2010 JSC Atomredmetzoloto Annual Report
APPROVED by the Annual General Shareholders' Meeting of JSC Atomredmetzoloto, June 30th, 2011 (record number 8) This Report by the decision of the Board of Directors of JSC Atomredmetzoloto dated 31.05.2011, number 62.
2010 JSC ATOMREDMETZOLOTO ANNUAL REPORT
URANIUM AND CONTEMPORARY ART Although uranium mining on an industrial scale only began in the 20th century, uranium was used for centuries in the applied and decorative arts. Uranium oxide was already used by artists to prepare yellow paint in the 1st century B. C. In the 19th century, Uranium oxide was used to paint glass yellow-green or green, leading to the creation of works of art with so-called Uranium glass. These days, the tradition of using this material to create art is being carried on by artists like Olga and Oleg Tatarintzevs. ARMZ Uranium Holding Co. supports contemporary art as part of its program to develop corporate philanthropy. As such, it seemed appropriate to use Olga Tatarintzeva's works to decorate this annual report.
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Content
05 ............... 1.0 Main operation results in 2010 06 ............... 1.1 Key figures 07 ............... 1.2 Key facts and events 09 ............... 2.0 Message to shareholders 10 ............... 2.1 Address by the Chairman of the Board of Directors 11 ............... 2.2 Address by the Director General 13 ............... 3.0 About the Company 14 ............... 14 ............... 15 ............... 17 ...............
3.1 3.2 3.3 3.4
General information about the Company History Structure of ARMZ Uranium Holding Co., geography of operations Main events of 2010
21 ............... 4.0 Company's position on the uranium market. Sales and marketing policy 22 ............... 4.1 Natural uranium market 27 ............... 4.2 Sales and marketing policy 31 ............... 5.0 Company development strategy and investment policy 32 ............... 5.1 Company development strategy 36 ............... 5.1.1 Implementation of the Company’s strategy under the alliance with Uranium One Inc. 39 ............... 5.2 Investment activity 43 ............... 6.0 Production activity in Russia and abroad 44 ............... 6.1 Development of resource base 47 ............... 6.2 Uranium production. Development of existing JSC Atomredmetzoloto companies
53 ............... 6.3 Designing of new mining ventures 57 ............... 6.4 Service and other companies 61 ............... 6.5 Projects with non-nuclear materials
JSC Atomredmetzoloto 2010 Annual Report
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63 .............. 7.0
Innovation and performance management
64 .............. 7.1 66 .............. 7.2
Performance management Innovation
69 .............. 8.0
Management system
70 .............. 8.1 71 .............. 8.2 78 .............. 8.3
Management by objectives. KPI Corporate governance system Key risks and risk management
85 .............. 9.0
Sustainable Development
86 .............. 89 .............. 92 .............. 94 .............. 97 .............. 102 ........... 107 ........... 108 ...........
Personnel Social policy Security Health and safety Environmental protection and ecological safety Development of territories where the Company operates Charity and sponsorship activity Cooperation with interested parties
9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8
119 ........... 10.0 Review of financial situation and results 125 ........... 11.0 About the report 129 ........... 12.0 Annex 130 ........... 132 ........... 135 ........... 136 ...........
Abbreviations and terms used in the report Company’s main deposits Stakeholder proposal status chart Use of standard elements of accountability and performance indicators 149 ........... 12.5 Audit report 150 ........... 12.6 Financial statements (IFRS) 155 ........... 12.7 Certification of non-financial reporting 161 ........... 12.8 Audit committee report 164 ........... 12.9 Internal audit report 165 ........... 12.10 Report on observance of the Corporate Code of Conduct 168 ........... 12.11 Details, contact information, feedback
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12.1 12.2 12.3 12.4
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Main operation results in 2010
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Main operation results in 2010
1 Key figures Key facts and events
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Main operation results in 2010
> 1.1 < Key figures Table 1.
Key indicators Indicator
2008****
2009****
2010
5,173.4*
Uranium production, tons
3,687*
4,624
Sales revenue**, RUB mln
15,197
29,812
30,409
289
5,789
12,332
13,065
81,298
124,317
577,8
661.9
726,5***
Net profit, RUB mln Net asset value, RUB mln Uranium resource base, thousand tons
* Including off-take contract. ** According to IFRS consolidated financial statements. *** Including acquisition of a controlling stake in Uranium One Inc. **** JSC Atomredmetzoloto changed its accounting policy with respect to the accounting of joint ventures: starting from 2010, the proportionate consolidation method replaced the previously-applied equity method. This change was prompted by the acquisition in 2010 of a controlling stake in Uranium One Inc., which practices the current accounting method. Changes to the accounting policy were applied retroactively from 1 January 2009, which led to changes in the accounting figures as of 01.01.2009 and for the year end 31.12.2009. Accounting figures for 2008 were not recalculated. In this annual report, the financial indicators listed in the 2008 Profit-and-Loss Statement (Statement of Comprehensive Income) do not reflect accounting policy changes, while the financial indicators of the Balance Sheet (Financial Position Statement) as of 31.12.2008 do reflect these accounting policy changes, in the totals of various Balance Sheet figures as of 01.01.2009.
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> 1.2 < Key facts and events ■■ G rowth of 9.76% in the resource base of ARMZ Uranium Holding Company to 726,500 tons of uranium. ■■ A RMZ Uranium Holding Company key performance indicators for 2010 are 108% achieved. ■■ A deal has been finalized to consolidate a controlling stake in Uranium One Inc. ■■ A deal is announced to acquire 100% of Australian public company Mantra Resources Limited. ■■ C ost reduction measures (reducing material costs and resource-use operating norms) result in a uranium-production cost reduction of 8% against target figures.
■■ JSC Atomredmetzoloto joins leading State Atomic Energy Corporation Rosatom companies in establishing a transparent procurement system. In 2010, the share of open procedures in total procurements by ARMZ Uranium Holding Co. amounted to 95%, compared to an industry average of 56%. ■■ A t ARMZ’s key companies (JSC PIMCU, JSC Dalur, JSC Khiagda) a single, unified system of remuneration is introduced. ■■ A program is continued at JSC PIMCU to modernize radiation controls and reduce staff exposure to radiation in 2009-2010. The average effective dose is reduced to 3.2 mSv. ■■ T he executive board of State Atomic Energy Corporation Rosatom approves in general the Company’s development strategy.
awards As part of the fourth annual Platts Global Energy Outlook Forum – “Clean Energy: Fact or Fiction?” – ARMZ Uranium Holding Co. received an award for outstanding achievements in business development. The award was given for projects implemented in 2010 to create a highlyeffective portfolio of uranium deposits.
