etc.; providing services for mining entities regardless of the degree of preparation and content of resources; wide experience in industrial facilities design in the mining and adjacent industries; rich intellectual resources (over 30 ScDs and PhDs); IAEA certified specialists in uranium site reclamation; and extensive experience in nuclear waste treatment and disposal and a unique database on tailing storages of former uranium sites in Russia and abroad.
Most 2013 losses were caused by writing off accounts receivable for 2012. Growing net assets prove the company’s stable financial position. Over the next three years the plan is to focus on establishing a knowledge-sharing system and rotate personnel without attracting a new workforce.
2.3.2.6. Main Activities 2013 Activities in Russia and Abroad (Project Roadmap) In 2013 JSC VNIPIpromtechnologii performed an engineering survey and designed production and social and welfare facilities in Russia, Tajikistan, and Kyrgyzstan.
2.3.2.5. 2013 Key Performance Indicators
2.3.2.7. Efficiency Enhancement Programme
VNIPIpromtechnologii demonstrates a gradual revenue increase and a gradual reduction of subcontracting scope, which means that the company performs more work using its own resources. In 2015–2016, the intention is to increase the amount of third-party orders by transforming the company into a modern engineering centre.
In 2013 JSC VNIPIpromtechnologii launched the automation of basic business processes that are indispensable for a modern design company and better project quality. By the end of the year the average workforce productivity had increased by 11% and was RUB 1.8 million per person.
Figure 15. 2013 VNIPIpromtechnologii Project Map
Moscow
Work at operating facilities
48
Radiation safety operations
Spent nuclear fuel disposal
Land reclamation
Industrial facility design
Liquid waste disposal
Social facility design
Actual performance
BSC indices
Indicators 2011
2012
2013
2014
2015
2016
Revenue (NET) from product sales, total: (work, services) (excl. VAT, excise taxes, and other statutory payments)
751,222
624,190 1,016,661
970,395
882,262
990,008
including industry entities (Rosatom State Corporation)
642,086
548,330
951,830
814,936
456,117
655,599
Other counterparties
109,136
75,861
64,831
155,459
426,146
334,409
Own resources, including:
512,327
540,097
765,899
820,682
826,334
869,581
Industry entities (Rosatom State Corporation)
416,660
466,236
705,468
683,006
416,226
589,456
95,667
73,861
60,431
137,676
410,109
280,125
2,481
2,750
-91,244
57,382
47,783
52,990
Net assets
385,066
387,816
296,780
551,217
577,467
592,574
Asset value
636,588
947,043
875,463
866,021
852,704
853,639
Total amount of taxes, duties, and fees paid to the budget and non-budgetary funds
175,339
295,866
279,055
215,215
249,476
262,404
479
442
409
402
405
405
60,000
0
0
0
21,533
37,882
116,925
115,162
122,375
282,277
262,361
265,386
Other counterparties NET REVENUE
Average number of employees Accrued dividends, total Gross margin
49
Address by Chief Executives About the Company Strategy and Management System Effective Capital Management
Table 6. 2011–2013 VNIPIpromtechnologii Key Financial Indicators, RUB thousand
Stakeholder Engagement
Production In 2013, JSC VNIPIpromtechnologii performed under 85 contracts, and its total revenue was RUB 1,010.66 million, including: ■■ design and survey — 44 contracts to the total of RUB 345.41 million; ■■ special operations — 5 contracts to the total of RUB 506.50 million; and ■■ R&D — 36 contracts to the total of RUB 164.75 million. JSC VNIPIpromtechnologii’s main customers were JSC Atomredmetzoloto S&A (JSC PIMCU, JSC Dalur and JSC Khiagda), and Rosatom State Corporation and its entities (NO RosRAO, Rosenergoatom, RosRAO, JSC Siberian Group of Chemical Enterprises, JSC Integrated Mining and Chemical Plant, etc.). Third-party customers were represented by Kovdorsky GOK, JSC Polyus, Lukoil Perm LLC, TYNGD LLC,
JSC Gazprom Neftekhim Salavat, JSC Kaustic, JSC Soda, and JSC Trevozhnoye Zarevo. Former uranium production sites were reclaimed in Russia (Almaz, Lermontov) and other countries under the international EEC contract Land Reclamation in EEC Countries Exposed to Uranium Production (Tajikistan and Kyrgyzstan). Two projects were certified by state experts (TPP Ash Dump Construction at JSC PIMCU and Reconstruction of the Sredneye Tailing Storage at JSC PIMCU). JSC VNIPIpromtechnologii creates a significant economic effect for its customers. For example, due to the technical solutions suggested under the TPP Ash Dump Construction at JSC PIMCU capital investment went from RUB 1,826.27 down to RUB 249.12 million, as measured in Q3 2012 and excluding VAT. Under Project Documentation Development for Design Solution Optimisation Related to Construction of a Drainage Channel at the Urtuysky Section, RUB 911.87 million was saved in 2013.
Appendices
2.3.2.8. 2013 Results
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Research In 2013, JSC VNIPIpromtechnologii performed the following research work: ■■ enhanced mine development at operated uranium fields and ensured mining operations safety; ■■ assessed nuclear subsurface burst sites and developed reclamation plans; and ■■ assessed and considered further use of liquid waste subsurface storages. VNIPIpromtechnologii has completed a package of works of establishment for the Integrated State NW Treatment System (ordered by Rosatom State Corporation). The company also worked on NW treatment solutions in terms of innovative nuclear power generation trends ensuring the complete closure of the nuclear fuel cycle. VNIPIpromtechnologii was issued four patents in Russia: ■■ Patent No. 2476819 Method for Blasting Ore and Formations in Subsurface Mining. By: S. Rubtsov, A. Seleznyov, and V. Yershov; ■■ Patent No. 2475874 Method for Subsurface Disposal of Biohazardous Drain Water. By: N. Prikhodko; ■■ Patent No. 2477181 Method for Lode Rock Preconcentration in Vein Gold Open Cut Mining. By: N. Lobanov, Ye. Kamnev, V. Kasatkin, and V. Latyshev; and
■■
Patent No. 2492534 Method for Liquid Industrial Waste Subsurface Storage Monitoring. By: Yu. Kultin, Ye. Baydariko, A. Rybalchenko, and P. Vereshchagin.
2.3.2.9. 2014 Plans ■■ ■■
■■
To increase the amount of third-party orders; to implement the Engineering Centre project, including: ■■ switching over to the modern matrix management organisation with up-to-date project management; introducing a computer-aided design system and management systems; ■■ establishing a competency development system (including for competencies related to EPCM project management); and ■■ increasing client focus and service quality; and in connection with the Rosatom Production System implementation, at the first stage it is planned to integrate a 3С system covering 80%–100% of employees and a 5С system covering about 30% of employees.
A surveying team at work at the Yermakovsky field, Buryatia
50
Address by Chief Executives About the Company
3.3. Production Capital Management 3.4. Human Capital Management 3.5. Intellectual Capital Management 3.6. Social Capital Management 3.7. Natural Capital Management
Effective Capital Management
Strategy and Management System
3.2. Financial Capital Management
Stakeholder Engagement
3.1. The Companyâ&#x20AC;&#x2122;s Capital
Appendices
EFFECTIVE CAPITAL MANAGEMENT
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.1. The Company’s Capital “Capital” implies certain resources (reserves) of tangible and non-tangible assets employed in the Company’s activities: financial, production, human, intellectual, social, and natural capital.
The Company acknowledges that a part of its resources is co-owned by other stakeholders (e.g. natural resources and public infrastructure) and treats such resources accordingly.
3.2. Financial Capital Management 3.2.1. Financial Management* Financial capital management involves financial strategy implementation and investment policy. Financial Policy JSC Atomredmetzoloto’s financial policy is based on complying with the corporate regulations and financial policy of Rosatom State Corporation. In 2013 the financial policy was further integrated at the Holding entities for the purpose of later treasury function centralisation. JSC Atomredmetzoloto pursued the following financial strategic objectives: ■■ to ensure financial stability of the Holding entities and at the same time concentrate the majority of temporarily available cash of the companies within the cash pulling system run by JSC Atomic Energy Power Corporation; ■■ to ensure effective financing of operational and investment activities of the Holding’s operated entities and new projects; and ■■ to manage financial risks of the Holding. 2013 Results ■■ A number of transactions were closed to raise funds for purchasing a 100% stake of Uranium One Inc. and for separating international assets from Atomredmetzoloto and consolidating such under Uranium One Holding N.V. control according to the shareholder strategic decision to establish an international mining division; ■■ the Holding continued its cooperation with Russian and foreign banks and its entities signed credit and trade finance contracts; ■■ the exchange risk hedging programme was implemented with the use of derivatives; ■■ treasury operations were further centralised and group-wide financing was developed on the basis of products offered by the base bank for more ef-
fective employment of internal financial resources by the Holding entities; ■■ in order to minimise the diversion of the Holding’s own cash, sureties and bank warranties were used as collateral in case of procurement paid from the Holding’s own and extra-budget funds, which allows reduction of financial risks related to advance payments and the stimulation of proper fulfilment of contractual obligations by counterparties; ■■ the Treasury Settlement Centre (Rosatom automated corporate system) was introduced, providing for automated recording of financial transactions and setting aside the financial performance part of management statements; ■■ norms and methods were introduced for interest risk management while taking into account the transfer pricing legislation; and ■■ management of the entities’ lending limit was continued to ensure effective management of the Holding’s operating and investment credit portfolio; a limit preventive control system was established on the basis of Holding budget planning and by-quarter forecast. Due to targeted financial policy and the above measures, ARMZ Uranium Holding Co. liquidity ratio fell within the target limits and the Holding demonstrated financial stability in spite of operational loss and low activity on the global uranium market after the Fukushima Daiichi disaster. When IFRS 11 Joint Arrangements came into effect, ARMZ Uranium Holding Co.’s altered its accounting policy for the part about disclosing equity interest in joint ventures. Since 2013, such equity interest shall be disclosed through equity accounting (previously proportionate consolidation was used). To ensure comparability of statements, comparative values for previous reporting periods included in the statements were recalculated based on the altered accounting policy. In accordance with Rosatom’s decisions and strategy related to the development of the international
* The Financial Management section is based on the consolidated IFRS financial statements for the period ending on December 31, 2013.
52
Address by Chief Executives About the Company
The 2013 results on the global uranium and uranium product market prove the stability of negative price trends. This caused a significant (RUB 22,874 million) impairment of some mining assets and assets under construction that belong to ARMZ Uranium Holding Co. This, together with the non-profitability of current production operations (due to diminished yield of the field and resulting high mining costs) at JSC PIMCU, ARMZ Uranium Holding Co.â&#x20AC;&#x2122;s main entity, caused the 2013 net loss equal to RUB 24,165 million, excluding ceased activities, and RUB 13,834 million, including the ceased activities.
Appendices
Stakeholder Engagement
Effective Capital Management
Strategy and Management System
mining division run by Uranium One Holding N.V., on December 5, 2013, JSC Atomredmetzoloto sold a controlling stake (57%) in Uranium One Holding N.V., which at that time owned an 89.07% stake in Uranium One Inc. As a result, JSC Atomredmetzoloto ceased consolidating its subsidiaries, disposed of and applied the equity accounting method for the disclosure purposes. For the purpose of statements preparation, these foreign subsidiaries were classified as ceased business. Comparative values were also adjusted to account for ceased business and ongoing business separately.
Valery Skosyrsky and Vyacheslav Stremilov, Underground Mine Repair Operators at the Product Solution Processing Area of the In Situ Leaching Shop. Well washing, JSC Khiagda
53
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Financial Performance Table 7. JSC Atomredmetzoloto Profit and Loss Statement million RUB
2012* (recalculated)
2013
33,810
31,819
(27,705)
(26,922)
6,105
4,897
(4,781)
(5,195)
Other expenses
(188)
(82)
Operating (loss)/profit
1,136
(380)
(49)
(4,820)
â&#x20AC;&#x201C;
(3 ,403)
(10,630)
(10,713)
(260)
(3,938)
378
1,534
(715)
(2,096)
(4)
(3)
(10,144)
(23,819)
(938)
(346)
(11,082)
(24,165)
2,047
10,331
(9,035)
(13,834)
EBITDA
2,779
1,753
Net operating profit after tax (NOPAT)
1,031
(374)
Sales proceeds Cost of goods sold Gross margin Administrative and selling expenses
Fixed asset impairment loss Intangible assets impairment loss Goodwill impairment loss Exploration and assessment impairment loss Financial income Financial loss Share in losses of financial investment assessed by equity accounting Loss before income tax Income tax Net loss for the period Ceased business Profit from ceased business, less income tax Loss for the year For reference only:
* 2011â&#x20AC;&#x201C;2012 indices may differ from similar indices provided in the 2012 JSC Atomredmetzoloto Annual Report
54
(2 525)
(9,035)
(13,834)
(11,082)
(24,165)
(9,035)
(13,834)
Re-evaluation of pension schemes with set payments
(211)
(55)
Total
(211)
(55)
(1,818)
1,093
185
(601)
Total
(1,633)
492
Other aggregated profit / (loss) from ongoing business
(1,844)
437
Other aggregated profit / (loss) from ceased business
(7,027)
1,393
Total other comprehensive income / (loss)
(8,871)
1,830
(12,926)
(23,728)
(4,980)
11,724
(17,906)
(12,004)
(15,647)
(10,776)
(2,259)
(1,228)
(17,906)
(12,004)
Total loss for the period Loss for the year from ongoing business Loss for the year Items not to be later reclassified for profit or loss
Items that have been or may later be reclassified for profit or loss Exchange rate difference resulting from conversion of foreign companies' indices from other currencies Hedging reserve
Total aggregated loss from ongoing business Total aggregated profit/(loss) from ceased business Total aggregated loss Total aggregated loss for the year owed to: JSC Atomredmetzoloto shareholders Non-controlling equity share Total aggregated loss for the year
55
Address by Chief Executives
36
Non-controlling equity share
About the Company
(11,309)
JSC Atomredmetzoloto shareholders
Strategy and Management System
(9,071)
Loss for the period owed to:
Effective Capital Management
2013
Stakeholder Engagement
2012* (recalculated)
Appendices
million RUB
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Table 8. JSC Atomredmetzoloto Balance Sheet million RUB
2011 (recalculated)*
2012 (recalculated)*
2013
Fixed assets
33,759
39,373
35,833
Intangible assets
20,345
19,850
14,869
Goodwill
40,638
28,052
–
Exploration and assessment assets
5,557
8,068
4,931
Investments in associated companies
1,253
1,207
30,127
61,846
55,922
–
2,424
3,171
7,677
165,822
155,643
93,437
11,479
10,189
6,720
562
605
196
4,823
7,641
4,907
21,189
16,713
1,166
2,145
1,851
3,364
40,198
36,999
16,353
206,020
192,642
109,790
Shareholder equity
20,257
22,430
22,430
Share premium
53,963
56,962
61,962
Reserve related to incorporation
7,201
7,201
7,201
Translation reserve
6,048
(502)
687
20,958
7,950
(20,162)
108,427
94,041
72,118
39,645
37,686
(2,086)
ASSETS
Investments in joint ventures Other non-current assets TOTAL non-current assets Reserves Income tax paid in advance Accounts receivable and advance payments Cash and cash equivalents Other current assets TOTAL current assets TOTAL ASSETS EQUITY
Retained profit / (accrued loss) Equity of JSC Atomredmetzoloto shareholders Non-controlling equity share
* 2011–2012 indices may differ from similar indices provided in the 2012 JSC Atomredmetzoloto Annual Report.
56
131,727
70,032
36,811
30,581
18,583
Reserves
6,746
8,700
6,218
Deferred tax liability
4,206
5,520
4,943
522
1
427
48,285
44,802
30,171
Short-term credits and loans and current long-term credits and loans
2,258
8,170
1,595
Accounts payable and accruals
6,109
7,114
7,175
Current income tax liabilities
470
14
34
Accounts payable (other taxes)
826
815
783
9,663
16,113
9,587
57,948
60,915
39,758
206,020
192,642
109,790
Credits and loans
Other accounts receivable TOTAL Long-term liabilities
TOTAL short-term liabilities TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES
Stakeholder Engagement
LIABILITIES
Table 9. Key Financial Indicators of JSC Atomredmetzoloto Description
2012 (recalculated)*
2013
2013/2012 change
% 2013/2012
Financial stability ratio Share of the owned capital in the assets
0.68
0.64
-0.05
-7%
Current liquidity ratio
2.3
1.7
-0.6
-26%
Quick liquidity ratio
1.5
0.6
-0.9
-58%
Turnover ratio, days
143
115
-28
-20%
15.4%
-2.7%
-15%
Liquidity ratio, unit fraction
Sales profitability ratio, % Sales profitability
18.1%
Address by Chief Executives
148,072
TOTAL EQUITY
About the Company
2013
Strategy and Management System
2012 (recalculated)*
Effective Capital Management
2011 (recalculated)*
* 2012 indices may differ from similar indices provided in the 2012 JSC Atomredmetzoloto Annual Report.