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Message to shareholders
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Message to shareholders
2 Address by the Chairman of the Board of Directors Address by the Director General
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Message to shareholders
Dear readers, You are holding in your hands the annual report of JSC Atomredmetzoloto (ARMZ Uranium Holding Co.) – the mining division of the State Atomic Energy Corporation Rosatom. Chairman of the Board of Directors of JSC Atomredmetzoloto Vadim Zhivov Companies in the Russian nuclear industry are strengthening their position in world markets: last year the total portfolio of Rosatom export contracts exceeded USD 20 billion in value. Our market share in the construction of nuclear reactors and fuel supply is increasing dramatically. New contracts were signed in 2010 to build nuclear power plants using Russian technology in India, Turkey, Vietnam, and a number of other countries. In this context, the task of ARMZ Uranium Holding Co. is to supply the growing demand for feedstock in the atomic energy sector. The results of work in this area are evidenced by the fact that ARMZ’s uranium production has increased by half from 2007 to 2010. The Company is continuing to expand internationally. In 2010, we took an important step in this direction by consolidating a controlling stake in Canadian uranium-mining company Uranium One Inc., which we regard as a platform for global growth in ARMZ Uranium Holding Co. business. The rights of minority shareholders will be observed during the development and management of Uranium One Inc. We believe that long-term value growth for Uranium One Inc., through the acquisition of new assets and the development of existing ones, is our common goal. An important step taken in 2010 to identify development priorities was the creation of a long-term strategy for the Company. It calls for continued business value growth for the Company’s principal shareholder, Rosatom, by optimizing the portfolio of uranium-production projects; their diversification in terms of geography, methods of production and life-cycle stages; expanding capacity in non-uranium projects, improving the efficiency of existing ventures, and investment in innovation. In May 2011, I was elected Chairman of the Board of Directors of JSC Atomredmetzoloto, which will allow me to focus primarily on achieving the Company’s strategic objectives as a reliable and established participant in the global nuclear market. The Company's activities on the global market require adherence to the principles of transparency, sustainable development. We will pay considerable attention to the application of global best-practice in corporate governance; actively engage with shareholders, including minority shareholders of subsidiaries and affiliates; and develop all aspects of our social activities and relationships with stakeholders in order to ensure the long-term sustainability of our operations. With all of this, we are setting an ambitious goal for ARMZ Uranium Holding Co. – to become one of the three largest uranium producers in the world. The JSC Atomredmetzoloto development dynamic demonstrated in 2010 has once again confirmed that the Company has the potential to reach this target and that we are already on our way to becoming one of the leaders in the uranium industry.
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Dear Shareholders, partners and colleagues, Last year was a time of intensive development for JSC Atomredmetzoloto. Uranium production by companies in ARMZ Uranium Holding Co. increased by 11.9% in 2010 – from 4,624 tons to 5,173.4 tons. The Company’s resource base increased by 9.76% to 726,502 tons by January 1, 2011. Director General Yakov Polunkin However, last year’s results are not limited to good production indicators and resource-base growth. More significantly, the Atomredmetzoloto team raised the Company to a qualitatively-new level of development, and took decisive steps towards turning ARMZ Uranium Holding Co. into a truly global participant capable of successfully competing with industry leaders anywhere in the world. In the year under review, a number of large international deals were transacted, the latest of which involved the consolidation in 2010 of a controlling stake in Uranium One Inc. – one of the largest publicly traded uranium producers in the world, and possessing among the lowest average operating costs of production (less than USD 40 per kilogram of uranium). I joined the Atomredmetzoloto team in January 2011. Much remains to be done on the road towards leadership, and I hope that my production experience and managerial capabilities will be of use to the Company. Further consistent development is impossible without the systematization of our capacities in the field of labor health and safety, as well as industrial and environmental safety. We have serious work to do in improving the operating efficiency of our companies, and in implementing a project approach to capital construction. Another important task involves creating an Engineering Center to harness our innovative potential. We recognize that we can only achieve our ambitious strategic goals by adhering to the principles of sustainable development. The Company is pursuing an active policy in matters of industrial and environmental safety, staff development and regions of operations, and each year we will strive not only to increase our economic efficiency but also our social and environmental achievements. We now devote considerable attention to maintaining a constant active dialogue and engagement with all of our stakeholders – customers, partners, employees, local communities, etc., and will continue to build on this foundation in the future. A long-term development strategy, many years of experience in the mining industry, a balanced project portfolio, and investment in innovation and human resources will allow us to achieve a leading position in the field of uranium mining and to ensure reliable supplies for our customers for decades to come.
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About the Company
JSC Atomredmetzoloto 2010 Annual Report
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About the Company
3 General information about the Company History Structure of ARMZ Uranium Holding Co., geography of operations Main events of 2010
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About the Company
> 3.1 < General information about the company ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) is a subsidiary of JSC Atomenergoprom, the mining division of State Atomic Energy Corporation Rosatom. JSC Atomredmetzoloto is currently one of the leaders in the world uranium industry. In 2010, ARMZ was in second place among uranium mining companies in terms of reserves, and was in the top five by output. The Company’s portfolio includes over twenty uranium and non-uranium projects throughout the world, which are at various stages of develop-
ment – from geological exploration to intensive industrial development. JSC Atomredmetzoloto has unique uranium mining capabilities and has over 50 years of mining experience in various geoclimatic conditions. Through all of our operations and subsidiaries, ARMZ employs over 10,000 people.
> 3.2 < History ARMZ Uranium Holding Co. was founded in 1991 as a State Concern within the framework of the Ministry of Atomic Energy and Industry of the USSR. In 1995,
Atomredmetzoloto State Concern was reformed as an open joint stock company.
in 2007,
it was decided to consolidate companies involved in the mining of uranium, rare metals, and other mineral resources into JSC Atomredmetzoloto.
ARMZ Uranium Holding Co. continued to expand its international operations by obtaining a 51% stake in Uranium One Inc., which is intended to become a platform for global growth by ARMZ Uranium Holding Co.
»
in 2007–2008,
in 2010,
domestic uranium mining assets and uranium exploration and mining joint ventures in Kazakhstan were transferred to the Company. JSC Atomredmetzoloto also obtained licenses to develop reserve uranium deposits.
in 2008,
JSC Atomredmetzoloto was authorized to supply the internal and external requirements of the Russian atomic industry.
in 2009,
saw the start of the Company’s active international activity. Acquisition of Effective Energy N. V. allowed the Company to consolidate Russian stakes in three uranium-mining joint ventures in Kazakhstan. During that same year, the Company became a minority shareholder in Uranium One Inc. (Canada), which is publicly traded and listed on both the Toronto and Johannesburg stock exchanges.