57
Appendices
million RUB
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
JSC Atomredmetzoloto prepares its consolidated financial statements in accordance with IFRS. Each Holding entity prepares individual accounting statements according to Russian accounting standards.
3.2.2. Investment Activities Investment priorities of the Company are based on the long-term development strategy and aimed at implementation of key strategic purposes of ARMZ Uranium Holding Co. and Rosatom State Corporation: ■■ developing the raw material base and uranium production in Russia; ■■ gaining leadership in uranium mining and processing technologies; and ■■ diversifying strategic and innovative materials. In 2013, investments in the raw material base and uranium production development in Russia accounted for the majority of the investment structure, with 90% of funds invested in the main uranium mining assets: JSC PIMCU, JSC Khiagda, and JSC Dalur. Of the investments, 94% of came from shareholders and internal funds of the Company. For more details on the investment decision system see 2.2.4.1. Internal Monitoring System.
In 2013 about RUB 9.1 billion were invested, including more than RUB 8 billion invested in operated Russian uranium mining assets for: ■■ construction and installation at production, infrastructure, and power facilities; ■■ industrial facility design; ■■ capital and preparation mining; ■■ upgrade and modernisation; ■■ information and technical support; ■■ design and R&D; ■■ security; and ■■ acquisition of industrial and drilling equipment. Figure 17. 2011–2013 Trends of Investing in Russian Projects, %
9.6
10.9 2011
3% Diversification with strategic and innovative materials
3% Technology leadership
3.3 90.2
0.7 86.6
Figure 16. 2013 Investment Structure, % 94% Development of raw material base and uranium production in Russia
74.2
3.9 12.2
1.8 2012
1.9 4.6 2013
other Russian projects
facilities under construction
operated facilities
non-uranium projects
In 2013 most funds were invested in the development and maintenance of operating facilities. In 2013 investments in operating facilities increased from 74.5% to 90.2% due to: ■■ construction at JSC Khiagda (main building, sorbing agent storage, finished product storage, acidulation unit, and utilities), and capital and preparation mining works on deposits; ■■ replacement of worn-out equipment, upgrade and modernisation, and completion of Mine No. 8 at JSC PIMCU; and ■■ geological exploration, capital and preparation mining at the Khokhlovskoye field, and modernisation of the LSU of the Ust-Uksyanskaya deposit at the Dalmatovskoye field (JSC Dalur). In addition, geological exploration for the Pavlovskoye project was commenced and is expected to become a profitable production complex based on the
58
2% Infrastructure
Address by Chief Executives
6% Other projects
3% Pavlovskoye 7.2% JSC Dalur
6% Other projects 39.4% JSC PIMCU
About the Company
Figure18. Investment by Projects Groups in 2013, %
Figure 19. ARMZ Uranium Holding Co. Key Projects in 2013, %
2% Facilities under construction
44.4% JSC Khiagda
Effective Capital Management Stakeholder Engagement Appendices
90% Operated facilities
Long-Term and Mid-Term Investment Priorities According to the mid-term investment plan, the 2014â&#x20AC;&#x201C;2016 JSC Atomredmetzoloto investment programme is preliminarily evaluated at RUB 20 billion.
Strategy and Management System
Pavlovsky lead and zinc field, including a mine and an enrichment plant.
59
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.3. Production Capital Management 3.3.1. Raw Material Base Development
■■
■■
As of January 1, 2014, the uranium raw material base (RMB) of JSC Atomredmetzoloto is 542,000 tons. With its RMB the Company is the second biggest uranium company in the world. RMB annual growth is ensured through:
■■
licensing of new fields, preferably with low production costs (up to USD 80 per kilo); geological exploration to prepare commercial reserves for mining; and the search for new deposits, with hydrogenous ones being the priority.
Table 10. Reserves and Resources of ARMZ Uranium Holding Co. Entities in Russia as of December 31, 2013, thousand tons Entity
Reserves
Р1 resources*
Total RMB
108.7
–
108.7
9.9
6.5
16.4
39.8
1.4
41.2
JSC EGMK-Project
357.1
–
357.1
JSC Olovskaya MCC
13.5
–
13.5
JSC Gornoye UMC
4.6
–
4.6
JSC Lunnoye
0.4
–
0.4
534.0
7.9
541.9
JSC PIMCU JSC Dalur JSC Khiagda
Total:
* Predicted resources at partially explored ore bodies and ore bodies that have been identified within a field but not explored yet.
Geological Exploration in Russia In 2013, geological exploration was conducted at the deposits of the Khiagda ore field, the Khokhlovskoye field, and at a subsurface site in the Bezymyannaya river area (Novaya Zemlya). The Kaldera project was launched in connection with the search for uranium deposits with high-grade ore within the Streltsovskoye ore field. A total of RUB 665.9 million was invested in geological exploration, which resulted in the reserve increment of 8.5 thousand tons. Main Measures and Results in 2013 ■■ Confirmation of uranium reserves at the Kolichikanskoye, Namaruskoye, Koretkondinskoye, Dybrynskoye, and Vershinnoye deposits (Khiagda ore field). Increment of С1+С2 reserves (8.5 thousand tons).
60
■■
■■
■■
Exploration commenced at the Khokhlovskoye deposit under the exploration and extraction license obtained by JSC Dalur in January 2013. Pilot uranium production works were resumed. Initiation of the Kaldera project on prospect evaluation survey within the Streltsovskoye ore field during 2013–2020. Successful completion of stage 1 and further work planning. Commencement of prospect evaluation survey at the subsoil site in the Bezymyannaya river area (Novaya Zemlya), including the Pavlovskoye field.
2014 Plans ■■ Further geological exploration and pilot uranium mining at the Khokhlovskoye field; ■■ approval of the survey conditions FS to estimate Lunnoye reserves;
Address by Chief Executives Strategy and Management System
About the Company
Work types
Metreage drilled, Investment thousand amount, million metres RUB –
23.5
42.8
187.9
JSC Khiagda (deposits of the Khiagda ore field)
9.3
166.3
The First Ore Mining Company (subsoil site in Novaya Zemlya, including the Pavlovskoye field)
8.5
244.3
60.6
622.0
JSC Dalur (Khokhlovskoye field)
Total:
■■
■■
■■
■■
■■
further development of the electronic database on Khiagda ore field deposits; further implementation of the Kaldera projects on exploration of uranium deposits within the Streltsovskoye ore field; obtaining an exploration and production license for the Pavlovskoye complex deposit due to its discovery; further prospect evaluation survey on Novaya Zemlya at the subsoil site near the Bezymyannaya river; and commencement of geologic survey at the Pavlovskoye field to prepare it for commercial exploitation.
Appendices
JSC PIMCU (Kaldera, stage 1)
Effective Capital Management
Table 11. Exploratory Drilling and Financing in 2013
Stakeholder Engagement
Vladimir Koshevoy, Urtuysky brown coal pit, JSC PIMCU
3.3.2. Uranium Production Methods JSC PIMCU uses the subsurface mining method and is now implementing a new R&D project on in situ leaching in blocks.
61
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Figure 20. Structure of Uranium Production at JSC PIMCU* Ore mining Ore excavation and backfill
Drilling and blasting
Ore storage yard
Ore haulage and surfacing
Ore check point (OCP)
Uranium oxide concentrate
Tailings Heap leaching
X-ray separation
Sorption and desorption
Hydrometallurgical process Leaching, sorption, and desorption
Ore reduction
Rich eluate processing
Tailings
JSC Khiagda and JSC Dalur produce uranium with the DISL method, the most eco-friendly and safe way
to produce uranium with a closed production cycle without waste.
Figure 21. Uranium Production Scheme at JSC Khiagda and JSC Dalur*
Production well drilling, construction and piping
Ore body acidulation and leaching
Loading and unloading product solutions for sorption
Solution processing, sorption and desorption
Sedimentation
Uranium concentrate
Recycled solutions + acid * You can find a video on these production methods at the JSC Atomredmetzoloto website: http://www.armz.ru/ore-main.php.
62
■■
In 2013 the main task of the Holding entities was providing for Rosatom needs in raw materials that carries out its ambitious NPP construction programme in Russia and actively increases its presence abroad. 3.3.3.1. JSC PIMCU, Krasnokamensk, Transbaikal Territory
■■ ■■ ■■
■■
to introduce a mobile integrated crushing unit to process unpayable ore; to commence construction of mine water treatment facilities (MWTF) phase 1; to increase the capacity of operating tailing storages; to complete the entire infrastructure at Mine No. 8; to further modernise stowing complexes of operating mines; and to increase operational efficiency and reduce costs.
Effective Capital Management
Strategy and Management System
2013 Results ■■ 2,133 tons of uranium were produced (+132 tons compared to 2012 figures); ■■ JSC PIMCU put into operation 6 new stopes and 3 half-stopes. This increased prepared reserves by 665 thousand tons of ore (1,030 tons of uranium); ■■ a 3D geological survey model of Mine No. 8 was prepared; ■■ Mine No. 8 is at the last development stage with an estimated output of 370 thousand tons of ore per year. The development shall be finished in 2014; ■■ 3,480 tons of coal were mined, which is 416 tons more than in 2012; ■■ dispatch of coal by third parties increased by 60% year-on-year; ■■ the administration building of the Urtuyskoye surface mine office was completed; ■■ live steam piping of the TPP phase 2 was replaced; and ■■ the pilot hydrometallurgical shop was reconstructed and put into operation.
Address by Chief Executives
■■
About the Company
3.3.3. Uranium Production by JSC Atomredmetzoloto Russian Entities
Appendices
Stakeholder Engagement
2014 Plans ■■ It is planned to produce 1,950 tons of uranium (-183 tons compared to 2013 figures); ■■ further geological exploration according to the MidTerm Development Programme of JSC PIMCU for 2013–2020; ■■ further implementation of the Kaldera projects on exploration of uranium deposits within the Streltsovskoye ore field; ■■ to shrink production volume at Mine No. 2 due to low reserve content and high production costs; ■■ to increase coal mining volumes up to 4,160 thousand tons; Table 12. Production Volume and Uranium Reserves in 2011–2013, JSC PIMCU 2011
2012
2013
Production volume, tons
2,191
2,001
2,133
Uranium reserves, thousand tons
113.1
111.06
108.7
63
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Mid-Term Plans ■■ Further implementation of the Kaldera projects on exploration of uranium deposits within the Streltsovskoye ore field; ■■ to implement the new method of in situ leaching in blocks; ■■ to change over to scheduling output on the basis of 3D mine models; ■■ to increase annual uranium production up to 2,500 tons; ■■ to increase coal production volumes and the share of products sold to third-party companies; ■■ to implement a stationary integrated crushing unit to produce more uranium by heap (percolation) leaching; ■■ to complete MWTF construction; ■■ to start using additional tailings storage capacities; ■■ to finish preparation for in situ leaching in blocks; and ■■ to increase operational efficiency and reduce costs under the Efficiency Enhancement Programme. 3.3.3.2. JSC Dalur, Uksyanskoye Settlement, Kurgan Region 2013 Results ■■ 562 tons of uranium were produced (+33 tons compared to 2012 figures); ■■ an exploration and production license for the Khokhlovskoye deposit was obtained; ■■ geological exploration was commenced at the Khokhlovskoye deposit; ■■ pilot work was resumed at the Khokhlovskoye deposit and pilot site facilities were put into operation: product and recycled solution settlers, acidulation unit, and switchboard room; ■■ products were delivered in accordance with obligations; ■■ further transfer to finished products was conducted according to the intermediate “core” ASTM С967-08 standard; ■■ pilot research project to explore the possibility of ancillary REE and scandium mining in the form of bulk concentrate from product solutions was launched;
■■
■■
■■
further development of the Rosatom Production System occured; modernisation of the local sorption unit of the Ust-Uksyanskaya deposit at the Dalmatovskoye field was completed; the unit can process product solutions at the rate of up to 1,100 cu. m per hour; topographical surveying and environmental engineering were performed under the FTP Reclamation of Land Polluted in the Course of Geological Exploration and Pilot Operations at JSC Dalur (Uksyanskoye, Dalmatovo Area, Kurgan Region).
2014 Plans ■■ It is planned to produce 570 tons of uranium (+8 tons as compared to 2013 figures); ■■ products will be delivered in accordance with obligations; ■■ further geological exploration and pilot operations at the Khokhlovskoye field will take place; ■■ further transfer to finished products was conducted according to the intermediate “core” ASTM С967-08 standard; and ■■ further implementation of the Rosatom Production System (3 projects, standardisation and visualisation of work stations). Mid-Term Plans ■■ To continue geological exploration at the Khokhlovskoye field; ■■ to get approval of the permanent survey conditions FS and the report on Khokhlovskoye reserves estimate; ■■ step-by-step production growth achieving 590 tons of uranium per year by 2016; ■■ to develop ancillary REE and scandium concentrate production; and ■■ transformation of the Khokhlovskoye pilot plant into a local sorption unit and commencement of commercial production in 2018.
Table 13. Production Volume and Uranium Reserves in 2011–2013, JSC Dalur 2011
2012
2013
Production volume, tons
535
529
562
Uranium reserves, thousand tons
11.2
10.7
9.9
64
2014 Plans ■■ It is planned to produce 443 tons of uranium (+3 tons as compared to 2013 figures); ■■ acidulation of deposit No. 3 at the Khiagda field; ■■ exploration of the Tetrakhskoye subsurface water deposit; ■■ completion of the basic database for the deposits of the Khiagda ore field;
■■
■■
Mid-Term Plans ■■ To achieve full load of the pilot plant (450 tons of uranium per year); ■■ to increase uranium production volumes by putting into operation (after 2017) an industrial plant to achieve its full capacity of 1,000 tons of uranium per year in 2018; ■■ to put into operation well-prepared infrastructure facilities; and ■■ to complete most infrastructure facilities and perform capital and preparation mining to increase production starting from 2017.
Table 14. Production Volume and Uranium Reserves in 2011–2013, JSC Khiagda 2011
2012
2013
Production volume, tons
266
332
440
Uranium reserves, thousand tons
32.4
31.9
39.8
2011
2012
2013
JV Betpak-Dala LLP (South Inkai)
1,083.8
1,309
1,420.1
Karatau LLP
1,087.3
1,067.6
1,057.5
780
766.5
714.0
3.3.4. Uranium Production by the Entities of Uranium One Inc.
Table 15. Uranium Production by the Entities of Uranium One Inc., tons* Asset
JV Betpak-Dala LLP (Akdala)
Address by Chief Executives Appendices
Key Production Indices
About the Company
■■
Strategy and Management System
2013 Results ■■ 440 tons of uranium were produced (+108 tons compared to 2012 figures); ■■ at the Khiagda field, blocks at deposit No. 7 were put into operation, and deposit No. 3 was tapped and hooked up; ■■ phase 1 of process complex and infrastructure of the main production site was completed; ■■ geological exploration was completed and reserves were confirmed at the Dybrynskoye, Koretkondinskoye, Kolichikanskoye, and Vershinnoye fields; and ■■ follow-up exploration at the Khiagda field was completed.
certification of DSE for the Istochnoye field with the State Examination Central Administration (Glavgosekspertiza); completion of phase 2 of the sulphuric acid warehouse and fire extinguishing pump station, construction of a package warehouse with a painting shop and a sodium nitrite storage and preparation site; pre-commissioning and start-up of the power supply package; and to purchase and install three 1.0 MWt back-up diesel power stations at the electric substation.
Effective Capital Management
■■
Stakeholder Engagement
3.3.3.3. JSC Khiagda, Bagdarin Settlement, Buryatia
* With regard to the stake in the relevant entity.
65
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Asset
2011
2012
2013
JV Akbastau LLP
552.7
601.3
749.5
JV ZARECHNOYE LLP
364.6
467.8
462.3
Kyzylkum LLP
128
174.6
225.7
Willow Creek
82.6
239
361.6
Honeymoon*
19.6
84.6
94.8
4,098.6
4,710.4
5,086.3*
Total
* In 2013 the project was preserved for an indefinite time due to the unfavourable market situation. ** The values are rounded, and the total value may be slightly different from the actual sum of separate values.
In 2013 Uranium One Inc. (taking distributed products into account) increased its uranium production volume by 8% up to 5,086.3 tons (about 13.2 million pounds of uranium oxide).
Uranium One Inc. proved that it was one of the most effective companies in the industry; average production costs in 2013 stayed at the level of USD 16 per pound of uranium oxide.