JSC Atomredmetzoloto 2010 Annual Report
The advantages of atomic energy are primarily related to the unique qualities of the energy source – nuclear fuel. Its main feature is its enormous calorific value compared to organic fuels. For example, 1 gram of nuclear fuel is equivalent to 2.8 tons of fossil fuel or, in other words, a fuel assembly containing 114 kg of nuclear fuel is the equivalent of 5,320 rail cars loaded with 60 tons of coal each.
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> 3.3 < structure of armz uranium holding co., geography of operations Key companies JSC Atomredmetzoloto MINING AND PROCESSING
GEOLOGICAL EXPLORATION
ENGINEERING, SERVICE, AND SUPPLIES
»
»
» CJSC ARMC (Armenia)
JSC PIMCU
50%
79.33%
JSC VNIPIprom technologii
SWA URANIUM MINES (Pty) Ltd. (Namibia)
JSC Dalur
»
12.5% LLC Agrofirm Itmanovo
100%
100% RUSBURMASH INC
98.89%
100%
JSC Khiagda
LLP JV RBM-Kazakhstan
100%
51%
JSC Elkon MMP
CAUC LLC (Mongolia)
100%
21%
JSC OMCC
LLC USC ARMZ
100% JSC SY Corporation
100%
25.1%
JSC UMC Gornoe
100% JSC Lunnoe
50.03% Uraium One Inc.
51.42%
MINING AND PROCESSING
» LLP Betpak Dala (Kazakhstan)
70% ZARECHNOYE (Kazakhstan)
49.67% JSC JV Akbastau (Kazakhstan)
50% Karatau (Kazakhstan)
50% LLP Kyzylkum (Kazakhstan)
30% Honeymoon Uranium Project Joint Venture
51% Uranium One U.S.A. Inc. (USA)
100% figure 1
Structure of the Holding as of 31.12.2010. Main assets (percentage given represents total ARMZ participation in the venture’s charter capital).
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Main events of 2010
About the Company
Company’s place in the State Corporation Rosatom nuclear fuel-cycle production chain Positioned at the very start of the Rosatom nuclear fuel-cycle production chain, ARMZ Uranium Holding Co. provides consolidated management of uranium-mining enterprises in Russia and abroad to ensure raw material supplies to the Russian and world nuclear industry.
ARMZ
rosatom
01 Geological
04 Conversion
exploration
05 Enrichment
02 Mining
06 Fuel production
03 Ore processing
07 Nuclear Power Plants 08 Spent nuclear fuel storage 09 Spent nuclear fuel processing 10 Spent nuclear fuel burial 11 MOX fuel production
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ARMZ
»
»
06
»
»
04
»
»
03
»
»
07
10
»
08
»
09
»
»
02
01
figure 2
ARMZ Uranium Holding Company’s place in the ROSATOM nuclear fuel-cycle production chain
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> 3.4 < Main events of 2010 January 2010
September 2010
■■ Construction of a sulphuric acid plant was launched at JSC Khiagda.
■■ A project was launched in ARMZ Uranium Holding Co. to automate the mine design process and the planning of mining work.
May 2010 ■■ On May 20, as part of a visit to Russia by Namibian President Hifikepunye Pohamba, an intergovernmental memorandum of mutual understanding was signed, which noted the main areas for mutually-beneficial cooperation between the two countries in geological exploration, mining, and processing of uranium ore. According to the memorandum, JSC Atomredmetzoloto joined a working group, along with the Namibian state company Epangelo Mining (Pty) Ltd, aimed at preparing a plan of action for the implementation of joint projects.
June 2010 ■■ A deal was announced to consolidate a controlling stake in Canadian uraniummining company Uranium One Inc.
July 2010 ■■ A consolidated financial report in accordance with international standards was published for 2009, along with an Independent Audit Report. ■■ An evaluation of reserves in the Yuzhnaya Zone of the Elkon uranium ore district was conducted in accordance with international JORC standards.
August 2010 ■■ The transaction to acquire a controlling stake in Uranium One Inc. outstanding stock was approved by that company’s shareholders.
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October 2010 ■■ An evaluation of reserves at the Olovskoye deposit in the Trans-Baikal region was completed in accordance with international JORC standards. ■■ The Rosatom executive board approved the development strategy for JSC Atomredmetzoloto.
November 2010 ■■ ARMZ’s acquisition of controlling stake in Uranium One Inc. received all necessary regulatory approvals in Canada, Australia, the USA, and Kazakhstan.
December 2010 ■■ As part of the fourth annual Platts Global Energy Outlook Forum – “Clean Energy: Fact or Fiction?” – ARMZ Uranium Holding Co. received an award for outstanding achievement in business development (Platts Global Energy Awards). The award was given for ARMZ’s projects implemented in 2010 to create a highlyeffective portfolio of uranium deposits. ■■ A deal to acquire 100% of Australian public company Mantra Resources Limited was announced. ■■ The transaction consolidating ARMZ’s 51% stake in Uranium One Inc. was completed.
Company's position on the uranium market
About the Company
Geography of operations USA
Through Uranium One Inc., JSC Atomredmetzoloto is developing projects for the creation of uranium-producing facilities in Wyoming, Arizona and Utah.
canada
JSC Atomredmetzoloto owns a controlling stake in the Canadian uranium-mining company Uranium One Inc.
Uranium One Inc.
Operating facilities and facilities under construction
Projected facilities
Potential projects
Including joint project with Uranium One Inc.
namibia
JSC Atomredmetzoloto 2010 Annual Report
The SWA Uranium Mines joint venture is conducting geological prospecting and exploration work.
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Kazakhstan
Following completion of the second stage of the transaction with Canada’s Uranium One Inc., JSC Atomredmetzoloto, through Uranium One, owns stakes in five uranium mining companies on Kazakh territory: ZARECHNOYE, JSC JV Akbastau, Karatau, LLP Betpak Dala, and LLP Kyzylkum.
Moscow
russia
The main ARMZ Uranium Holding Co. production facilities are located in Russia – JSC PIMCU, JSC Dalur, and JSC Khiagda. In addition to these existing operations, prospective companies and facilities under construction are: JSC Elkon MMP, JSC UMC Gornoe, JSC OMCC, and JSC Lunnoe.
Khiagda
Dalur
Akbastau
UMC Gornoe
Elkon MMP Lunnoe OMCC PIMCU
Zarechnoe
mongolia
Central Asian Uranium Company (CAUC LLC) is developing the Dornod uranium deposit.
armenia
CJSC ARMC is carrying out geological exploration work in Armenia’s Syunik region.
Tanzania
At the end of 2010, an agreement was reached for ARMZ Uranium Holding Company to buy a 100% stake in Mantra Resources Limited.
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australia
Uranium One Inc. is developing the Honeymoon project, which will begin to mine uranium using in-situ leaching.
Company's position on the uranium market
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Company's position ON the uranium market. Sales and marketing policy
4 Natural uranium market Sales and marketing policy
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Company's position On the uranium market. Sales and marketing policy
> 4.1 < Natural uranium market World uranium production: 2010 results and forecasts for 2011
Main events of 2010 ■■ World uranium production in 2010 amounted to 53,400 tons, up 6.1% from 2009. ■■ Kazakhstan reinforced its leading position in world uranium production with an output of 17,803 tons, or a third of total world production. Uranium production decreased in Canada, Australia and Namibia. ■■ Kazakhstan’s National Atomic Company Kazatomprom (NAC Kazatomprom) retained its leadership in uranium production, with output in 2010 of 10,600 tons, or 19.9% of world production. Cameco was in second place, Areva – in third, and ARMZ – in fourth.
■■ The group of uranium-production companies with annual production of over 1,000 tons increased to 11, due to the addition of China National Nuclear Corp (CNNC). These 11 companies’ total share in world output amounted to 93%, or 49,500 tons. ■■ J SC Atomredmetzoloto consolidated a controlling stake in Canadian uranium-mining company Uranium One Inc., which was the most significant M&A event in the world uranium industry in 2010. ■■ I n 2010 – January 2011, pilot production began at new uranium mines: Azelik (Niger), Trekkopje (Namibia), La Palangana, Arizona-1 (USA), Dulaan Uul (Mongolia), and Oban (Australia).
Table 2.
Uranium output by main producing countries, tons 2008
2009
Kazakhstan
8,521
13,900
Canada
9,000
10,175
Australia
8,430
Namibia
% change 2010/2009
% of world total
17,803*
+28
33
9,332*
-8
18
7,962
6,203*
-22
12
4,352
4,681
4,476*
-4
8
Russia
3,521
3,564
3,563*
0
7
Niger
2,923
3,243
4,200*
+30
8
Uzbekistan
2,338
2,338
2,338*
0
4
USA
1,508
1,442
1,629*
+13
3
Total
40,593
47,305
49,543*
+5
93
Other
3,055
3,000
3,807*
+28
7
43,648
50,305
53,350*
+6
100
World total
2010
* AREVA forecast for mines in Niger (2010) Source: JSC Atomredmetzoloto estimates
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» CANADA, AUSTRALIA AND NAMIBIA SAW A DECLINE IN PRODUCTION, WHICH WAS PROMPTED BY A REDUCTION IN ORE QUALITY AND INCREASED TECHNICAL AND ENVIRONMENTAL CHALLENGES
kazakhstan
2009 2010
18,000 16,000
2,000
USA
4,000
UZBEKISTAN
6,000
NIGER
8,000
RUSSIA
10,000
NAMIBIA
canada
12,000
AUSTRALIA
14,000
FIGURE 3
Uranium output by country, tons U Source: JSC Atomredmetzoloto estimates
■■ Following an accident in 2009, BHP Billiton only managed to return production at Australia’s Olympic Dam mine to full capacity in July 2010. A drop in uranium output at Ranger mine was due to ore-quality deterioration and problems caused by flooding of the mine and the tailings dump. ■■ Similar problems with ore quality were experienced at the Rossing mine (Namibia).
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■■ The drop in uranium output in Canada was due to the temporary closure of MacLean Lake that was caused by a lack of ore for processing. ■■ Uranium production in Russia remained essentially unchanged, falling by only 2 tons over the year.
Sales and marketing policy
Company's position On the uranium market. Sales and marketing policy
Largest uranium-mining companies
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All of these companies, with the exception of Rio-Tinto (Rossing and Ranger mines) and BHP Billiton (Olympic Dam), saw growth in output. The highest percentage growth occurred for Australia’s Paladin Energy, where uranium production was up 73% (fig. 4). The company implemented the second phase of an expansion project at Langer Heinrich (Namibia) to 1,420 tons, and significantly increased production at the Kayelekera mine (Malawi), although it failed to reach its project target of 750 tons.
The number of uranium producing companies with annual production exceeding 1,000 tons increased to 11.
2010
2009
KAZATOMPROM
12,000
Note. Production volumes are calculated based on the companies’ project stakes.
CAMECO
10,000
AREVA NC
8,000
CNNC
ONAREM
URANIUM ONE
2,000
NMMC
BHP BILLITON
4,000
PALADIN ENERGY
RIO TINTO
ARMZ
6,000
FIGURE 4
Uranium output by company, tons Source: JSC Atomredmetzoloto estimates
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The first yellowcake was produced at a number of new companies in 2010 – beginning of 2011:
■■ At the start of 2010, Denison Mines began ore production at the previously-operated Arizona-1 mine in the US.
■■ China National Nuclear Corp. (CNNC) produced its first yellowcake at the Azelik deposit in Niger on December 30, 2010.
■■ Uranium Energy started ore production at the La Palangana (South Texas) mine in the US in Q4 2010.
■■ On January 10, 2011, Areva produced its first batch of yellowcake at the Trekkopje mine in Namibia.
■■ Pilot production of uranium began in February 2010 at the Oban deposit in Australia, which is being developed by Curnamona.
■■ Pilot production using in-situ leaching began at the Dulaan Uul project in Mongolia’s Dornogobi province on December 1, 2010. This work is being conducted by Areva subsidiary Kojegobi LLC.
Despite the slower growth of uranium mining in 2010 (6% in 2010 compared to 15% in 2009), global development of the uranium mining industry has generally continued, resulting in pilot uranium production at six new mines located in five different countries.
Future uranium sector projects Producers are continuing to implement plans to increase uranium production at existing operations and to launch new mines in the coming years. ■■ Paladin Energy is completing the third phase of expansion at the Langer Heinrich mine – increasing output to 2,000 tons. A further expansion of production to 3,840 tons per year should be completed by the end of 2011. In addition, the company is considering the possibility of building a new facility next to the existing one with an additional annual capacity of about 3,350 tons of uranium. ■■ C ameco Corp. is continuing its planned construction of the Cigar Lake mine (annual capacity — 7,000 tons of uranium) and plans to start producing in 2013. The MacLean Lake and Key Lake processing plants are ready to receive ore. Cameco has stated plans to double the production capacity of the Inkai mine (to 4,000 tons) in Kazakhstan. In 2011, Cameco will start designing the work for the Kintyre deposit in Australia. At the beginning of 2011, Cameco also reached an agreement on supplying uranium produced by Talvivaara at the Sotkamo copper-nickel mine in Finland, where uranium by-product output is estimated at 900,000 pounds of U3O8 or 350 tons of uranium per year, once production capacity is achieved.