Table 16. Raw Material Base of Uranium One Inc., as of December 31, 2013 Asset
Measured
Indicated
Inferred
Total
JV Betpak-Dala LLP (Akdala) *
1,394
0
4,041
5,435
JV Betpak-Dala LLP (South Inkai) *
7,570
13,341
18,877
39,788
Karatau LLP *
9,677
21,619
31,385
62,681
15,580
7,624
15,426
38,630
JV ZARECHNOYE LLP *
578
3,146
2,235
5,959
Kyzylkum LLP *
525
1,896
5,382
7,803
Honeymoon
0
4,153
0
4,153
Willow Creek*
0
6,461
54
6,515
Mkuju River**
31,579
16,348
10,562
58,489
Total
66,903
74,588
87,962
229,453
JV Akbastau LLP *
* With regard to the stake in the relevant entity. ** Total raw material base of the project.
The significant growth of the uranium raw material base, with its total size as of December 31, 2013 being 229.453 thousand tons, can be in the
66
first place explained through its overestimation at mines in Karatau, Akbastau, and South Inkai on the basis of 3D models.
B+C1+C2
P1
Total
756
4,108
4,864
1,029
5,893
South Inkai
9,050
24,609
33,659
21,302
54,961
Karatau LLP**
Karatau
4,904
22,870
27,774
0
27,774
JV Akbastau LLP**
Akbastau
6,056
14,624
20,680
21,501
42,182
Kyzylkum LLP**
Kharasan
1,266
8,330
9,596
16,258
25,854
JV ZARECHNOYE LLP**
Zarechnoye
4,994
2,146
7,139
11,305
18,444
0
709
709
2,285
2,994
27,025
77,396
104,421
73,679
178,100
JV Betpak-Dala LLP**
Akdala
South Zarechnoye Total
* Based on the 8GR official report; the values are rounded, and the total value may be slightly different from the actual sum of separate values. ** With regard to the stake in the relevant entity.
■■
3.3.5.1. Beryozovoye-Gornoye, JSC Gornoye UMC In 2013 no exploration was carried out at the Beryozovoye deposit. Confirmed uranium reserves (С1+С2) were 4,613 tons, with an average uranium content of 0.278%. The Beryozovoye-Gornoye project is aimed at the establishment of a profitable entity for small mine development based on JSC Gornoye UMC, with an annual capacity of up to 500 tons possibly increased up to 1,000 tons by using the raw material base of the nearby small deposits in the Transbaikal Territory, Buryatia, and the Khabarovsk Region. The purpose is the industrial development of the Beryozovoye and Gornoye deposits to produce uranium concentrate (yellowcake) and the later production of uranium oxide. The Gornoye project was suspended by the decision of the Company’s Investment Committee: at the current stage the project bears high risks because of the current market situation and possible significant increase of capital and operating expenses.
■■
leaching plant project at the Beryozovoye deposit; part of the design documentation was prepared for the pilot heap leaching plant project at the Beryozovoye deposit; and license conditions for the Gornoye field subsoil use were changed (adjusted according to the beginning of mine development).
Appendices
3.3.5. New Projects
Address by Chief Executives
C2
About the Company
B+C1
Strategy and Management System
Mine
Effective Capital Management
Category Entity
Stakeholder Engagement
Table 17. Raw Material Base of Uranium One Inc. Entities in Kazakhstan as of January 1, 2014, tons of uranium*
2013 Results ■■ engineering survey was completed and a report was prepared with all the data required for the pilot heap
67
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2014 Plans ■■ To finish the project for the pilot heap leaching plant project at the Beryozovoye deposit; and ■■ to submit the project for the pilot heap leaching plant project at the Beryozovoye deposit for state examination. Mid-Term Plans ■■ To obtain state examination approval for the project for the pilot heap leaching plant project at the Beryozovoye deposit; ■■ to perform pilot operations (up to 600 tons of ore) at the Beryozovoye deposit according to the Rosnedra SCMR decision; ■■ to prepare and approve of, in conjunction with the Rosnedra SCMR, the permanent survey conditions FS and the reserve estimation report for the Gornoye and the Beryozovoye fields based on pilot operation outcomes at the Beryozovoye field; ■■ to develop a facility project on the basis of the permanent survey conditions FS and the reserve estimation report; and ■■ to develop the Gornoye and the Beryozovoye fields on the Beryozovoye industrial site.
2014 Plans The Balance Committee of JSC Atomredmetzoloto decided to lease the subsoil use license and close JSC Olovskaya MCC down.
3.3.6. Other Entities 3.3.6.1. Geological Survey Companies CJSC RUSBURMASH is an integrated geological survey company with an extensive drilling service that offers design for operation implementation of solid minerals geologic survey projects in Russia, Asia, and Africa. For more details see 2.3.1. CJSC RUSBURMASH Activities. 3.3.6.2. Engineering Companies JSC VNIPIpromtechnologii is a leader in designing mineral resources producing facilities, R&D, and experimental and pilot work in the uranium industry. For more details see 2.3.2. JSC VNIPIpromtechnologii Activities. 3.3.6.3. Service Companies
3.3.5.2. Olovskoye, JSC Olovskaya MCC Confirmed uranium reserves (С1+С2) were 13,535 tons, with an average uranium content of 0.076%. The purpose of the Olovskoye project is to establish a uranium mining facility for the development of the Olovskoye deposit in the Transbaikal Territory. At present the Olovskoye project is suspended according to the decision of the Company’s Investment Committee. No co-investors were found for this project. 2013 Results License conditions for the Olovskoye field subsoil use were changed (adjusted according to the beginning of mine development).
ARMZ Service LLC Services Rendered by the Company Supplies of raw materials, materials, and equipment to ensure continuous production at the Holding’s uranium production entities. 2013 Key Results ■■ Participation in procurement for Russian entities of the Holding to reduce procurement costs; ■■ increased thermal coal supplies to the Urtuysky Section (JSC PIMCU) in Russia; ■■ introduction of tank containers to replace tank cars for delivering sulphuric acid from JSC PIM-
Table 18. 2013 ARMZ Service LLC Key Performance Indicators Area of activities
Revenue (excluding VAT)
Russian entities
3,958,178
Delivery of goods to Kazakhstan Other goods and services for third parties
607 25,818
TOTAL
3,984,603
Coal sales (under an agency scheme)
1,058,538
68
■■
3.3.7. Non-Nuclear Projects Non-nuclear projects ensure business diversification. For more details see 2.1.4. Long-Term Strategy and Current Status of the Company.
Address by Chief Executives Effective Capital Management
3.3.7.1. Pavlovskoye The purpose of the Pavlovskoye project is to establish a profitable industrial complex based on
About the Company
■■
Strategy and Management System
■■
to terminate supplies through intermediaries and invite manufacturers to bid; to enter into long-term supply contracts with prices fixed for 2–3 years and prompt delivery; to increase the number of procurement procedures via OJSC Atomkomplekt due to proper scaling (putting more consignments together and introducing category management); and to participate in the diversification of ARMZ Uranium Holding Co.’s production activities.
Stakeholder Engagement
2014 and Mid-Term Plans ■■ To render services on organising and carrying out procurement procedures; ■■ to ensure procurement feasibility and efficiency at the Mining Division and a competitive environment in the course of bidding, and to increase procurement economic efficiency; ■■ to terminate single supplier procurement and supplies through intermediaries;
■■
Appendices
■■
CU to JSC Khiagda (without pouring the acid from one container to another) to optimise and reduce transportation costs; and restructuring and rebranding ARMZ Service LLC under the 2013 procurement restructuring scheme of ARMZ Uranium Holding Co. Under Rosatom’s decree, ARMZ Service LLC was included in the list of authorised procurement companies of the nuclear industry. In 2014, ARMZ Service LLC ceased to participate in procurement procedures; however it renders services of organising and carrying out procurement for the Mining Division.
69
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Tamara Balashova, Chemistry Engineer at the Chemical Analysis Laboratory of the In Situ Leaching Shop, JSC Khiagda
a silver-bearing lead and zinc ore deposit in Pavlovskoye (Bezymyansky ore cluster, Yuzhny Island, Novaya Zemlya, Arkhangelsk Region) with an extensive mineral base of over 37 million tons of ore (category C1+C2). The holder of the subsoil use license is The First Ore Mining Company. 2013 Results ■■ The prospect evaluation survey license was altered (prolonged to 2018); and ■■ a field prospect evaluation survey was carried out at the Bezymyansky ore cluster (also at the Pavlovskoye deposit); 8,516 m of prospecting and
70
appraisal wells were drilled. The data is under processing. Following the prospect evaluation survey, the RMB increased by 15–20%. 2014 Plans ■■ To complete the prospect evaluation survey at the licensed site; ■■ to obtain a license for geological survey and natural resources exploration and production at the Pavlovskoye deposit; and ■■ to perform geological exploration at the Pavlovskoye deposit.
3.3.7.3. Ancillary REE Mining The Ancillary REE Mining project outlines ancillary production of REE and scandium bulk concentrate from uranium product solutions produced at JSC Dalur and JSC Khiagda. 2013 Results ■■ A pilot plant was installed and put into operation at the JSC Dalur production site that is used for low-tonnage testing of the ancillary scandium concentrate production method; and ■■ the Company signed a letter of intent with a potential investor for the development of ancillary REE and scandium mining at JSC Khiagda. 2014 Plans ■■ To complete the pilot production and register the right to the ancillary scandium concentrate production method tested at JSC Dalur; ■■ to develop a project for, establishing a pilot scandium concentrate production plant at JSC Dalur; and ■■ to develop a project for and commence building of, a pilot ancillary REE and scandium concentrate production plant at JSC Khiagda.
2014 Plans In 2014, the Holding plans to continue with the RPS implementation in three basic directions: ■■ production; ■■ efficiency of business processes; and ■■ administrative efficiency. 3.3.8.2. Integrated Power Saving and Enhanced Power Efficiency Programme JSC Atomredmetzoloto pays a lot of attention to enhancing production power efficiency and power saving.
71
Address by Chief Executives About the Company Strategy and Management System
2013 Results ■■ 791 employees were involved in the implementation of various parts of the RPS; 54 employees were recognized as RPS leaders; ■■ under the project Development of Mining Labour Productivity at Mine No. 8 of JSC PIMCU, horizontal metreage achieved 160 m per month (compared to the earlier result of 48.7 m/month, this is a more than a threefold growth); ■■ the number of trips to transport coal was reduced by nearly 8,000 due to switching over to BelAZ vehicles; the load was increased by 8.5 tons; 57.8 more thousand tons of coal were transported than initially planned; and the annual economic effect was RUB 17.3 million (project Optimisation of Coal Production and Logistics of the JSC PIMCU Coal Mine); ■■ the Leaders of Changes, the RPS leader identification and promotion system, was implemented successfully on the basis of self-promotion (54 leaders as compared to 19 leaders year-on-year); ■■ the total economic effect of the measures taken was RUB 108 million; ■■ JSC Dalur unified the procedure of sulphuric acid acceptance at the railway base and its delivery to onsite storages at the CPS and the LSU; ■■ JSC Khiagda optimised the system of TSC preparation and rejection; ■■ CJSC RUSBURMASH took measures to increase performance and reduce costs, achieving the total economic effect of RUB 26.9 million.
Effective Capital Management
2014 Plans ■■ Together with third-party investors, to develop basic conditions for establishing a pilot REE production based on JSC PIMCU; and ■■ to carry out R&D and experimental development of REE production methods.
3.3.8.1. Implementing RPS Projects The introduction of the Rosatom Production System at the Holding entities started in October 2011. In 2013 the work on RPS implementation focused on the application of the RPS culture and philosophy at the Holding entities and identification and promotion of production system leaders.
Stakeholder Engagement
2013 Results The Company identified the prospects of the potential establishment of an industrial REE processing complex based on JSC PIMCU in the form of industrial cooperation with third-party investors; and ■■ at JSC VNIPIpromtechnologii a subdivision was created specialising in the development of REE production methods (also under Sub-Programme No. 15 for Development of Rare and Rare Earth Metal Industry included in the State Programme for Industry Development and Competitive Growth). ■■
3.3.8. Rosatom Production System: Complying with Product Quality Requirements
Appendices
3.3.7.2. Development of REE Production Under this project, an REE production complex will be established based on existing industrial infrastructure, personnel resources, and the technological competencies of the Mining Division.
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
JSC PIMCU is the biggest power consumer within the Holding — 410 MWt of electric power and 1,076 Gcal of thermal power, which accounts for 95% of the fixed power consumption for JSC Dalur and JSC Khiagda. 2013 Results In 2013 the Company consumed 98,831 litres of AI 95 and AI 92 gasoline to the total amount of RUB 3.26 million. The Company rents its office premises. Under the office rent agreement, consumed power is included in the common list of municipal services and is paid for on a monthly basis under a separate bill among other services. Within the reporting period, the Company used about 790,000 kWh of electric power to the total amount of RUB 2.8 million. In 2011–2013 in general, savings due to reduced power consumption by the Holding S&A was RUB 290 million (in monetary terms) under comparable consumption conditions.
Table 19. Power Consumption by Main Industries
Coal Year
Entity TJ thousand RUB
2011
JSC Atomredmet zoloto
0
0
20,484
529,538
0
0
20
3,493
20,504
533,031
0
0
20,145
555,760
0
0
24
3,417
20,169
559,177
0
0
19,253
485,700
0
0
30
4,978
19,283
490,678
JSC PIMCU JSC Dalur JSC Khiagda Total: 2012
JSC Atomredmet zoloto JSC PIMCU JSC Dalur JSC Khiagda Total:
2013
JSC Atomredmet zoloto JSC PIMCU JSC Dalur JSC Khiagda Total:
Figure 22. Power Saving and Efficiency Indices for
72
Dalur 2011 plan — 10%
12.9
11.4
18.5
2014 Plans JSC PIMCU ■■ To continue construction and installation of the automated eclectic power information and metering system (AEPIMS); ■■ pre-commissioning and putting into operation of the electric power metering system (automated technical and commercial eclectic power information and metering systems (ATEPIMS/ACEPIMS));
Plan by year, % 35.5
Actual for ARMZ S&A, %
PIMCU
Khiagda
TOTAL ARMZ
thousand RUB
TJ thousand RUB
Diesel fuel
TJ thousand RUB
TJ thousand RUB
0
0
0
11
4,458
0
0
0
0
33
8,672
0
0
5,874
669,997
17
11,777
207
123,161
0
0
46
4,432
280
84,739
10
5,954
20
11,241
0
0
0
0
114
34,342
5
3,334
31
22,905
33
8,672
46
4,432
6,279
793,536
32
21,065
258
157,307
0
0
0
0
12
4,069
7
5,539
0
0
33
10,833
0
0
6,010
715,132
20
16,231
230
171,272
0
0
46
4,738
292
85,163
7
4,798
16
10,376
0
0
0
0
184
48,106
4
3,978
34
33,234
33
10,833
46
4,738
6,498
852,470
38
30,546
280
214,882
0
0
0
0
8
2,800
4
3,255
0
0
32
11,300
0
0
6,082
811,300
22
17,778
250
186,208
0
0
41
4,753
311
100,482
7
4,923
16
11,744
0
0
0
0
242
70,031
6
4,658
38
35,972
32
11,300
41
4,753
6,643
984,613
39
30,614
304
233,924
Appendices
0
2012 plan — 14.5%
PIMCU
Khiagda
TOTAL ARMZ
Dalur
PIMCU
Khiagda
13.6
19.0 13.0
17.5
17.5
17.3
14.5
30.7
2011–2013, %
Dalur
Address by Chief Executives
TJ
Car fuel
About the Company
TJ thousand RUB
Electric power
Strategy and Management System
Natural gas
Effective Capital Management
Fuel oil
Stakeholder Engagement
Entities of ARMZ Uranium Holding Co.
TOTAL ARMZ
2013 plan — 20%
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
to install and put into operation modernised relay protection and emergency control automatics at the 110 and 220 AL; and to carry on work on the frequency-regulated drive at HMPs and TPPs.
3.3.8.3. Complying with Product Quality Requirements ARMZ Uranium Holding Co. products are consumed by the JSC Chepetsky Mechanical Plant and JSC Siberian Group of Chemical Enterprises.
JSC Dalur To purchase 11 FCD stations in the first half of the year.
Products manufactured by JSC PIMCU, JSC Khiagda, and JSC Dalur comply with TU (Technical Specifications) 95 1981–2009 for Uranium Oxide Concentrate and TU (Technical Specifications) 95–2002 for Ammonium Polyuranate (Yellowcake). In 2013, all products manufactured were in compliance with technical specifications and there were no claims from the consumers of otherwise.
■■
■■
JSC Khiagda To calculate economic efficiency and perform the following design works: ■■ reconstruct the forced draft system of the main in situ leaching shop; ■■ reconstruct the lighting at the CPB and six deposits (installation of power saving SD-LED40); and ■■ to install four automatic voltage control points (AVCP) type VDT/VR-32.
3.4. Human Capital Management 3.4.1. Management System The personnel management system is based on the following principles: ■■ strict compliance with the Russian Labour Code; ■■ integral and socially oriented personnel policy; ■■ increase of labour productivity; ■■ priority and career development of own employees.