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■■ Areva is expanding production in Niger, where it planned to increase the capacity of Somair to 2,700 tons in 2010. Construction of the Trekkopje mine (3,400 tons per year) in Namibia is in the final stages. Due to technical problems, production start was deferred to Q1 2013, although the first trial consignment of product has already been produced. Areva started to develop infrastructure for the Imouraren mine in Niger, where uranium output of 5,000 tons per year is planned to be reached in 2014. ■■ BHP Billiton has started re-evaluating reserves at the Yeelirrie deposit and is considering starting construction of a mine with a capacity of 3,500 tons per year in 2011 that will start producing in 2014.
Sales and marketing policy
Company's position On the uranium market. Sales and marketing policy
Uranium sector M&A in 2010 The uranium production industry continued to see increased M&A activity throughout 2010. Some of the more significant transactions included: ■■ Paladin Energy completed its acquisition of NGM Resources, which owns assets in Niger, Western Australia and on Madagascar, and has finalized a deal to buy Aurora Energy Resources, which is exploring for uranium in Labrador, Canada. The company also reached an agreement with France’s Areva, under which they became joint shareholders in Summit Resources (Paladin — 81.8%), and Paladin secured the sales and marketing of uranium received from the Mt.Isa project.
■■ Korea Electric Power Corporation (KEPCO) signed an agreement with Areva to acquire a 10% stake in the Imouraren project (Niger) for EUR 170 million. Along with the agreement to acquire the stake, they also signed an off-take contract for the corresponding share. ■■ Japan’s Itochu Corp. announced it had reached a deal to buy 15% of Kalahari Minerals, which is one of the main owners of Australia’s Extract Resources, for USD 92.3 million (JPY 8.5 billion). Later, Itochu Corp. signed an agreement to acquire an additional 10.3% of the shares in Extract Resources.
Forecast for 2011 ■■ A ccording to ARMZ’s forecasts, we anticipate a very small increase in world uranium output for 2011. We expect world production in 2011 to total 56,000 tons of uranium, with year-on-year growth not expected to exceed 5%. ■■ T he production increase will come chiefly from Kazakhstan, which plans to produce 19,600 tons of uranium or just over one-third of world production. These plans are supported by raw materials and production base.
JSC Atomredmetzoloto 2010 Annual Report
The growth in uranium spot prices that began in July 2010 amounted to 73% and reached its peak of USD 73 per pound of uranium oxide in February 2011. ■■ A major event outside the reporting period – the accident at the Fukushima-1 nuclear power plant in Japan – caused a significant drop in the spot price, however the fundamental growth in demand for natural uranium over the medium and long-term perspective has not changed.
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> 4.2 < Sales and marketing policy The main aim of the Company’s sales and marketing policy is to ensure effective and coordinated organization and execution of sales of natural uranium by companies within ARMZ’s structure to customers in both Russia as well as other countries in order to increase the value of the group’s mining business. The organization of ARMZ’s sales and marketing system is aimed at creating the most convenient and efficient form of interaction for customers by maintaining a local presence in key overseas sales regions.
»
Objectives of ARMZ Uranium Holding Co.’s sales and marketing policy: ■■ d eveloping a coordinated sales systems for natural uranium for all of ARMZ’s Russian and foreign uranium-mining companies;
■■ e xpanding the volume and geography of natural uranium sales in key target markets; ■■ p roviding financing for programs to develop uranium mining in Russia and abroad through long-term contracting.
The ARMZ Uranium Holding Co. group operates to supply natural uranium ore (product) on the domestic (Russian) and foreign markets.
Sources of raw materials
Sales markets Internal market (Russia)
Enterprises in Russia
»
Enterprises abroad
»
Market purchases of raw materials
»
» ARMZ Uranium Holding Co.
»
Stockpiles
JSC TVEL
»
Fuel assembly market
JSC TENEX
»
Enrichment market
»
Natural uranium market
External market
»
Foreign companies
FIGURE 5
Organisation of structure for distribution of the products
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Company development strategy and investment policy
Company's position On the uranium market. Sales and marketing policy
Company marketing and sales policy in Russia. Cooperation with JSC TVEL and JSC TENEX On the domestic market, ARMZ Uranium Holding Co. supplies product to two customers – JSC TVEL and JSC TENEX. ARMZ markets and sells natural uranium produced in Russia. The Company’s domestic operations guarantee that Russia’s nuclear-power and nuclear-industry needs are met under long-term contractual relations on market terms. These guaranteed supplies are ensured by uranium produced both in Russia and abroad (primarily in Kazakhstan).
Following the launch of new production facilities in Russia, additional volumes of natural uranium may be sold to Russian customers as well as to foreign customers. The reliability and security of product supply is supported by long-term contractual relationships with Russian clients, suppliers and processors, and also by the existence of an operational inventory reserve.
The Holding Company’s global sales and marketing policy On the external market uranium is supplied through Uranium One Inc. as the main sales channel. JSC Atomredmetzoloto will also continue meeting its obligations under earlier contracts with foreign counterparties.
From the perspective of consumer groups on the global uranium market, we can distinguish the following list of potential customers (fig. 6):
external market Long-term contracts (80–85%)
Spot (15–20%)
Conversion services
Enrichment services
main consumers
Energy companies
Fuel producers
Uranium mining enterprises
States (state reserves)
Traders and hedge funds figure 6
List of potential customers of ARMZ Uranium Holding Co.
JSC Atomredmetzoloto 2010 Annual Report
28
A priority for the Holding Company is direct deliveries to foreign energy companies to guarantee their raw material needs for the production of fuel for nuclear power plants. Sales through traders, brokers and other market participants may also be used as alternative sales channels. From the point of view of sales and marketing, a prominent feature is the formation of a complex portfolio of contracts, which consists mainly of medium-and long-term contracts (at least 50%). The Company has not ruled out transactions on the spot market under short-term contracts in order to take advantage of market conditions in the event of a significant increase/decrease in spot market prices, to balance sales/purchases when there are product surpluses or shortages, and also to optimize supply logistics and receive additional income.
»
Pricing policy
When marketing and selling natural uranium, the Company follows a widely-used approach to price formation, which includes the following mechanisms: ■■ Market – the use of spot and long-term market price indicators, either on their own or combined with other conditions (such as a price range, floor, ceiling, and escalation factors). ■■ Basic-escalating – in some cases it may be preferable to apply fixed/base-escalating prices, the level of which is set in due consideration of current or forecast market price levels. ■■ M ixed (combined) – use of a combination of market price indicators (spot and/or longterm) and a basic-escalating price component.
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An important objective, aimed at supporting and developing the Company’s operations in foreign markets, is the development of sales infrastructure and the organization and management of a renewable stockpile of natural uranium in Russia and abroad to ensure the unconditional fulfillment of contractual obligations to customers and to optimize supply logistics. The implementation of a material accounting system at foreign conversion facilities for companies within the ARMZ Uranium Holding Co. was completed in 2010 with the stockpiling of a reserve to ensure the reliability and security of supplies to foreign consumers.
The use of one or the other of the above approaches, or a combination thereof, will in each individual case be determined based on the existing market conditions and terms for product purchases, the conditions for delivery to the consumer, and the consumer’s contracting policy.
Company development strategy and investment policy
JSC Atomredmetzoloto 2010 Annual Report
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Company development strategy and investment policy
5 Company development strategy Implementation of the Companyâ&#x20AC;&#x2122;s strategy under an alliance with Uranium One Inc. Investment activity
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Company development strategy and investment policy
> 5.1 < Company development strategy
1993
Subordinate
Regional
organization
player
1994
Venture reformed as joint stock company Atomredmetzoloto was formed from the former 1st Department of the Ministry of Medium-Weight Machine & Tool Building of the USSR
2006
2007
2008
2009
Acquisition of Effective Energy NV
License for reserve deposits in Russia (including Elkon) JSC PIMCU, JSC Dalur, JSC Khiagda
Acquisition of 19.9% of shares in Uranium One
Russian-Kazakh cooperation program
Long-term development strategy The Company’s strategy is based on two areas of corporate development: ■■ T he large-scale development of nuclear power – a low-carbon option, capable of ensuring ecologically-sustainable growth in the world economy.
JSC Atomredmetzoloto 2010 Annual Report
■■ I nnovative development – the creation of new technological platforms, including new technology for storing and transporting electricity, etc.
32
Global company
2010
2011
Acquisition of 100% of shares in Mantra Resources
Acquisition of 51% of shares in Uranium One
2015
2020
2030
Leadership in uranium, Uranium One â&#x20AC;&#x201C; a platform for global growth
Product diversification (strategic and innovative metals)
It is the mission of ARMZ Uranium Holding Co. to ensure supplies of raw materials for the development of new technologies 33
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Implementation of the Companyâ&#x20AC;&#x2122;s strategy under an alliance with Uranium One Inc.
Company development strategy and investment policy
strategic Company aim One strategic Company aim is to maximize the value of its mining business for shareholders by tapping the potential of the growing market and becoming a recognized long-term partner and preferred supplier for the global nuclear power industry. This business model (creating value for consumers and earnings for shareholders) is based on: ■■ integration into the Rosatom value chain; ■■ use of Uranium One Inc. as a growth platform for developing the uranium business outside of the Russian Federation, carrying out sales and marketing in key foreign markets, creating sales infrastructure and gaining access to international capital markets. The mining and processing of natural uranium will remain the core business. There will be a moderate diversification into the strategic and innovative metals segment, motivated both by a desire to increase the scale of the Company’s business and by a desire to hedge risks specific to the uranium market. This strategy aims to achieve a sustainable leading position on the global market (one of the top three companies in terms of production and sales of uranium by 2030). ARMZ Uranium Holding Co. will become a supplier with the lowestpossible cost and will provide consumers with supplies of natural uranium through the entire life cycle of their existing and new nuclear power plants. A key element of ARMZ’s development strategy is to optimize our portfolio of projects which are diversified by geography, production methods, and life-cycle stages:
■■ current highly-profitable production is primarily abroad (with further diversification of business outside the CIS, including Africa, Australia, and other regions with the best mining conditions, apart from Kazakhstan); ■■ gradual development of new Russian strategic reserves, which will be needed in the future. In the mid-term, production in the Russian Federation will play a key role in supplying domestic demand, and in retaining and enhancing technical and technological capabilities. By maintaining a business growth rate above that of the world market (largely due to organic growth, i.e., the development of deposits in the Russian Federation and abroad), JSC Atomredmetzoloto will consistently hold its market position. Sales and marketing activities are structured as conveniently as possible for customers through the establishment of a local presence in key foreign sales regions. A diversified project portfolio will further accommodate clients’ requirements related to risk management. The Company will develop and use new technology to explore for, mine and process ore, which will allow it not only to reduce capital expenditures and improve operational performance, but also to participate in shaping the overall technological profile of the industry in the future.
» According to the International Socio-Ecological Union, by preventing the combustion of gas, nuclear power made up for up to a quarter of all gas exports from Russia in 2000. Nuclear energy prevents the burning of up to 40 billion cubic meters of natural gas annually, with total exports of 176 billion cubic meters. The share of Russia's “nuclear” gas in Europe exceeds 22% per year. After 2000, the replacement of gas by nuclear plant operations grew at a rate of up to 3 billion cubic meters a year.
JSC Atomredmetzoloto 2010 Annual Report
34
» By 2020, gas exports are expected to grow to 280 billion cubic meters a year. Given that the cost of 1,000 cubic meters of gas on the world market averages USD 100, nuclear power will bring the country (apart from the direct economic benefit associated with the development of cheap electricity and heat) another USD 10.5 billion in gas savings annually. Therefore, a critical issue today is the state support and the creation of a favorable environment for the development of nuclear energy in general and uranium-mining companies in particular.
For its development, the Company relies on three corporate values – security, customer care, and business initiative, all of which underpin its chosen approach.
Corporate values
Principles of conduct
Security
Ensuring health and safety at our facilities, compliance with technological standards in the process of extracting and processing natural uranium, including nuclear and radiation safety standards, compliance with environmental regulations in countries where the Company is present, and increasing the environmental safety of production.
Customer care
Reliably meeting the needs of Russian and foreign consumers under long-term contractual relations and market conditions with products that comply with local and international quality standards.
Business initiative
Maximum use of opportunities in the Company’s markets in order to realize the Company’s potential to ensure sustainable business development, including the use of advanced Russian and world developments in exploration, production and corporate governance, as well as finding new prospects for business development in the uranium sector and related mining sectors in Russia and abroad.