3.4.2. KPI System
KPI was one of the factors that resulted in increased labour productivity. It allows measuring performance as well as establishing performance criteria for the company in general, for each subdivision, and for each employee. Employees’ salaries depend on their productivity and compliance with KPI. KPI for the head of the Holding are established with consideration of strategic objectives and KPI. These indices are further decomposed into structural subdivision KPI and separate employee KPI.
ARMZ Uranium Holding Co. uses a KPI personnel performance management system. Introduction of
Table 20. Types of KPI Collective KPI
The Rosatom CEO can set a collective KPI for all employees of the Corporation entities. In this case the target KPI, the lower and upper limits of the collective KPI, and the KPI type will be the same for all KPI roadmaps and will be cascaded from the roadmap of the CEO’s KPI.
Decomposed KPI
KPI from the head’s roadmap. KPI achievement by subordinate managers shall ensure KPI achievement by superior managers (KPI decomposition scheme).
Functional KPI
KPI developed by the functional manager of the superior company (Rosatom State Corporation).
74
Address by Chief Executives
Figure 23. Decomposition Principle
KPI of unit directors
KPI of deputy company directors
KPI of unit directors
Strategy and Management System
KPI of deputy company directors
About the Company
KPI of company director
KPI of unit directors
KPI of unit directors
Effective Capital Management
2013 Results In 2013, a collective KPI named Adjusted Free Cash Flow was introduced for all Holding employees. Results of Director Generalâ&#x20AC;&#x2122;s KPI System Application*
Target value
Actual value
Adjusted Free Cash Flow at Rosatom State Corporation, billion RUB
157.27
174.5
Involvement, %
55
55
Adjusted Free Cash Flow at JSC Atomredmetzoloto, billion RUB
4.30
5.9
Unit cost per ton of uranium, thousand RUB/ton
3,518
3,337
Reduction of uranium bearing reserves at the NFC IS in general, RUB billion
10.7
12.2
Labour productivity, million RUB/person
2.69
2.84
Lost-time injury frequency rates (LTIFR)
10% decrease as compared to the reference period
achieved
Appendices
KPI title and unit of measurement
Stakeholder Engagement
Table 21. 2013 JSC Atomredmetzoloto Target KPI
* Director Generalâ&#x20AC;&#x2122;s KPI are approved by the Board of Directors
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2014 Plans Increase the role of KPI in the personnel motivation system.
3.4.3. Human Capital Features Number of Employees The 2013 average headcount demonstrated a 5.7% year-on-year increase (627 people) and amounted up to 11,588 people. The biggest part of the increase is due to JSC PIMCU (560 people or 6.4%) and JSC Khiagda (73 people or 21.7%) and resulted from production expansion.
Paramilitary mine rescue team, JSC PIMCU
JSC Atomred-
JSC Dalur
Nikolay Shirokorotov, Deputy Head of the Mining Machinery Equipment Maintenance, underground uranium mine No. 1, JSC PIMCU
76
JSC Khiagda
787
757
723
409
442
479
409
336
301
442
437
433 JSC PIMCU
metzoloto
JSC VNIPI
CJSC RUSBUR-
promtechnologii
MASH
TOTAL
11,588
10,453
2013
9,313
228
236
223
8,753
2012
8,294
2011
10,961
Figure 24. Average Headcount Dynamics in 2011–2013, people
Address by Chief Executives
Transbaikal Territory
499
438
308
127
137
Irkutsk Region
Republic of Buryatia
Similar dynamics can be seen in the headcount by regions of operation. The number of employees increased in the Transbaikal Territory and Buryatia, where JSC PIMCU and JSC Khiagda operate.
Within the reporting period only 66 employees of all S&A worked part-time, which is less than 1%. 340 people (3%) worked under a fixed-term employment contract.
380
Employed under a fixed-term employment contract
10,288
405
340
11,445
11,305
10,668
11,850
11,645
2011
2012
2013
Stakeholder Engagement
Employed under an indefinite-term employment contract
Effective Capital Management
Figure 26. ARMZ Uranium Holding Co. Personnel by Employment Contract and Employment Conditions, people
Gender and Age In 2013, 8,396 men and 3,249 women worked at ARMZ Uranium Holding Co.
29% (3,147) Women
2011
72% (8,571) Men
28% (3,279) Women
2012
72% (8,396) Men
Appendices
Figure 27. ARMZ Uranium Holding Co. Personnel by Gender in 2011â&#x20AC;&#x201C;2013, people 71% (7,521) Men
About the Company
Kurgan Region
134
563
567
567
704
749
770 Moscow
9,695
2013
9,070
2012
8,674
2011
Strategy and Management System
Figure 25. Average Headcount Dynamics in Main Regions of Operation, people
28% (3,249) Women
2013
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Personnel by Age In 2013 the percentage of employees by age showed very little changed. Figure 28. ARMZ Uranium Holding Co. Personnel by Age in 2011–2013, people
Under 35
36 to 50
28% (2,995)
Over 50 43% (5,097)
25% (2,952)
41% (4,401)
31% (3,272)
24% (2,797)
32% (3,801)
43% (5,062)
33% (3,786)
2011
2012
Personnel Turnover The general turnover within the Holding in 2013 went up from 17% to 23%. A 13% turnover increase at JSC Atomredmetzoloto is related to organisation changes in the Holding (restructuring of the Rosatom
2013
Mining Division). At JSC VNIPIpromtechnologii, the turnover went up from 11% to 20% due to retirement. The JSC Khiagda personnel policy in 2012–2013 made the company a more attractive employer, which resulted in reducing the turnover from 43% down to 26%.
Figure 29. Turnover by Gender in 2011–2013, % Men
3.8
Women
6.1
5.5
18.9
17.3
16.5
22,7
22
23,4
2011
2012
2013
Kurgan Region
Irkutsk Region
Transbaikal Territory
Republic of Buryatia
78
92
67
28
47
60
85
31
29
214
197
172 Moscow
78
2013
2,461
2012
2,023
2011
2,308
Figure 30. Number of Dismissed Employees by Regions of Operation, people
Figure 31. Number of Dismissed Employees by Gender, people
The Single Unified Remuneration System (SURS) was introduced at all JSC Atomredmetzoloto entities and established a common approach to remuneration payments.
Men
Women
2,323 1,781
1,653
880
698
2013
4,903
6,376
7,346
684
771
917
1,476
1,532
1,940
557
2011
2012
2013
Stakeholder Engagement
Effective Capital Management
Insurance contributions to payroll
2012
Strategy and Management System
Personal income tax
2011
About the Company
Table 22. Expenses and Deductions Related to Remuneration at ARMZ Uranium Holding Co. Entities in 2011â&#x20AC;&#x201C;2013, million RUB
Payroll
Address by Chief Executives
3.4.4. Remuneration System
JSC PIMCU
JSC Dalur
JSC Khiagda
JSC VNIPIpromtech-
Appendices
60,849
58,024
50,022
96,551
73,750
72,800
55,347
52,631
43,232
35,086
31,845
27,966
42,658
36,659
29,588
Figure 32. Remuneration Amount at ARMZ Uranium Holding Co. Entities in 2011â&#x20AC;&#x201C;2013, RUB
CJSC RUSBURMASH
nologii
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
5,114 7,312 5,683 8,462 6,207 8,462
4,611 / 5,338 9,719 4,611 / 6,693 11,088 6,782 / 6,693 13,165
2011
2011
2011
– – – – – –
Entity minimum
12,200 / 6,782 11,000
4,611 6,495 4,611 7,289 6,782 7,289
Region minimum
10,737 16,200 11,700 / 4,611 12,000
Figure 33. Minimum Salary to Entry Salary in Regions of Operation, RUB*
Moscow
2012
2013
2011
2013
2011
2012
2013
Irkutsk Region
2011
2012
2013
Transbaikal Territory
2011 2012 Republic of Buryatia
6,693
14,038 6,693
14,038 5,338
14,212
2011 2012 2013 CJSC RUSBURMASH
14,212 6,782
14,038
14,212
14,038 4,611
5,205
14,212 6,207
14 038 2012
Kurgan Region
2011 2012 2013 JSC VNIPIpromtechnologii
4,611
2013
14,038
2012
4,611
2013
JSC Khiagda
5,683
5,114
14,038
14,038 12,200 14,212
10,737 14,038 11,700 2011
2012
JSC Dalur
14,038
2013
4,611
2012
JSC PIMCU
2013
* A region of operation is a subject of the Russian Federation where the Holding operates: Moscow, the Transbaikal Territory, the Kurgan Region, the Republic of Buryatia, and the Irkutsk Region.
The average growth of the average salary was 13.5%. The minimum salary at all the entities is higher than the minimal income threshold in the regions of operation. 2014 Plans Further harmonisation of the SURS.
3.4.5. Social Policy of the Company In 2013 the Integrated Industry Social Policy of Rosatom and its Entities was introduced for all entities of the Holding. Social payments to employees increased from RUB 177 million in 2012 to RUB 254 million in 2013. The Company offers the following social benefits: voluntary medical insurance, sickness and accident insurance, health resort treatment and vacations, housing improvement assistance, retirement bene-
80
Dmitry Dementyev, Head of Underground Mine Area No. 8, JSC PIMCU
12.7% Compensation for travel expenses 4.8% Financial assistance
16.1% VME
Address by Chief Executives About the Company
0.2% Compensation of travel vouchers
2.3% Voluntary life and accident insurance
Strategy and Management System
18.4% Additional payment upon retirement
6.5% Compensation for rented accommodation
21.3% Retirement benefits
Effective Capital Management
1.8% Presents for anniversaries, professional holidays, and the New Year
15.9% Sports and cultural events
Stakeholder Engagement
2014 Plans: To continue implementation of the Integrated Industry Social Policy.
Figure 34. Social Payments to Employees, %
Appendices
fits (non-state), social support, support for veterans and pensioners, meals, awards, sports and cultural events. In September 2013, ARMZ Uranium Holding Co. mounted sports competitions at the Serebryany Bor beach (Moscow) for its employees and personnel of its entities: employees of JSC PIMCU, JSC Dalur, ESK ARMZ (ARMZ Service LLC), CJSC RUSBURMASH, JSC EGMK-Project, and JSC VNIPIpromtechnologii took part in them. The total amount of participants was 196 employees. It was the first time a corporate sports competition had been organised. The Holding carries out a non-state pension benefit programme. It is carried out in compliance with Russian law. Non-state pension benefits are financed by the employee (0.8% to 3.3% of the salary depending on age) and the employer (1.5% to 10.0% of the employeeâ&#x20AC;&#x2122;s salary). At JSC PIMCU, 1,083 people participate in this programme. In 2013, 17 retired participants of the programme started receiving their non-state pensions. Over RUB 35 million was transferred to employer accounts. JSC Dalur made pension transfers to 225 retired employees, amounting up to RUB 2 million.
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.4.6. Training and Development 2013 Results: Table 23. Training and Development of ARMZ Uranium Holding Co. Personnel in 2013
Employee value
Sports competitions were mounted for teams from JSC Atomredmetzoloto, JSC PIMCU, JSC Dalur, ESK ARMZ (ARMZ Service LLC), CJSC RUSBURMASH, JSC EGMK-Project, and JSC VNIPIpromtechnologii. A separate sports team was formed including children of the Holding personnel to participate in special sports games for children, including a family competition. The childrenâ&#x20AC;&#x2122;s programme included the following games: futsal, volleyball, ping-pong, chess, darts, racing, and kettlebell lifting.
Internal communications
Four Personnel Information Days were organised. Each Information Day covered an average of 7,000 people.
Professional development and training
Training sessions and modules by functional directions were mounted for JSC Atomredmetzoloto and S&A employees. Best Young Specialists of JSC PIMCU were awarded (shaft men, timber-men, and other professions). The Overmen School programme was developed. A profession-oriented event was mounted to select candidates for universities enrolment in 2013. Target training programmes for employees were organised at universities and colleges. JSC Khiagda continued training for main industrial specialities at integrated advanced training courses for wellfield operators (ISL uranium production) developed by Miass Geologic Survey College. In addition hydrometallurgy instrumentation workers were trained at Vocational College No. 15. On the basis of its educational centre, JSC PIMCU started a mentor training programme to increase mentorsâ&#x20AC;&#x2122; professional level, skills, and competencies. Public transport drivers participated in a service culture programme. To ensure mobility of the LF personnel, they were trained in second and adjacent professions. Six specialists of JSC PIMCU participated in short-term trainings at facilities operating in the same field but not run by the Corporation.
Personnel reserve
Rosatom personnel reserve programmes were carried out.
82
Address by Chief Executives
2013
73
134 27
18
20
30
60 30 9
28
31
47
56
25
JSC Atomredmetzoloto
JSC PIMCU
JSC VNIPIpromtech-
CJSC RUSBURMASH
JSC Dalur
JSC Khiagda
nologii
133
13
9
58
Managers
JSC PIMCU
16
16
14
9
0
10
Effective Capital Management
JSC Atomredmetzoloto
0
2
0
0
0
15
36
54
59
66
92
Subordinates
JSC VNIPIpromtech-
JSC Dalur
CJSC RUSBURMASH
About the Company
2012
141
2011
Strategy and Management System
Figure 35. Training Hours per Person by ARMZ Uranium Holding Co. Entities, hr/person
JSC Khiagda
nologii
Appendices
Stakeholder Engagement
Nina Smirnova, Remote Control Operator at cat. 8 chemical production, Sulphuric Acid Shop of the JSC PIMCU Hydrometallurgical Mill
83
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
2014 Plans: Employee value
To continue implementation of the sports initiatives and organise more corporate sporting events
Internal communications
To organise three Information Days in 2014
Professional development and training
To develop and implement mentoring programmes
Personnel reserve
To carry out the personnel reserve programmes Capita, Personnel Assets and Rosatom Talents, and new selection events to form a pool of well-qualified, top of the line, and junior managers to prepare them for work in key positions and projects
3.4.7. Work with Students and Youth One of the priority areas of the ARMZ Uranium Holding Co.’s personnel policy is to look for, attract, and support talented young people with the required theoretical and practical knowledge. In 2013 the pool of highly-qualified ARMZ Uranium Holding Co. specialists mainly contained employees with high-quality professional education. In 2013 the work with youths and students performed by the Holding was also focused on prospective HR for the development of the research and production potential and succession within the Holding. The Holding employs the following methods in its work with youths: ■■ training employees and their family members at universities (target education); ■■ inviting students to undergo their practical and pre-graduation training at the Holding entities; ■■ organisation of mentoring; and ■■ training, advanced training, etc. Young Holding employees participated in the Rosatom Forsazh Youth Innovation Forum, in the organisation of the 3rd Youth Educational Environmental Forum Ekoline-2013, and the ARTnova Musical Creative Project: sport competitions of various levels; volunteer clean-ups; and other social-related events. On October 10–11, 2013, the final stage of the Young Talents competition was held (for the 3rd year in a row organised by ARMZ Uranium Holding Co.). Students from more than 15 Russian universities participated in it. Winners were from NRNU MEPhI, National Mineral Resources University,
84
Russian State Geological Prospecting University, Ural State Mining University, Siberian Federal University, Transbaikal State University, Moscow Power Engineering Institute, and NRNU MEPhI Seversky Technology Institute. 2014 Plans To continue active interaction with youths (also under the Young Programmes project).
3.4.8. Support for Veterans and Pensioners Following the traditions of the Ministry of Medium Machine Building, Ministry for Atomic Energy, and Rosatom State Corporation, since 1992, the trade union of JSC Atomredmetzoloto has been providing social benefits to employees and retired atomic scientists. At present the delegate body of the JSC Atomredmetzoloto personnel is a trade union that participates in rendering legal and social support to personnel.
Address by Chief Executives About the Company Strategy and Management System Effective Capital Management Stakeholder Engagement Appendices
As of December 31, 2013, 7 employees and 17 retired veterans were registered with the JSC Atomredmetzoloto trade union.
3.4.9. Trade Unions and Collective Agreements Trade unions are operating at JSC PIMCU and JSC VNIPIpromtechnologii. At JSC Dalur there is a
Personnel Advisory Board that participates in the relations between the employer and employees. At CJSC RUSBURMASH there is no collective agreement, and the trade union is only formed by employees of the economically autonomous structural subdivision Khiagda Drilling Office (61 people). Thus, collective agreements exist at three S&A; such agreements are effective for three years and cover important issues regarding the relations between the employer and employees.
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Table 24. Rate of Employees Covered by Collective Agreements in 2013, people, %
Entity
Number of employees covered by collective agreements, people
Total amount of employees, people
Rate of employees covered by collective agreements, %
9,313
9,313
100
JSC Dalur
442
442
100
JSC VNIPIpromtechnologii
409
409
100
JSC PIMCU
3.4.10. Occupational Health and Safety Occupational health and safety (OHS) goals of JSC Atomredmetzoloto are as follows: ■■ zero industrial accidents; ■■ compliance with safety requirements; ■■ no production emergencies; and
■■
the minimisation of occupational disease factors.