ARMZ Uranium Holding Co. long-term development ARMZ Uranium Holding Co. in 2030: ■■ a global mining company, specializing in supplying uranium to the global nuclear power sector, moderately diversified into the production of other minerals for the high-tech sector;
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■■ a world-class business, high-performing and dynamic, offering customers effective solutions and generating stable revenue.
Implementation of the Company’s strategy under an alliance with Uranium One Inc.
Company development strategy and investment policy
Sustainable development strategy Corporate Social Responsibility and respect for the principles of sustainable development are important priorities for JSC Atomredmetzoloto. The strategy of sustainable development is related to the implementation of economic, environmental and social measures aimed at managing the complete mining life cycle. Activities in this area are systemic in nature and aimed at creating effective and safe jobs, ensuring social security for workers and their families, the on-going professional development of staff, and maintaining a favorable social environment in the regions where the Company operates. Paying great attention to environmental safety, the Company closely monitors the environmental impact of its production facili-
ties, and adheres to the principles all major international agreements (in particular, the Kyoto Protocol). In 2010, companies in the ARMZ Uranium Holding Co. reduced air pollutant emission through the use of dust collectors (for more details, see section 10.5). The Company is continually implementing elements of the best international practice in corporate governance, technological innovation, customer relations, management systems, and employee and supplier relations. The Company has begun developing a Corporate Social Responsibility Memorandum, which will define the Company’s priorities and activities in the field of sustainable development.
> 5.1.1 < Implementation of the Company’s strategy under an alliance with Uranium One Inc. ARMZ Uranium Holding Co. intends to become one of the top three uranium producers in the world. Consolidation of a controlling stake in Uranium One Inc. is a significant step on the path to leadership in the industry.
Rosatom State Nuclear Energy Corporation is actively expanding its international presence. At year-end 2010, the value of Rosatom’s export contract portfolio exceeded USD 20 billion. Today, Russian nuclear industry companies control 45% of the world market for uranium enrichment services, 23% of the world market for nuclear reactor construction, and 17% of the global market for fabricated nuclear fuel. Yet the share of Rosatom companies on the natural uranium market is only about 9%.
JSC Atomredmetzoloto 2010 Annual Report
ARMZ Uranium Holding Co.’s development strategy aims to eliminate this imbalance. The alliance with Uranium One Inc. and the creation of a global growth platform based on the Canadian company is an important step in this direction.
36
» ■■ Creating platforms for global growth ■■ Geographical diversification ■■ T echnical, infrastructural, and logistic synergy in Kazakhstan ■■ Co-financing of future M&A activities
Acquisition of a 19.9% stake in Uranium One Inc. In June 2009, ARMZ Uranium Holding Co. signed an agreement with Uranium One Inc. for the sale of a 50% stake in Karatau in exchange for 117 million ordinary shares from an additional issue by Uranium One Inc. and monetary compensation of USD 90 million. Along with the asset swap agreement, ARMZ Uranium Holding Co. and Uranium One Inc. signed a framework agreement on strategic
partnership, and an agreement for JSC Atomredmetzoloto to buy uranium (off-take contract) produced by Uranium One Inc. As a result of the deal, which was finalized in December 2009, ARMZ Uranium Holding Co. became the owner of 19.9% of Uranium One Inc. and the Canadian company’s largest shareholder.
Consolidation of a 51.4% stake in Uranium One Inc. In June 2010, ARMZ Uranium Holding Co. announced a deal to consolidate a 51.4% stake in Uranium One Inc. According to the terms of the deal, which was finalized in December 2010, JSC Atomredmetzoloto increased its share in Uranium One Inc. capital to 51.4% by buying an additional share issue by Uranium One Inc.
(356 million ordinary shares). As a payment for this stake, ARMZ Uranium Holding Co. contributed 50% of the shares in JSC JV Akbastau, 49.7% ZARECHNOYE, and USD 610 million in cash.
Advantages of the deal for ARMZ Uranium Holding Co. Uranium One Inc.’s strong position in world financial markets will increase joint opportunities to finance acquisition of uranium assets in the future. Over the long term, the acquisition of Uranium One and the creation of a global growth platform based thereon will put Rosatom in a leading position in the uranium mining indus-
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try and consolidate Rosatom’s export potential at higher production stages including uranium enrichment, fabricated fuel production, and, finally, construction of nuclear power plants.
Investment activity
Company development strategy and investment policy
Acquisition of Mantra Resources Limited On December 15, 2010, ARMZ Uranium Holding Co. announced a deal to acquire 100% of the shares in the Australian public company Mantra Resources Limited, with uranium assets in Tanzania and Mozambique. The company’s flagship project is Mkuju River in Tanzania, with reserves of over 39,000 tons of uranium.
Along with the agreement to buy the shares in the Australian company, ARMZ Uranium Holding Co. and Uranium One Inc. signed a Put/Call Agreement for 100% of the shares in Mantra Resources Limited. Upon finalization of the transaction, Uranium One Inc. will become the operator of Mantra’s Mkuju River in Tanzania.
Respect for the rights of minority shareholders The shared aim of ARMZ Uranium Holding Co. as the principal shareholder in Uranium One Inc. and that of U1 minority shareholders is long-term growth in value to be achieved by developing the company’s current assets and acquiring new ones.
JSC Atomredmetzoloto is committed to protecting the rights of Uranium One Inc’s minority shareholders. After the deal, the number of seats on the Uranium One board of directors fell from 13 to 9, 5 of which are independent.
Information about Uranium One Inc. ■■ Uranium One Inc. is a publicly traded company registered in Canada. Uranium One Inc. and listed on the Toronto (Canada) and Johannesburg (South Africa) stock exchanges.
■■ Uranium One Inc’s reported reserves exceeded 200,000 tons of uranium.
■■ Uranium One Inc. 2010 revenue totaled USD 327 million, with production of 2,800 tons of uranium.
JSC Atomredmetzoloto 2010 Annual Report
38
> 5.2 < Investment activity The Company’s investment priorities are based on its long-term development strategy and aim to implement the key strategic initiatives of ARMZ Uranium Holding Co.: ■■ development of the resource base and production of natural uranium in Russia;
■■ leadership in uranium mining and processing technology.
■■ developing the global resource base and production of natural uranium based on a global growth platform;
Development of the global resource base and production of natural uranium comprised the bulk of development investments in 2010 (71%) (fig. 7).