Radiation Safety Within the reporting period, the individual effective exposure at JSC Atomredmetzoloto S&A was not more than 20 mSv. The individual exposure of 100 mSv was never exceeded from 2009 to 2013.
Table 25. Average Effective Exposure in 2013, mSv Entity
Average Effective Exposure
JSC PIMCU
3.30
JSC Dalur
1.37
JSC Khiagda
1.19
JSC VNIPIpromtechnologii
1.32
2013 Results ■■ LTIFR at JSC Atomredmetzoloto entities went down from 1.07 to 0.55 as compared to the previous three years. The reduction rate was 48%, with the target reduction rate of 10% (0.96) set by JSC Atomredmetzoloto. ■■ Casualties occurred at JSC PIMCU and CJSC RUSBURMASH. As compared to the 3-year reference period, the amount of casualties was reduced nearly twofold, from 19 down to 10 casualties. ■■ In 2013 at JSC Atomredmetzoloto there were no casualties subject to investigation in accordance with federal norms and regulations.
86
Figure 36. LTIFR at JSC Atomredmetzoloto Entities actual
2,50
target
2.23
2,00 1,50
1
1,00
0.39
0.96 0.55
0,50 0,00
2011
2012
2013
minor
fatal
group
major
15
18,00
total
16,00
10
10
12,00
About the Company
14,00
7
7
10,00
5
6
8,00
0,00
average for 2010–2012
2013
2011
2
2
Strategy and Management System
2,00
1
1
2
4,00
2
4
6,00
2012
2013
2012
2013
0.02
0.01
0.02
2011
2012
2013
13.23
2.16
0.3
Effective Capital Management
Figure 26. Fatal Injury Frequency Rate (FIFR) 2011
Stakeholder Engagement
Figure 27. Lost Work Day Rate (LWDR)
2012
2013
0.39
0.75
0.05
The injury rate was effectively reduced and safe working conditions were ensured through: ■■ the safety culture development project based on best global practices and created with the assistance of DuPont Science and Technology; and ■■ evaluation of S&A manager and specialist performance in terms of labour safety and industrial, radiation, and environmental safety.
Appendices
Figure 28. Occupational Diseases Rate (ODR) 2011
Address by Chief Executives
20,00
Figure 38. Total Number of Casualties in 2011–2013
19
Figure 37. Number of Casualties at JSC Atomredmetzoloto Entities
2014 and Mid-Term Plans Ensuring proper personnel rotation based on evaluation results; ■■ use of radon testing devices at closed work sites; and ■■ implementation of technical measures for better radiation safety at production facilities of S&A. ■■
87
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.5. Intellectual Capital Management 3.5.1. Innovative Activities JSC Atomredmetzoloto innovative activities pursue the following goals: ■■ To enhance the efficiency of uranium ore mining and processing methods; ■■ to increase the stake of “reasonably priced” mining methods within the common framework of uranium concentrate production; and ■■ to introduce modern competitive methods in the course of business diversification. The following directions are considered as priority in the Holding: JSC PIMCU: ■■ To develop a method for removing uranium ore tailings into the goaf at HMPs; ■■ further processing of off-balance ore dumps under the contract with the Russian Ministry of Education and Science; and ■■ pilot testing of non-waste gold-bearing sulphur waste processing. JSC Khiagda: ■■ To increase process wells efficiency. JSC Dalur: ■■ To test new technologies in the course of pilot works at the Khokhlovskoye field. In 2013 the general innovation costs, including R&D, were RUB 253.5 million, RUB 101.98 million of which was spent on R&D development. Innovative projects of JSC Atomredmetzoloto were financed by the Holding’s own funds and by subsidies granted by the Russian Ministry of Education and Science.
253.5
Figure 39. Holding Innovative Development Programme Costs, million RUB
226
300
200
156.6
250
150 100 50 0
88
2011
2012
2013
Innovation Development Programme Development plans for breakthrough, mandatory (environment protection and industrial security), and support technologies have been incorporated into four innovative projects implemented since 2011 under the JSC Atomredmetzoloto Innovation Development Programme for 2011–2020. Project 1. Establishment of a New Uranium Geotechnical Production Platform The purpose of the project is to create innovative, highly economical, and eco-friendly geotechnologies for uranium deposit development at all project stages (from exploration and mining to subsoil and land reclamation). 2013 Results Laboratory tests of heap leaching (HL) and in situ leaching in blocks (ISLB) stimulation with the help of surface-active agents (SAA) were completed. The SAA that are most effective for HL of picked off-balance ore products and ISLB were identified. Pilot technical works (PTW) were commenced. Within two months of PTW, uranium extraction volume increased by 10% as compared to the currently employed scheme. ■■ An expert and analytical system was established for multi-factor comparative analysis of block processing, geotechnology optimisation, and planning and design of DISL block processing. With the help of the system, the ISL process can be intensified and JSC Dalur field development efficiency can be increased. ■■ Optimum modes were identified and a process scheme developed for producing leaching agents at the mine. This was the result of experiments on producing sulphurous leaching solutions with oxidising properties that were verified by Urals Science and Technology Centre in a laboratory and on a pilot plant. ■■ Forecast and optimisation calculations were performed with regard to block processing at the Khiagda field with the use of sulphurous DISL on the basis of a software package developed by the NRNU MEPhI Seversky Technology Institute. Following the analysis of multi-option forecast calculations, recommendations were given for optimum operation modes, basic geotechnical processing values were determined for a set extraction grade, and a production schedule was drawn up. The recommendations will ensure in■■
Address by Chief Executives About the Company
Project 2. Development of a Refractory Ore Enrichment and Processing Method for the Elkon and the Streltsovsky Uranium Ore Districts The refractory ore fields of the Elkon and the Streltsovsky uranium ore districts account for about 80% of uranium commercial reserves in Russia. Due to a high capital-output ratio and low uranium extrac-
2013 Results ■■ Geophysical equipment was developed and introduced for uranium gamma-tests at production sites and mines of JSC PIMCU. The equipment replaced the outdated and worn out equipment developed in 1970s–1990s. Following the introduction of Uran-M devices, in 2013, actual uranium losses and ore dilution were diminished at Mines Nos. 1 and 2 and the Gluboky mine. ■■ JSC PIMCU performed pilot testing of the optimised method for uranium agitation leaching, which resulted in a significant reduction of oxidising agent consumption as well as the consumption of materials, and agents and power saving, which reduced the aggregate costs of hydrometallurgical crude ore processing. Project 3. Introduction of Geological Mine Modelling and Mining Operations Planning: Development of a Single Geologic Database 2013 Results ■■ The development of producing blocks of Mine No. 8 demonstrated that modern mining and geological
89
Effective Capital Management
Strategy and Management System ■■
tion level, the aim of this project is to reduce the prime cost of final products through modern, highly efficient technologies and integrated subsoil development.
Stakeholder Engagement
■■
creased average uranium concentration in block product solutions, a quicker uranium extraction rate, and a lower rate of acid consumption. Selection of optimum oxidising agents were completed for uranium in situ leaching from Khiagda ores. According to the experiments on leaching uranium from unoxidised ore samples in the presence of various oxidising agents, such agents bring about a threefold increase of the leaching rate and a 1.5-fold reduction of sulphur acid consumption. Research was completed and a pilot operation commenced to process off-balance ore dumps fromJSC PIMCU. An ore-picking facility was mounted and put into operation to sort dumps from the Tulukuy quarry. In 2013, over 50 thousand tons of uranium ore concentrate were produced from off-balance dumps with the use of the ore-picking facility.
Appendices
Ruslan Urubchev, Pump and Engine Repairman, JSC PIMCU
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
■■
■■
CAD technologies (MineFrame) facilitate less ore dilution and increased uranium content in mined ore as compared to the mining method traditionally used at JSC PIMCU. Under the project of Streltsovsky Ore Field Geodynamic Grounds creation, a laser strainmeter was developed, a 3D model of rock mass stress-strain behaviour completed, and an automated widerange lithological pressure control system was developed and installed at monitored areas of Mines 1 and 2 and the Gluboky mine. In 2014, the plan is to complete the geodynamic grounds project that will increase underground operations safety and reduce the number of mining operations accidents. Contingency geomechanical modelling substantiated decreasing the goaf to be stowed from 80% to 67%, thus saving on stowing operations.
Project 4. Development of a New-Generation Integrated Hardware and Methodical Logging System for Direct Uranium Identification in Wells with Prompt Neutrons Method (IHMS PNM) 2013 Results ■■ Detailed engineering drawings were prepared, and prototypes of the IHMS PNM-M-48 downhole tool were manufactured for direct uranium in situ identification with the prompt neutrons method;
in terms of the operational life (200–250 hrs) of the ING-12-50-100BT neutron generator, the equipment is at the level of similar foreign devices and is unprecedented in terms of its small logging tool external diameter of 48 mm. Due to reducing the tool diameter from 60 to 48 mm, it can be used for measuring exploration and process wells with a wider structure both in Russia and abroad; ■■ metrological examination and pilot operation were completed to certify the measurement method. Method certification will be done in 2014. In 2012 the project Developing a Complex Geotechnology-Based Processing Method for LowGrade Uranium Ore was launched. In 2013–2015 the Russian Ministry of Education and Science subsidised RUB 150 million for R&D. The 2013 R&D activities by the Transbaikal State University (RUB 30 million) were funded using the subsidy. In 2014 the project will be continued. Further RUB 50 million from the subsidised funds were allocated to this project. In 2013 project approach to R&D was introduced. It is supposed that treatment of R&D as one of the stages making up the chain of innovation development, introduction, and commoditisation will make R&D self-sustaining. ■■
3.6. Social Capital Management 3.6.1. Stakeholder Engagement Stakeholders
Key issues
Shareholders
■■
■■ ■■
building up and diversifying resource base effective use of investments safety priority
Engagement mechanisms ■■
■■
■■
Investors
Local communities
■■
■■
■■
effective use of investments and good growth quality
■■
expectations of local communities implementation of sustainable development projects
■■
■■
■■
■■
■■
90
convening General Meetings of Shareholders disclosure on an external website regular reporting regular meetings disclosure on an external website public opinion polls public hearings related to annual report publications public hearings related to the construction of new facilities information via mass media
■■
Business partners
■■ ■■
■■
Holding’s personnel
■■ ■■
■■
■■
stable cooperation protecting and complying with shareholders’ rights and interests modern projects
■■
fair remuneration training, development, and career prospects competitive social benefits
■■
■■
■■
■■ ■■
■■
■■
Consumers
■■
stable and reliable supplies
■■ ■■
Mass media and research and production associations
■■ ■■ ■■ ■■ ■■
operation efficiency development prospects environmental safety major developments social responsibility
Address by Chief Executives
■■
tax deductions developing regions of operation environmental responsibility responsible personnel and social policy
■■
■■
■■
■■
cooperation agreements regular meetings
meetings disclosure on an external website
drawing up and signing collective agreements Information Days regular meetings between managers and workers to discuss Holding activities, including the Foremen Council at JSC PIMCU internal mass media and feedback public hearings related to annual report publications regular meetings disclosure on an external website press conferences and media briefings public hearings related to annual report publications media tours for Russian and foreign mass media comments on issues related to JSC Atomredmetzoloto activities
About the Company
■■
Strategy and Management System
■■
Effective Capital Management
State and municipal authorities and local communities in regions of operation
Engagement mechanisms
Stakeholder Engagement
Key issues
Appendices
Stakeholders
91
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.6.2. Developing Regions of Operation 3.6.2.1. Economic Impact in Regions of Operation In 2012 Rosatom State Corporation established a consolidated group of taxpayers. On the part of JSC Atomredmetzoloto, the programme was joined by JSC PIMCU (Transbaikal Territory), JSC Khiagda (Buryatia), JSC Dalur (Kurgan Region), and CJSC RUSBURMASH. The CGT was established to incorporate the income tax base of interrelated (equity holding) companies and change over to paying the income tax based on the income share of each CGT member. The establishment of CGT brought about
redistribution of the income tax paid to the Moscow and the St. Petersburg regional budgets and the budgets of the regions where Rosatom facilities are registered and operated. Each subject of the Russian Federation receives a part of the consolidated Rosatom income tax depending on the value of fixed assets registered there and the number of personnel. In 2013 tax deductions to regional budgets in the regions of operation increased. The biggest growth was demonstrated by tax deductions to the Transbaikal budget due to JSC PIMCU registered there; in 2013, RUB 565.9 million in tax was paid in addition to the planned amount.
Table 29. Taxes Paid by ARMZ Uranium Holding Co. Key Entities to Regional Budgets, million RUB Entity
2011
2012
2013
JSC PIMCU
797
641
1,017
JSC Dalur
158
270
378
JSC Khiagda
100
126
197
92
Address by Chief Executives About the Company Stakeholder Engagement
Effective Capital Management
3.6.2.2. 45 Things by the JSC PIMCU 45th Anniversary Programme In August 2013, JSC PIMCU celebrated its 45th anniversary. By the anniversary date, ARMZ Uranium Holding Co. and JSC PIMCU had completed the 45 Things by the JSC PIMCU 45th Anniversary Programme aimed
Strategy and Management System
2014 Plans ■■ Launching a new Krasnokamensk—Chita flight; ■■ completion of the sport centre general construction works; ■■ reconstruction of two kindergartens; ■■ transfer of the ownership of treatment facilities and a water conduit on the JSC PIMCU balance sheet to the municipal authorities for reconstruction; and ■■ opening Argun and Bogatyr gyms and the Argun stadium for visitors.
Appendices
On February 28, 2013 the regional social and economic development programme was approved for Krasnokamensk and the Krasnokamensk Region to fund city facilities from the regional budget. The 2013–2017 city development plan was drawn up. The most important 2013 project was the launch of air communication between Krasnokamensk and Chita. The first flight took place on August 5, 2013. In 2013 in Krasnokamensk a sport centre project was under implementation: a construction site was selected, a design was completed, and a contractor was found. RUB 35 million was allocated to renovate the race tracks and the terrace of the Argun stadium. RUB 280 million was allocated to ensure more places for children in kindergartens. A total of RUB 346 million was allocated for Krasnokamensk social development.
93
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
at better labour conditions and a more active social life in Krasnokamensk. A part of the 45 things was already
completed in 2012. JSC Atomredmetzoloto and JSC PIMCU allocated over RUB 410 million for the programme.
Table 30. 45 Things by the JSC PIMCU 45th Anniversary Programme No.
Completed in 2012
Execution period
1
Presenting school backpacks to JSC PIMCU employees' children entering the 1st grade
25.08.2012
2
Opening a memorial to S. Pokrovsky, the first director, in school No. 7 named after him
01.09.2012
3
Volunteer clean-up at the Gornyak sanatorium associated with the International Day for the Elderly and arranging recreation for retired veterans
29.09.2012–01.10.2012
4
2nd Youth Educational Environmental Forum ECOLINE-2012 (winners awarded on 20.10.2012)
September–October 2012
5
Launching an additional retirement benefit corporate programme for JSC PIMCU employees
since 01.10.2012
6
Open competitions among Company employees to October–November 2012 develop a Best in Profession sign or logo to be used as one of the JSC PIMCU official awards and a JSC PIMCU anniversary badge
7
45 Working Weeks Marathon for the JSC PIMCU 45th Anniversary among Company teams
October 2012 – July 2013
8
Putting Mine No. 8 into operation
November–December 2012
9
Issue of the Gornyak Priargunya (Priargunye Mineworker) newspaper in A3 colour variant (distributed at newsstands)
since 20.11.2012
10
Opening a skating rink and playgrounds at the Gornyak December 2012 – January 2013 sanatorium and New Year recreation for JSC PIMCU employees' families Completed in 2013
11
Enactment of the new version of the Regulations of Vacation Fare Compensation (for JSC PIMCU employees once a year and for employee's family members once in three years)
January
12
Modernisation of changing rooms and showers at the Uranium Mine Office
January–December
94
Check-off
Construction of an administrative building for the Urtuyskoye Section Administration
January–November
15
Reconstructing the DAURIYA recreation centre and equipping a cinema
January–August
16
Sports competitions for Company entities including new types of sports
January–August
17
An anniversary competition among amateur artistic groups
January–August
18
Completion of de-preservation of Mine No. 6 with pumping water out of shafts
February
19
2nd ARTnova Musical Creative Project
February–August
20
Good Deed volunteer movement; registering the Krasnokamensk Youth Public Organisation for implementing joint social projects
March
21
Installation of bus stops at production sites and optimisation of personnel transfers
March–August
22
Repair of facilities at the Sputnik and the Argun kids recreation camps
May
23
Signing 45 target contracts for university and college education with grant payments
May
24
The Bridge Between Generations Parade dedicated to the Victory Day
May
25
Presenting backpacks to first-grade and school gradu- May 25 ate children of Company employees
26
A social campaign on planting pine trees at two city sites (Shakhtyorov Prospect and Pokrovsky park) (some of them with name plates)
June
27
Establishment of a paintball club of the JSC PIMCU shop-floor trade union
June
28
Equipping outdoor playgrounds in every part of the city
June
29
Constructing an outdoor sporting grounds for youths
June
Address by Chief Executives
14
About the Company
Repair and modernisation of facades and accommoda- January–August tion premises of the Gornyak sanatorium
Strategy and Management System
13
Check-off
Effective Capital Management
Execution period
Stakeholder Engagement
Completed in 2013
Appendices
No.
95
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
No.
Completed in 2013
Execution period
30
A city-wide youth volunteer clean-up associated with the Day of Youth
June
31
Industry-related graffiti competition
June
32
Work of the anniversary-related youth construction team
June–August
33
Summer school for children at the Argun camp
June–August
34
Taking pictures and organising photo exhibitions Industrial Art and Krasnokamensk Today; workshops for beginners conducted by renowned industrial art style Moscow photographers. Pictures of production departments were made.
June–August
35
Launch of construction of a sport centre with an integrated gym and a swimming pool
August
36
Installation of a JSC PIMCU memorial
August
37
Installation of the JSC PIMCU Labour Memorial in the Stroiteley Prospect with 45 Steps to the JSC PIMCU 45th Anniversary information boards
June–August
38
Meeting in Krasnokamensk of Company veterans from all over Russia
August
39
Anniversary-related sports competitions
July
40
Anniversary-related Best Young Specialist competition (by profession) with more professions nominated
July
41
1st Uranium Racing Inter-Regional Motor Fest
July
42
Anniversary-related JSC PIMCU yearbook entitled “45 Steps to the 45th Anniversary”
August
43
Issue of commemorative JSC PIMCU 45th anniversary medals
August
44
Opening a branch of the Health Academy (city kinesitherapy centre)
August
45
Installation of a monument to the first Company director in the Pokrovsky park
August
96
Check-off
Address by Chief Executives
3.7. Natural Capital Management 3.7.1. Environmental Policy of the Company Mining facilities invariably cause an ecological footprint. The most important environmental safety direction is correct forecasting of environmental impact at the design and operation stages, minimisation of such impact in the course of current operation, and reclamation upon shutdown. The key document in this area is the JSC Atomredmetzoloto Environmental Policy based on rational use of natural resources and maximum environment preservation. Under Rosatom Decree No. 1/937-П dated September 5, 2013, S&A also developed and approved their individual Environmental Policies. The JSC Atomredmetzoloto Environmental Policy supports manufacturing competitive products with
a minimum environmental footprint and the best possible preservation of the natural environment in production areas. The following was completed to implement the Environmental Policy: ■■ environmental impact was reduced due to compliance with Russian law and international agreements; ■■ economic mechanisms were implemented to stimulate footprint reduction; ■■ the Company’s contractors complied with environmental, industrial, and labour safety norms and standards set by JSC Atomredmetzoloto; and ■■ a programme for introducing an integrated quality and environmental protection management system in compliance with ISO 9001 and ISO 14001 at key management and production subdivisions was implemented.
97
Strategy and Management System
About the Company ■■
Effective Capital Management
■■
arranging a tour to Greece for the winners of the ARTnova-2013 projects; support of kids and youth sport teams and educational institutions of the villages of Uksyanskoye and Lyubimovka (Dalmatovo Area, Kurgan Region) and the city of Dalmatovo in areal, territoryial, regional, and national championships; and sponsoring of a volunteer movement and the implementation of social and youth projects in Krasnokamensk.
Stakeholder Engagement
2013 Key Projects ■■ 2nd ARTnova Musical Creative Project; ■■ 3rd Youth Educational Environmental Forum EKOLINE-2013; ■■ 3rd Kids and Youth Sport Competitions Breakthrough-2013;
■■
Appendices
3.6.2.3. Charity and Sponsorship In 2013, ARMZ Uranium Holding Co. continued charity projects mainly focusing on the regions of operation.
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.7.2. Protection of Land and Biological Diversity The downhole in situ uranium leaching is more acceptable in terms of environment preservation since it hardly disturbs the natural landscape. This method is used at JSC Khiagda and JSC Dalur. In case of underground mining (JSC PIMCU) there is a goaf that is filled with a cement, sand, and gravel mix to ensure safety and minimise radon escape. Upon field development disturbed land is reclaimed.
Figure 40. Total Amount of Disturbed Land at JSC PIMCU in 2011â&#x20AC;&#x201C;2013, ha* 16 14 12 10 8 6
* Due to alteration of the method, the values are calculated under
4
Russian Federal State Statistics Service (Rosstat) Decree No. 676
2
on Approving Statistical Tools for Federal Statistic Monitoring of Land Reclamation and Top Soil Removal and Use by the Federal Supervisory Natural Resources Management Service dated December 29, 2012. The increase of disturbed land resulted from the development of new deposits.
98
0
2011
2012
2013
Address by Chief Executives About the Company Strategy and Management System 300
Effective Capital Management
Figure 41. Total Amount of Disturbed Land at JSC Dalur in 2011â&#x20AC;&#x201C;2013, ha*
Figure 42. Total Amount of Disturbed Land at JSC Khiagda in 2011â&#x20AC;&#x201C;2013, ha*
250
Stakeholder Engagement
140 120
200 100
150
80
100
0
2011
2012
2013
Appendices
60
50
40 20
* Due to alteration of the method, the values are calculated under Russian Federal State Statistics Service (Rosstat) Decree No.
0
2011
2012
2013
676 on Approving Statistical Tools for Federal Statistic Monitoring of Land Reclamation and Top Soil Removal and Use by the
* Due to alteration of the method, the values are calculated under
Federal Supervisory Natural Resources Management Service
Russian Federal State Statistics Service (Rosstat) Decree No.
dated December 29, 2012.
676 on Approving Statistical Tools for Federal Statistic Monitoring of Land Reclamation and Top Soil Removal and Use by the
ARMZ Uranium Holding Co. regularly monitors the environment and performs environmental surveys of bushes and plants in its territories.
Federal Supervisory Natural Resources Management Service dated December 29, 2012. Since 2012 disturbed land area excludes mining allotment areas.
99
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.7.3. Protection of Water Resources Water Consumption Figure 43. Water Consumption in 2011â&#x20AC;&#x201C;2013 by Purpose and Entity, thousand m3 JSC Dalur
JSC Khiagda
Water for production
Water for drinking
Total water con-
Underground
needs
needs
sumption
springs
Waste Water Discharge Figure 44. Waste Water Discharge in 2011â&#x20AC;&#x201C;2013, JSC PIMCU, thousand m3 2011
12,553.60
2012
12,470.21
2013 13,291.68
JSC Dalur JSC Dalur applies a closed-type technological cycle, so the company does not discharge water containing hazardous chemical agents and radioactive nuclides. Household waste water from the sewage is taken to a contracted special treatment facility. JSC Khiagda No waste water is discharged into surface water bodies. Water discharged on the terrain undergoes treatment. This type of discharge is not limited by any norms.
100
Surface springs
Exceeding set limits
no
no
no
0
0
5,318.6
81.97
89.84
28,960.59 74.04
89.84
17.84
48.71
6,998.99 59.2
41.13
27,280.2
34,279.19
JSC PIMCU
765.31
870.87
929.23
Sulphur dioxide
5,674.68
6,424.87
6,462.71
Nitrogen dioxide
1,493.21
1,499.81
1,604.37
236.13
238.13
286.49
5,086.34
5,223.29
6,477.00
Inorganic dust
187.10
205.75
179.27
Other
216.41
239.19
480.05
8,572.84
14,701.91
16,419.12
Carbon monoxide
Nitrogen oxide Inorganic dust and ash
Total
Table 32. Discharge of Pollutants into the Air by JSC Khiagda, tons Pollutant
2011
2012
2013
Carbon monoxide
80.40
73.82
69.57
Sulphur dioxide
9.65
9.88
9.37
Nitrogen dioxide
16.41
4.60 11.26
Nitrogen oxide Inorganic dust and ash
12.57
17.93
15.15
Inorganic dust
0.04
0.14
0.35
Other
3.87
0.35
2.96
122.94
106.73
108.66
Total
The discharge figures are given for the following two production sites: CPB (Transbaikal Territory) and the in situ leaching shop (Buryatia). In 2013 the discharged amount went up due to production extension, new facilities construction and putting into operation, and 27 additional vehicles, the use of which started in 2013. Furthermore in 2013 the coal boiler house of the ISL shop was
reconstructed (modernised) with a power increase from 2.89 Gcal/hr up to 6.0 Gcal/hr and the addition of a new boiler (now 3 instead of 2), which resulted in increased coal consumption and more pollutants discharged into the air.
101
Address by Chief Executives
2013
About the Company
2012
Strategy and Management System
2011
Effective Capital Management
Pollutant
Stakeholder Engagement
Table 31. Discharge of Pollutants into the Air by JSC PIMCU, tons
Appendices
3.7.4. Air Protection
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Table 33. Discharge of Pollutants into Air by JSC Dalur, tons Pollutant
2011
2012
2013
Carbon monoxide
4.56
4.50
3.92
0
0
0
Nitrogen dioxide
2.01
1.98
1.73
Nitrogen oxide
0.33
0.32
0.28
0
0
0
0.001
0.001
0.001
Other
3.57
3.59
3.63
Total
10.47
10.40
9.56
Sulphur dioxide
Inorganic dust and ash Inorganic dust
3.7.5. Waste Treatment Table 34. Production of Waste of All Hazard Classes in 2011â&#x20AC;&#x201C;2013, tons Entity Hazard class
Hazard class 1
Hazard class 2
Hazard class 3
Hazard class 4
102
Year JSC PIMCU
JSC Dalur
JSC Khiagda
2011
2.69
0.01
0.07
2012
3.807
0.007
0.087
2013
3.427
0.01
0.066
2011
1.37
0.89
0.32
2012
1.386
0.122
2.018
2013
0.636
0
1.963
2011
614.49
0.37
0.99
2012
930.912
0.336
1.385
2013
152.552
0
4.739
2011
2,694.6
22.90
4,339.41
2012
2,020.6
22.80
5,131.5
2013
2,650.9
45.0
3,380.7
JSC PIMCU
JSC Dalur
JSC Khiagda
2011
22,180,541
9.70
7,224.47
2012
21,279,598
7.60
7,082.9
2013
24,467,312.3
6.9
1,893.8
2011
22,183,854
33.87
11,565.26
2012
21,282,555
3.,87
12,217.4
2013
24,470,119.8
51.9
5,281.2
Waste stored at operated facilities, tons (%) 2013
24,469,897.37 (99.99%)
Waste handed over to special contractors 2013 for use and treatment, tons (%)
38,213.632 (0.001%)
25.6 (50%)
332.69 (6.3%)
none
none
none
2013
Effective Capital Management
Exceeding set limits
0 4,950.86 (93.7%)
Stakeholder Engagement
Total
Appendices
Hazard class 5
Address by Chief Executives
Year
About the Company
Hazard class
Strategy and Management System
Entity
103
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
3.7.6. Expenses Related to Environment Preservation Table 35. Environmental Protection Expenses in 2013, million RUB Entities
JSC PIMCU
JSC Dalur
JSC Khiagda
206.37
0.10
1.06 *
Protection of water resources
45.46
0.47
80.48 **
Protection of land
18.45
0.28
19.45
13.2
1.99
1.50
Environmental projects
107.00
0.05
4.12
Total
390.48
2.89
106.61
Environmental impact prevention costs Air protection
Environmental management costs Environmental monitoring
*
The total air protection costs amount also includes RUB 0.499 million for the installation of gas treatment equipment in the course of reconstruction (modernisation) of the JSC Khiagda coal boiler house as fixed asset overhaul costs for environment purposes.
** The total water body costs include RUB 51.681 million for the construction of a flood water system and surface water collection from operational blocks, hydro insulation of storm water sumps at Deposit 6 to prevent storm water from mining sites from getting into the hydrographic network, and prevent pollution of the phreatic aquifer. Costs of the development, introduction, and certification preparation of the management system complying with ISO 9001:2008 and ISO 14001:2004. Total under the contract: RUB 1.670 million carried over to 2014; in 2013 the costs were RUB 0.23 million.
104
Address by Chief Executives About the Company Strategy and Management System
of Report Preparation 4.2. Taking into Account Stakeholder Suggestions 4.3. Statement of Public Assurance
Stakeholder Engagement
Effective Capital Management
4.1. Discussions with Stakeholders in the Course
Appendices
STAKEHOLDER ENGAGEMENT IN THE COURSEÂ OF REPORT PREPARATION
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
One of the basic principles of public reporting at JSC Atomredmetzoloto is stakeholder engagement in the course of report preparation.
For more details on cooperation principles, the stakeholders’ key interests, and relations mechanisms, see 3.6.1. Stakeholder Engagement.
4.1. Discussions with Stakeholders in the Course of Report Preparation Two discussions were held in accordance with the АА1000SES Stakeholder Engagement Standard while preparing the Report. The purpose was to get feedback from stakeholders on the quality of priority topic, sustainable development, and capital management disclosure in the Report. All ARMZ Uranium Holding Co. stakeholders were invited to participate in the discussions. Discussion 1. JSC Atomredmetzoloto 2013 Basic Performance and Efficiency Enhancing Measures On March 26, 2014 from 10:00 to 12:00 in the office building of JSC Atomredmetzoloto (22 Bolshoy Drovyanoy Per., Moscow) a discussion on JSC Atomredmetzoloto’s 2013 Basic Performance and Efficiency Enhancing Measures was held. The discussion was related to the main production performance of the Rosatom Mining Division in 2013 and the main performance results of CJSC RUSBURMASH and JSC VNIPIpromtechnologii in 2013. Discussion 2. Organisational Changes within the Rosatom Mining Division and JSC Atomredmetzoloto Development On March 26, 2014 from 12:00 to 13:30 in the office building of JSC Atomredmetzoloto (22 Bolshoy Drovyanoy Per., Moscow) a discussion on Organisational Changes within the Rosatom Mining Division and JSC Atomredmetzoloto Development was held. The discussion was related to the evolution of the Rosatom Mining Division under the changing global uranium market conditions and the JSC Atomredmetzoloto development concept. For more details about the discussion see the JSC Atomredmetzoloto website: http://www.armz.ru/ press/news/?id=510.
106
Public Discussions of the Draft Annual Report On May 20, 2014 an in absentia discussion of the 2013 JSC Atomredmetzoloto public annual report was held. The public discussion involved stakeholder representatives. Stakeholders expressed their opinion about the significance of disclosed information.
In the course of the discussions, 16 suggestions and recommendations were received from stakeholders, and 9 of them were implemented in this Report, while the rest are still being reviewed by the Holding’s management in the course of ongoing operations
Stakeholder suggestions
JSC Atomredmetzoloto suggestions
1
To specify what needs of the regions will be provided for by means of the taxes paid by the Holding entities.
See 3.6.2. Developing Regions of Operation.
2
To invite more parties to hearings and invite The list of in absentia hearing participants has representatives of public environmental organi- been extended. sations, including those disapproving of the nuclear industry, to participate in discussions with stakeholders and public hearings.
3
To conduct an excursion for environmentalists and Rosatom Community Council members to Holding entities, with JSC PIMCU being the first place.
Not done due to budget optimisation.
4
To include ARMZ Uranium Holding Co.â&#x20AC;&#x2122;s position and interests in sustainable development in the current Report or mention that they will be developed in 2013.
To be included in the 2014 Report.
Appendices
Stakeholder Engagement
Effective Capital Management
No.
Strategy and Management System
Table 36. Meeting Commitments Undertaken during 2012 Report Preparation
About the Company
Address by Chief Executives
4.2. Taking into Account Stakeholder Suggestions
107
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Table 37. Taking Shareholder Suggestions into Account as Made during Discussions in the Course of 2013 Report Preparation No.
Stakeholder suggestions based on discussions
JSC Atomredmetzoloto suggestions
1
To introduce a section devoted to environmental protection into the Report (including results of the Environment Year).
See 3.7. Natural Capital Management.
2
To extend CJSC RUSBURMASH geographic reach outside the Russian territory, diversify operations to not to limit them to drilling, increase quality, reduce prime costs, and develop the company as an integrated business that also offers geologic exploration services.
For future. The suggestion will be reviewed by the Holding's management in the course of ongoing operations. The 2013 JSC Atomredmetzoloto Annual Report does not require the Company to react to this suggestion.
3
To recommend JSC VNIPIpromtechnologii to switch over to engineering activities, which means complete restructuring of its current activities with the introduction of global technical and technological solutions becoming the core activity.
For future. The suggestion will be reviewed by the Holding's management in the course of ongoing operations. The 2013 JSC Atomredmetzoloto Annual Report does not require the Company to react to this suggestion.
4
The 2013 JSC Atomredmetzoloto Annual Report should underline the Company's responsible approach to labour and industrial safety and indicate positive trends in these areas.
See 3.4.10. Occupational Health and Safety.
5
To include the mentioned development prospects of JSC Atomredmetzoloto in the Strategy section of the Annual Report.
See 2.1. Business Strategy.
6
To mention the effect from the Rosatom Production System implementation in monetary terms.
See 3.3.8.1. Implementing RPS Projects.
7
To disclose main KPIs in the report, together with injury rates (if the data collection system allows).
See 3.4.2. KPI System.
8
To include information about new risks, including those related to the Company's operations in the US and Canada in view of the latest political circumstances.
Information about risks related to the Company's activities in the US and Canada will be included in the Uranium One Holding Report, and 2.2.3. Risk Management of the JSC Atomredmetzoloto Report specifies the risks that JSC Atomredmetzoloto is prone to.
9
To make strategy development the priority topic of the annual report in the following reporting period.
For future. To be taken into account when developing the 2014 Report concept.
108
Address by Chief Executives
To include the CJSC RUSBURMASH project roadmap in the Report.
See 2.3.1. CJSC RUSBURMASH Activities.
11
To describe the KPI system and its performance.
See 3.4.2. KPI System.
12
To disclose the changes in the marketing and sales policy resulting from restructuring.
See 2.1.3. Marketing and Sales Policy.
13
In next reports, to confirm the GRI G4 compliance level with a non-financial audit.
For future. To be taken into account when developing the 2014 Report concept.
14
To include a chapter about Company performance in the Report.
For future. To be taken into account when developing the 2014 Report concept.
15
To include significant developments outside the For future. To be taken into account when dereporting period in the Major Developments veloping the 2014 Report concept. section.
16
To disclose capital business models, i.e. specify For future. To be included in the 2014 Report. what capital and in what amount they were available at the beginning of the reporting period and what the gains (value delivery) were in the reporting period.
About the Company
10
Strategy and Management System
JSC Atomredmetzoloto suggestions
Effective Capital Management
Stakeholders' suggestions based on discussions
Appendices
Stakeholder Engagement
No.
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4.3. Statement of Public Assurance Background JSC Atomredmetzoloto (hereinafter referred to as “ARMZ Uranium Holding Co.” or the “Company”) submitted its 2013 Annual Report (hereinafter referred to as the “Report”) for us to review, whereby we also had a chance to verify the comprehensiveness and significance of its contents and Company’s response to our recommendations. For this purpose our representatives were invited to participate in two discussions with stakeholders held on March 26, 2014: ■■ Discussion 1. JSC Atomredmetzoloto 2013 Basic Performance and Efficiency Enhancing Measures; and ■■ Discussion 2. Organisational Changes within the Rosatom Mining Division and JSC Atomredmetzoloto Development. We also took part in the in absentia public discussion of the draft Report on May 20, 2014.
One of the advantages of the Report is that it was prepared in compliance with international standards (Global Reporting Initiative (GRI rev. G4.0), АА1000 Institute of Social and Ethical Accountability standards, and IIRC International Integrated Reporting Framework). Due to its integrity, the Report discloses information about the Company’s main activities and sustainability development performance. We are not aware of any facts that could undermine the accuracy of the data included in the Report. We think that the information disclosed in the Report is sufficient both in terms of compliance with international public reporting standards and taking into account stakeholder comments made at the Report preparation stage. We believe that it is the integrated Report that should represent the official position of the Company’s management with regard to socially significant issues and activities of the Company.
Draft Report Evaluation Procedure Our opinion is based on comparative analysis of two Report versions (draft Report for public discussion and the final version of the Report), materials that were provided to us (minutes and a table with stakeholders’ comments) upon the discussions, and comments from the management and employees of the Holding that were made in the course of public assurance of the Report. In the course of public assurance, we were not trying to verify the information collection or analysis system; neither did we confirm the accuracy of any information included in the Report. All participants of public discussions had a chance to share their opinion. The Company did not remunerate us in any way for taking part in the public assurance procedure.
Significance of Information We think that in the Report the Holding managed to disclose all topics important for stakeholders. The Report represents the Company’s position on strategic development, financial and economic performance, and social, environmental, and economic impact. The priority topics considered in the Report are: ■■ organisational changes within the Rosatom Mining Division and enhancing the efficiency of the Mining Division part located in Russia; and ■■ key production performance as of the end of the year. All significant information on the above topics was disclosed properly.
Evaluation, Comments, and Recommendations We unanimously evaluated the Report in a positive manner in terms of its form and the scope of information included in it. We find it very important that the Report was prepared voluntarily and is a good example of an enhanced transparency on the part of the Company. In preparing the Report, the Company demonstrated that it intended to ensure public and environmental satisfaction and was prepared to engage in open dialogue with stakeholders about various issues concerning its activities. We can see that the Company’s management realises the importance and prospects of engaging stakeholders.
110
Comprehensiveness We believe that the Report contains comprehensive information about sustainable development and JSC Atomredmetzoloto’s sustainability performance and describes nearly all the activities of the Company that influence economy, society, and environment and are of interest for stakeholders. To ensure compliance with the comprehensiveness principle, the Report contains reference to regulating documents and additional open sources, including the corporate website of the Company. Company’s Reaction to Stakeholders’ Comments and Suggestions In our opinion, the Company is stable in terms of stakeholder engagement and public reporting. Three
Grigory Mashkovets Ph.D in Geology and Mineralogy, Professor, General Director of All-Russian Scientific Research Institute of Mineral Resources (FSUE VIMS)
Yury Didenko Chairman of the Town of Krasnokamensk Council, Transbaikal Territory
Aleksey Zammoyev Chairman of the Town of Krasnokamensk and Kranokamensk Area Council, Transbaikal Territory
Boris Pichkurenko Head of the Town of Krasnokamensk, Transbaikal Territory
Address by Chief Executives About the Company Stakeholder Engagement
Andrey Anosov Deputy Head of the Dalmatovo Area, Kurgan Region
Strategy and Management System
Stepan Zhiryakov member of the Russian Council Committee for Agricultural and Food Policy and Use of Natural Resources, representative of the legislative (representational) state agency of the Transbaikal Territory
Effective Capital Management
ness Strategy, Natural Capital Management, Occupational Health and Safety, Implementing RPS Projects, KPI System, etc. The Company undertook to disclose information on an array of other matters in future Reports or provided a reasonable explanation for not disclosing certain information. Thus, in the course of Report preparation the Company demonstrated that it was eager to react to stakeholder suggestions and recommendations and deal with the issues raised.
Gennady Shirokov General Director of Dalspetsstroy LLC, Dalmatovo Area, Kurgan Region
Olga Plyamina Executive Director of Greenlight International Environmental NCO
Svetlana Dvoryaninova Deputy General Director and Head of the Information Department at Nuclear.ru Information Agency
111
Appendices
events engaging stakeholders were mounted in the course of the Report preparation. In fact, stakeholder engagement had started before the preparation of the Report, at the concept development stage. Stakeholders had a chance to make their suggestions and recommendations with regard to the information to be disclosed in the Report. The Company reacted to stakeholdersâ&#x20AC;&#x2122; comments by elaborating the final version of the Report and introducing additional information. In particular, the following sections were reviewed and extended: Busi-
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
112
Appendix 4. Auditorâ&#x20AC;&#x2122;s Opinion on Financial Statements Accuracy Appendix 5. Report on Compliance with the Code of Corporate Conduct Appendix 6. Terms and Abbreviations
Address by Chief Executives About the Company Strategy and Management System
Appendix 3. Table of Disclosures as per the Reporting Standard of Rosatom State Corporation
Effective Capital Management
Appendix 2. Table of Standard GRI Disclosures
Stakeholder Engagement
Appendix 1. Matrix of Companyâ&#x20AC;&#x2122;s Activities and Sustainable Development Data Significance
Appendices
APPENDICES
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Appendix 1. Matrix of Company’s Activities and Sustainable Development Data Significance The average score given to each of the aspects was determined separately on the basis of evaluation by JSC Atomredmetzoloto representatives and stakeholders’ representatives. A data significance matrix was developed on the basis of the above analysis (see Figure 45. Matrix of Company’s Activities and Sustainable Development Data Significance). The most significant aspects that must be disclosed are those that scored: ■■ at least 4.0 as evaluated by both internal and external stakeholders;
at least 4.0 as evaluated by external stakeholders and at least 3.0 as evaluated by internal stakeholders; and ■■ at least 4.0 as evaluated by internal stakeholders and at least 3.0 as evaluated by external stakeholders. The horizontal axis demonstrates significance for the Company and the vertical one demonstrates significance for external stakeholders. The aspects that scored 3.0 to 4.0 in the average were also taken into account during the Report preparation. ■■
Figure 45. Matrix of Company’s Activities and Sustainable Development Data Significance 5 11 20
4,5
3 1 27
4
16
17
8
15 12
22 18 4
10 21
19 6
13
5
9 14
3,5
3
2,5
2
1,5
1
0,5
0 1 2 3
4 5
6 7
1 Social impact in regions of operation Public policy Business diversification and development of promising segments Employment Health and safety at work (including industrial safety and compliance of labour conditions with international occupational and industrial safety standards) Investment programme Innovative activities and technological development programme
114
2
3 Global uranium markets Training and education (including availability of qualified workforce and talent development) 10 General investment in environmental protection 11 Key production performance 12 Occupational health and safety 13 Safety approaches 14 Market presence 15 Outlook for the future 16 Raw material base development and uranium production 17 Development strategy
4
5
8
18
9
19 20 21 22
Key risk and opportunity management Environmental impact management Performance management Business stability Economic performance
6
GRI Clause
Reflected in the Report
Report section/clause
Address by Chief Executives
Appendix 2. Table of Standard GRI Disclosures Notes
About the Company
General Standard Disclosures Strategy and analysis Disclosed in full
Address by the Chairman of the Board of Directors and Address by the Director General
Strategy and Management System
G 4-1 Statement from the most senior decision-maker of the organisation
G 4-4 Primary brands, products, and services
Disclosed in full
1.1. General Information about JSC Atomredmetzoloto
G 4-5 Location of the organisationâ&#x20AC;&#x2122;s headquarters
Disclosed in full
Contact Information
G 4-6 Countries where Disclosed in full the organisation operates
1.1. General Information about JSC Atomredmetzoloto
G 4-7 Nature of ownership and legal form
Disclosed in full
1.1. General Information about JSC Atomredmetzoloto
G 4-8 Markets served
Disclosed in full
1.2. Presence in Markets
G 4-9 Scale of the organisation
Disclosed in full
2013 Key Performance Indicators, 3.4.3. Human Capital Features, 1.1.3. Holding Organisation, 3.2.1. Financial Management
Stakeholder Engagement
1.1. General Information about JSC Atomredmetzoloto
Appendices
G 4-3 Name of the organ- Disclosed in full isation
Effective Capital Management
Organisational Profile
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GRI Clause
Reflected in the Report
Report section/clause
Notes
G 4-10 Number of employees
Disclosed in full
3.4.3. Human Capital Features
Substantial portion of the organisation’s work performed by workers who are legally recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors — not registered.
G 4-11 Percentage of total employees covered by collective bargaining agreements
Disclosed in full
3.4.3. Human Capital Features
G 4-12 Supply chain
Disclosed in full
1.3. Value Chain and Business Model
G 4-13 Changes regarding the organisation’s size, structure, or ownership
Disclosed in full
1.1. General Information about JSC Atomredmetzoloto
G 4-14 Precautionary approach or principle
Disclosed in full
Not applicable
G 4-15 Externally develDisclosed in full oped charters, principles, or other initiatives
1.1. General Information about JSC Atomredmetzoloto
G 4-16 Memberships of associations
1.1. General Information about JSC Atomredmetzoloto
Disclosed in full
Identified Material Aspects and Boundaries G 4-17 List all entities included in the organisation’s consolidated financial statements
Disclosed in full
Information about the Report
G 4-18 Process for defining the report content and the Aspect Boundaries
Disclosed in full
Information about the Report
116
Changes in the location of suppliers, the structure of the supply chain, or in relationships with suppliers — none.
G 4-19 Material Aspects
Disclosed in full
Information about the Report
G 4-20 Material Aspect Boundary outside the organisation
Disclosed in full
Information about the Report
G 4-21 Material Aspect Boundary outside the organisation
Disclosed in full
Information about the Report
G 4-22 Restatements of information provided in previous reports
Disclosed in full
Notes
Only material Aspects within the organisation are represented. No figures were restated within the reporting period. There were no material changes in measurement and calculation procedures.
Information about the Report
Effective Capital Management
G 4-23 Significant chang- Disclosed in full es from previous reporting periods in the Scope and Aspect Boundaries
Address by Chief Executives
Report section/clause
3.6.1. Stakeholder Engagement
G 4-25 Identification and selection of stakeholders with whom to engage
Disclosed in full
3.6.1. Stakeholder Engagement
G 4-26 Organisationâ&#x20AC;&#x2122;s approach to stakeholder engagement
Disclosed in full
3.6.1. Stakeholder Engagement
G 4-27 Key topics and concerns that have been raised through stakeholder engagement
Disclosed in full
4.2. Taking into Account Stakeholder Suggestions
Disclosed in full
Information about the Report
Appendices
Disclosed in full
Stakeholder Engagement
Stakeholder Engagement G 4-24 List of stakeholder groups
Report Profile G 4-28 Reporting period
About the Company
Reflected in the Report
Strategy and Management System
GRI Clause
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GRI Clause
Reflected in the Report
Report section/clause
G 4-29 Date of most recent previous report
Disclosed in full
G 4-30 Reporting cycle
Disclosed in full
Information about the Report
G 4-31 Contact point
Disclosed in full
Appendix 2. Table of Standard GRI Disclosures
G 4-32 GRI Content Index table
Disclosed in full
Appendix 2. Table of Standard GRI Disclosures
G 4-33 External assurance of the Report
Disclosed in full
4.3. Statement of Public Assurance
Disclosed in full
2.2.1. Corporate Governance, 2.2.3. Risk Management, 3.2.2. Investment Activity
Disclosed in full
2.1.1. Corporate Mission and Values, Appendix 5. Report on Compliance with the Code of Corporate Conduct
The 2012 JSC Atomredmetzoloto Annual Report was published on the Holding's website: www.armz.ru (Shareholders and Investors > Information disclosure > Annual Reports) on July 1, 2013.
Governance G4-34 Governance structure
Ethics and Integrity G4-56 Values, principles, standards, and norms of behaviour
Specific Standard Disclosures: Indicators Category: Economic. Aspect: Economic Performance EC1 Direct economic value generated and distributed
118
Disclosed in full
Notes
2013 Key Performance Indicators, 3.2.1. Financial Management, 3.4.4. Remuneration System, 3.4.5. Social Policy of the Company, 3.6.2. Developing Regions of Operation, 2.2.1. Corporate Governance
Reflected in the Report
Report section/clause
EC3 Coverage of the organisationâ&#x20AC;&#x2122;s defined benefit plan obligations
Disclosed in full
3.4.5. Social Policy of the Company
Address by Chief Executives
GRI Clause
Notes
Category: Economic. Aspect: Market Presence 3.4.4. Remuneration System
About the Company
Disclosed in full
Strategy and Management System
EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation
Category: Environmental. Aspect: Overall EN31 Total environmental Disclosed in full protection expenditures and investments by type
3.7.6. Expenses Related to Environment Preservation
Category: Social. Aspect: Employment 3.4.3. Human Capital Features
LA2 Total number and rates of new employee hires and employee turnover by age group, gender, and region
Disclosed in full
3.4.5. Social Policy of the Company
Information on new employee hires is not collected.
Effective Capital Management
Disclosed in part
Stakeholder Engagement
LA1 Total number and rates of new employee hires and employee turnover by age group, gender, and region
Category: Social. Aspect: Occupational Health and Safety Disclosed in part
3.4.10. Occupational health and safety
No statistics by gender and region are kept.
Appendices
LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender
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GRI Clause
Reflected in the Report
Report section/clause
Notes
Category: Social. Aspect: Training and Education LA9 Average hours of training per year per employee by gender and by employee category
Disclosed in part
LA10 Programs for skills Disclosed in full management and lifelong learning that support the continued employability of employees and assist them in managing career endings
3.4.6. Training and Devel- Average hours of trainopment ing per gender are not registered.
3.4.6. Training and Devel- Support of further opment employment and career ending management through retirement or quitting work is provided within the framework of the Labour Code.
Category: Society. Aspect: Public Policy SO6 Total value of political contributions by country and recipient/ beneficiary
120
Disclosed in full
No monetary or non-monetary political contributions were made.
3.2. Financial Capital Management
Address by Chief Executives
2.1.1 Profit 2.1.3 Financial stability
2.3 Production capacities development
2.3.1 Investment in equity within the reporting period
3.2.2. Investment Activity
9.1 Availability of qualified and competent workforce
9.1.1 Availability of qualified workforce
3.4. Human Capital Management
9.1.2 Employee training 10.1 Economic performance
10.1.1 Direct economic value generated and distributed, including revenues, operating costs, employee wages and benefits, contributions and other investment in societies, undistributed profits, payments to providers of capital, and payments to government ЕС1 GRI
3.2. Financial Capital Management, 3.4. Human Capital Management, 3.6.2. Developing Regions of Operation
10.3 Indirect economic impact
10.3.1 Development and impact of investments in infrastructure and services supported for the public good in the first place, through commercial, in-kind, or pro bono engagements ЕС7 GRI
3.6.2. Developing Regions of Operation
11.2 Consumption of materials, power, and water
11.3.10 Total weight of waste by type and disposal method EN23 GRI
3.7.5. Waste Treatment
12.1 Employment
12.1.1 Total number of employees by employment type, employment contract, and region 4-10 GRI
3.4. Human Capital Management
12.1.2 Total number and employee turnover by age group, gender, and region LA1 GRI
3.4. Human Capital Management
12.1.4 Share of specialists aged under 35
3.4. Human Capital Management
12.1.7 Ratios of standard entry level wage compared to local minimum wage at significant locations of operation EC5 GRI
3.4. Human Capital Management
121
Strategy and Management System
2.1 Economic performance
Effective Capital Management
Report section
Stakeholder Engagement
Indicator
Appendices
Indicator designation
About the Company
Appendix 3. Table of Disclosures as per the Reporting Standard of Rosatom State Corporation
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
Indicator designation
Indicator
Report section
12.3 Employee social benefits 12.3.1 Benefits provided to full-time employ- 3.4. Human Capital Manageees that are not provided to temporary or ment part-time employees, by significant locations of operation. LA2 GRI 12.3.5 Total expenses on employee social programmes 12.4.2 Type of injury and rates of injury, occu- 3.4.10. Occupational Health pational diseases, lost days, and absenteeism, and Safety and total number of work-related fatalities, by region and by gender LA6 GRI 12.4.5 Monitoring of personnel radiation expo- 3.4.10. Occupational Health sure and Safety 13.4 Charity
122
13.4.1 Charity projects and amount of invest- 3.6.2. Developing Regions of ment under such projects Operation
Responsibility of the management of the audited entity for the consolidated financial statements The management of the audited entity is responsible for the preparation and accurate presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards, as well as for such internal control as the management deems necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express our opinion on the accuracy of these consolidated financial statements based on our audit. We conducted our audit in accordance with Russian federal auditing standards and the International Standards on Auditing. These standards require that we comply with ethical norms and plan and perform the audit so as to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence supporting the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the professional judgement of the auditor, including an assessment of the risks of material misstatement, whether due to fraud or error. In assessing this risk, the auditor considers the system of internal controls relevant to the preparation and accurate presentation of the consolidated financial statements in order to draft the appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of internal controls. An
Opinion In our opinion, the consolidated financial statements fairly present in all material respects the financial position of the Group as of December 31, 2013, and the results of its operations and its cash flows for 2013 in accordance with International Financial Reporting Standards.
Address by Chief Executives About the Company Effective Capital Management
We have audited the attached consolidated financial statements of JSC Atomredmetzoloto and its subsidiaries (hereinafter referred to as the “Group”) consisting of the consolidated financial position report as of December 31, 2013 and consolidated profit and loss statement and statements of other aggregate income, changes in equity and cash flows in 2013, as well as comments offering a summary of the Group’s accounting policy and other explanatory information.
Stakeholder Engagement
To the Shareholders and Board of Directors of JSC Atomredmetzoloto
audit also includes evaluating the appropriateness of accounting policies adopted and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of (consolidated) financial statements. We believe that the audit evidence we have obtained in our audit serves as a reasonable basis for expressing our audit opinion on the accuracy of these consolidated financial statements.
Appendices
Auditor’s Opinion
Strategy and Management System
Appendix 4. Auditor’s Opinion on Financial Statements Accuracy
K. Altukhov Director (Power of Attorney No. 65/13 dated October 1, 2013) ZAO KPMG May 30, 2014 Moscow, Russian Federation
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Appendix 5. Report on Compliance with the Code of Corporate Conduct The Report was prepared according to the form set by the Guidelines on the Contents and Form of the Report on Compliance with the Code of Corporate Con-
No.
Article of the Code of Corporate Conduct
duct Included in Annual Reports, as approved by Russian Federal Securities Market Commission Decree No. 03-849/р dated April 30, 2003.
Compliant or non-compliant
Note
Compliant
When a general meeting of shareholders is convened, the periods of notice to hold such meetings are observed and the shareholders exercise the following rights: to familiarise themselves with the list of persons entitled to participate in the general meeting of shareholders; to review the materials (information) on the general meeting of shareholders; and to add issues to the agenda of the general meeting of shareholders
2
The Charter of the joint stock compa- Compliant ny shall provide for the power of the Board of Directors to annually approve the financial and economic plan of the joint stock company
In accordance with paragraph 13.2(25) of the Charter, the competence of the Board of Directors includes approval of annual plans, budgets, and estimates for the Company’s activities and related progress reports, and planned financial and economic performance indicators of the Company
3
The Charter of the joint stock company shall provide for the right of the Board of Directors to authorise the suspension of the Director General appointed by the General Meeting of Shareholders
Compliant
In accordance with paragraph 13.2 (23) of the Charter, the competence of the Board of Directors includes authorising the formation of a temporary sole executive body of the Company in the event of the Director General’s suspension or inability to discharge his/her duties for any reason, and convening an Extraordinary General Meeting of Shareholders to decide on the early dissolution of the sole executive body of the Company and the formation of a new executive body of the Company
Observance of Shareholders’ Rights 1
Observance of the rights and lawful interests of the shareholders in accordance with the laws of the Russian Federation and observance of the fundamental provisions of the Code of Corporate Conduct shall be ensured
Board of Directors
124
Non-compliant
Independent directors were not elected to the Board of Directors of the Company
5
The board of directors of the jointstock company shall not include persons who were found guilty of economic crimes or crimes against the government, the interests of public service, and service in local governments; or who were administratively penalised for violations in the field of business activities or in the field of finance, taxes, and duties, or the securities market
Compliant
The Board of Directors of the Company does not include such persons
6
The Board of Directors of the jointstock company shall not include persons who are a member, the general director (manager), a member of the governing body, or an employee of a legal entity competing with the joint stock company
Compliant
Members of the Board of Directors of the Company do not hold management positions in the governing bodies of any competing company
7
The internal documents of the jointstock company shall regulate the conduct of the meetings of the Board of Directors
Compliant
Section 10 of the Regulations on the Board of Directors of the Company formalises the basic provisions of the rules governing the meetings of the Board of Directors of the Company
8
Compliant The joint-stock company’s internal documents shall stipulate that the Board of Directors must approve jointstock company transactions worth 10 or more percent of the company’s assets, with the exception of transactions effected in the ordinary course of business
In accordance with paragraph 2.2 (12) of the Regulations on the Board of Directors of the Company, the competence of the Board of Directors includes approval of a major transaction or a number of interrelated transactions, the subject of which are assets accounting for 10% to 50% of the book value of the Company’s assets
9
The Board of Directors of the Company shall have committees
The Company has not set up any committees of the Board of Directors
Non-compliant
125
Address by Chief Executives
The Board of Directors of a joint stock-company shall include at least three independent directors meeting the requirements of the Code of Corporate Conduct
About the Company
4
Strategy and Management System
Note
Effective Capital Management
Compliant or non-compliant
Stakeholder Engagement
Article of the Code of Corporate Conduct
Appendices
No.
I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
No.
Article of the Code of Corporate Conduct
Compliant or non-compliant
Note
Executive Bodies (Director General) 10
The executive bodies shall not include Compliant any person who is a member, the director general (manager), a member of the governing body, or an employee of a legal entity competing with the joint stock company
The Company has not set up a collective executive body (management board). The Director General of the Company is not a member of the governing body or an employee of a legal entity competing with the Company, and was not found guilty of economic crimes, crimes against the government, or other crimes or offences
11
The executive bodies of the joint-stock Partially compliant The Director General submits a report company shall submit annual reports on his/her work to the Board of Directors on their work to the Board of Directors when duly instructed and requested by the Board of Directors
12
Contracts between the joint-stock company and the general director (management company, manager) and the members of the management board shall provide for liability for the violation of the provisions on the use of confidential and proprietary information
Compliant
The contract with the Director General provides for the Director General’s liability for the violation of the provisions on the use of confidential and proprietary information
Compliant
The Company has an elected corporate secretary who organises the work of the Company’s governing bodies
Compliant The charter or the internal documents of the joint-stock company shall require a major transaction to be approved prior to its consummation
In accordance with Clauses 12.1, 13.2, and 14.3 of the Charter, the competence of the governing bodies includes approval of transactions in cases stipulated by Chapter 10 Major Transactions of Federal Law No. 208-ФЗ on Joint-Stock Companies dated December 26, 1995
Company Secretary 13
The joint-stock company shall have a specially designated officer (company secretary) whose task is to ensure that the bodies and officers of the joint-stock company comply with procedural requirements protecting the rights and lawful interests of the company’s shareholders
Significant Corporate Actions 14
126
An independent appraiser shall be necessarily engaged to estimate the market value of the property that is the subject of a major transaction
Compliant
Implemented in practice. The Company engages an independent appraiser to determine the value of the Companyâ&#x20AC;&#x2122;s shares or other assets planned to be disposed of or acquired
Disclosure 16
The joint-stock company shall have a Compliant website on which it regularly discloses information
The Company discharges its duty to disclose relevant information in accordance with the current laws of the Russian Federation at the website (http://www.disclosure.ru/issuer/ 7706016076/)
Control over Financial and Economic Activities 17
A special unit of the joint-stock company shall operate to ensure compliance with the internal control procedures (control and audit department)
Compliant
The Company has set up an internal control body and elected an audit commission, both of which act in accordance with the respective approved regulations
Compliant
The Company distributes dividends in accordance with the decisions taken by the General Meeting of Shareholders. Dividend distribution details are published at the website (http://www.disclosure.ru/issuer/ 7706016076/) as part of the Companyâ&#x20AC;&#x2122;s annual reports
18
Dividend distribution
Appendices
Dividends
Address by Chief Executives
15
About the Company
Note
Strategy and Management System
Compliant or non-compliant
Effective Capital Management
Article of the Code of Corporate Conduct
Stakeholder Engagement
No.
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Appendix 6. Terms and Abbreviations GRI
Sustainability Reporting Guidelines, Global Reporting Initiative
M&A
Mergers and Acquisitions
U1H
Uranium One Holding
SAP SRM
Supplier Relationship Management
ACEPIMS
Automated commercial eclectic power information and metering system
ATEPIMS
Automated technical eclectic power information and metering system
AEPIMS
Automated eclectic power information and metering system
AEMS
Automated environmental monitoring system
NPP
Nuclear power plant
ISLB
In situ leaching in blocks
AL
Air power lines
RSC CEO
Rosatom State Corporation Chief Executive Officer
SCMR
State Commission on Mineral Reserves
HMP
Hydrometallurgical plant
FP
Finished products
GE
Geological exploration
S&A
subsidiary and associated companies
VME
Voluntary medical insurance
CSP
Crushing and screening plant
ЕРСМ
Engineering, procurement, construction
SURS
Single unified remuneration system
UOC
Uranium oxide concentrate
IT
Information technologies
HL
Heap leaching
CGT
Consolidated group of taxpayers
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KPI
Key performance indicators
CSR
Corporate social responsibility
CRMS
Corporate risk management system
LSU
Local sorption unit
IAEA
International Atomic Energy Agency
RMB
Raw materials base
IFRS
International Financial Reporting Standard
Procurement
Financial and logistical procurement
R&D
Research and development
NRNU MEPhI
National Research Nuclear University MEPhI (Moscow Engineering Physics Institute)
NFC IS
Initial stage of the nuclear fuel cycle
EIA
Environmental impact analysis
PW
Pilot work
MWTF
Mine water treatment facilities
PTW
Pilot technical works
OECD
Organization for Economic Cooperation and Development
SAA
Surface-active agents
AVCP
Automatic voltage control point
ISL
In situ leaching
NWBS
Nuclear waste burial site
DEW
Design and exploration work
EEP
Efficiency Enhancement Programme
PS
Product solution
DISL
Downhole in situ leaching
Address by Chief Executives
Occupational diseases rate
About the Company
ODR
Strategy and Management System
Lost work day rate
Effective Capital Management
LWDR
Stakeholder Engagement
Integrated physical security system
Appendices
IPSS
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
DSE
Design specifications and estimates
RPS
Rosatom Production System
NW
Nuclear waste
RR
Repair and restoration
REE
Rare earth metals
Rosnedra
Federal Subsoil Resources Management Agency
AS
Average salary
SAP
Sulphuric acid plant
TDES
Technical data exchange system
JV
Joint venture
SRO
Self-regulating organisations
FPS
Fuel and power sector
FS
Feasibility study
TPP
Thermal power plant
TSC
Transport and storage containers
FSTEC
Federal Service for Technical and Export Control
FFMS
Federal Financial Markets Service
FTP
Federal target programme
KhOF
Khiagda ore field
CPB
Central procurement base
CPS
Central production site
FCD
Frequency-controlled drive
LF
Launch facility
NFC
Nuclear fuel cycle
NPC
Nuclear power complex
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Feedback: Weâ&#x20AC;&#x2122;d love to know your opinion.
1. Did you find significant information about your concerns in the Report? Yes
No
I only flicked through the Report.
What was most important personally for you? In your opinion, what does the Report lack?
2. Does the information disclosed in the JSC Atomredmetzoloto Report facilitate better engagement with the Company? Yes
No
I am not concerned about it.
Effective Capital Management
What information did you find most useful and what was lacking?
3. What sections of the Report were most interesting to you?
Stakeholder Engagement
4. What sections of the Report were least interesting to you?
5. What is your opinion about the accuracy and fairness of the Report?
Appendices
6. Would you like to read the next JSC Atomredmetzoloto report? Yes
Strategy and Management System
About the Company
You have studied the 2013 JSC Atomredmetzoloto Annual Report. We would like to know your opinion of it. Please answer several simple questions to help us improve our reporting quality.
Address by Chief Executives
Feedback Questionnaire
No
7. What would you like the next report to be like?
8. What recommendations on the Holding and its S&A performance improvement would you like to give?
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I N T E G R AT E D A N N U A L R E P O R T JSC ATOMREDMETZOLOTO For 2013
9. Other comments.
10. Please indicate what group of stakeholders you represent (you can select no more than two options): Shareholder
Investor
Contractor/supplier
Company operating in the same industry
Business customer
Small and medium business representative
Federal state authority representative
Regional state authority representative
Local government body representative
Non-state environmental organisation representative
Representative of a business association or another non-governmental organisation
Mass media representative
ARMZ Uranium Holding Co. employee
Employee of a Holdingâ&#x20AC;&#x2122;s subsidiary or affiliate
Other (please specify)
11. To receive a reply to your comments, please indicate your contact details (full name, post box, zip code, phone number, e-mail), and we will contact you.
Thank you!
132
Address by Chief Executives
Contact Information Joint Stock Company Atomredmetzoloto
Short company name
JSC Atomredmetzoloto
Location of headquarters (principal business office) and post address
22 Bolshoy Drovyanoy Per., Moscow, 109004 Russia
T/F
(495) 508-88-08/508-88-10
info@armz.ru
Registering authority, registration number and date
Moscow Registration Chamber, No. 004.997 dated 22.02.1995
OGRN (Principle State Registration Number)
1027700043645
INN (Taxpayer Identification Number)/KPP (Tax Registration Reason Code)
7706016076/774850001
Main type of activities
Geologic exploration and production of natural resources, including resources containing nuclear and radioactive materials, and uranium concentrate production
Website
http://www.armz.ru
Auditor and Registrar
Open Joint-Stock Company R.O.S.T. Registrar Registrarâ&#x20AC;&#x2122;s details: OGRN (Primary State Registration Number) 1027739216757, INN (Taxpayer Identification Number) 7726030449. Located at: 18 Stromynka Ul., Bldg. 13, Moscow, Russia T/F: (495) 771-73-36.
Appendices
Stakeholder Engagement
Effective Capital Management
Strategy and Management System
About the Company
Full company name
Ivan Krupyanko Head of Public and Regional Authorities Relations Department ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) 22 Bolshoy Drovyanoy Per., Moscow, 109004 Russia T: +7-495-508-8808, ext. 177 F: +7-495-508-8810 E-mail: Krupyanko.I.M@armz.ru
Victoria Dolina Annual Report Project Manager ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) 22 Bolshoy Drovyanoy Per., Moscow, 109004 Russia T: +7-495-508-8808, ext. 146 F: +7-495-508-8810 E-mail: Dolina.V.G@armz.ru
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