Development of the resource base and natural uranium production in Russia
28%
Leadership in uranium mining and processing technology development
1% Development of the global resource base and mining of natural uranium based on a global growth platform
71%
FIGURE 7
Structure of investments in 2010 by main targets
Investment in existing Russian uranium mining assets accounted for 19% of the Company’s overall investment program, and was aimed at:
■■ m odernization and upgrading of production facilities;
■■ c onstruction work at production units, infrastructure and energy facilities;
■■ p urchasing of production and drilling equipment.
■■ project work, R&D;
■■ designing production facilities; ■■ g eological exploration and pre-mining preparatory work;
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Production activity in Russia and abroad
Company development strategy and investment policy
16 Existing enterprises
Miscellaneous projects
Enterprises under construction
2011
12 2010 8
66%
2009 4
69%
2008 73% 73%
32% 22%
21%
27%
FIGURE 8
Progress of investments in Russian projects in 2008–2011
»
As a part of its investment program in ventures under construction, in 2010, ARMZ Uranium Holding Co. carried out pre-design and design research, geological exploration works, and R&D. A conservative approach was taken in financing of investment projects. The bulk of projects were financed with the Company’s own funds, Rosatom funds, and external bank financing. The terms of borrowed project funds were coordinated with the receipt of positive cash flows from project implementation, and were diversified among lenders.
The JSC Atomredmetzoloto 2010 investment program was 95% financed with funds from shareholders and the Company’s own funds.
JSC Dalur JSC Khiagda
12% JSC PIMCU
4%
3%
JSC Elkon MMP
3% JSC EGMK-Project
3% Miscellaneous projects
2%
RUSBURMASH INC.
1%
Acquisition of foreign uranium mining assets
71%
FIGURE 9
ARMZ Uranium Holding Co. key projects
JSC Atomredmetzoloto 2010 Annual Report
40
Miscellaneous projects
1% Infrastructure projects
1% Enterprises under construction
8% Existing enterprises
19% Acquisition of foreign uranium mining assets
71% FIGURE 10
Investment project groups
In 2008–2010, the investment program for JSC Atomredmetzoloto’s Russian projects increased by 82%. A 48% year-on-year increase in investment in Russian projects is planned
for 2011 primarily in the development of existing companies – JSC PIMCU, JSC Khiagda, and JSC Elkon MMP.
Long-term and mid-term investment priorities According to the Company’s mid-term plan, the JSC Atomredmetzoloto investment program for 2011-2015 totals RUB 101.5 billion, which is in line with the guidelines set in Rosatom’s strategic initiatives.
■■ The strategic initiative “Development of the Raw Material Base and Production of Natural Urani um in Russia” – 69.5% of overall investment. ■■ The initiative “Development of the Raw Material Base and Production of Natural Uranium Based on a Global Growth Platform (U1)” – 30.3% of overall investment.
Development of a global resource base and mining of natural uranium based on a global growth platform
30.3%
Leadership in uranium mining and processing technology
0.2% Development of the resource base and natural uranium production in Russia
69.5%
FIGURE 11
Investment structure by targets in 2011–2015
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Production activity in Russia and abroad
JSC Atomredmetzoloto 2010 Annual Report
42
Production activity in Russia and abroad
6 Development of resource base Uranium production. Development of existing JSC Atomredmetzoloto companies Designing of new mining ventures Service and other companies Projects with non-nuclear materials
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Production activity in Russia and abroad
> 6.1 < Development of resource base The main aim of developing the resource base is the long-term maintenance of the base and the creation of industrial stocks for the Company’s production program. The main methods for achieving growth in the resource base include: ■■ Carrying out geological exploration work to increase industrial reserves in preparation for mining; ■■ Licensing of new deposits; ■■ Acquiring deposits (companies) with low extraction costs (<USD80/kg U);
■■ Searching for new uranium deposits with low extraction costs, particularly roll front (sandstone) deposits. In 2010, the ARMZ Uranium Holding Co. resource base rose to 726,500 tons of uranium. With resource base of 511,300 tons of uranium in Russia and 182,000 tons in Kazakhstan, the Company is in second place among global uranium mining companies in terms of its resource base.
Table 3.
Company reserves and resources* Total, t
Assets
Share
Reserves, t
JSC PIMCU
100%
115,379
–
115,379
JSC Dalur
100%
11,660
6,836
18,496
JSC Khiagda
100%
26,514
14,978
41,492
JSC Elkon MMP
100%
319,186
–
319,186
JSC OMCC
100%
11,726
–
11,726
JSC UMC Gornoe
100%
4,613
–
4,613
JSC Lunnoe
100%
408
–
408
489,486
21,814
511,300 23,529
Russia total
Resources Р1, t
49.67%
8,578
14,951
JSC JV Akbastau
50%
17,576
21,983
39,559
Karatau
50%
7,147
15,800
22,947
LLP Betpak Dala
70%
26,908
42,656
69,564
LLP Kyzylkum
30%
10,181
16,257
26,438
Kazakhstan total
70,390
111,647
182,037
USA
10,130
18,997
29,128
2,472
1,565
4,037
572,478
154,024
726,502
ZARECHNOYE
Australia
ARMZ, total
* As of 01.01.2011
JSC Atomredmetzoloto 2010 Annual Report
44
Table 4.
Reserves and resources by country/company
Total, t
Reserves, t
533,212
494,685
26,669
521,354
489,486
21,814
28,994
44,630
27,016
36,943
63,959
–
–
–
–
–
–
42,387
34,152
76,538
82,992
132,209
215,202
522,179
55,663
577,842
564,088
97,764
661,851
572,478
154,023
726,502
Uranium One Inc.
Total, t
Reserves, t
Resources Р1, t
Total, t
26,669
15,636
Kazakhstan
Total
Resources Р1, t
506,543
Reserves, t Russia
01.01.2011
01.01.2010*
Resources Р1, t
01.01.2009*
511,300
* Information as of 01.01.2009 and 01.01.2010 adjusted for changes in calculation methodology
Geological exploration work in the Russian Federation
In 2010, geological exploration work was conducted at 10 deposits in the Elkon uranium ore district and at the Khiagda ore field. Total
investment amounted to RUB 1.5 billion, with growth in reserves, according to current calculations, of 32,500 tons of uranium. As a result, the effectiveness of geological exploration work was RUB 46/kg of uranium.
Table 5.
Main types of work in 2010 Deposit
Volume of work l. m.
Growth in С1+С2 Reserves by 2009
GE, Elkon
17,363
23.1
GE, Neprokhodimoye
22,689
–
GE, Severnoye
13,500
–
53,552
23.1
Condition Feasibility, Yuzhnaya Zone Total, JSC Elkon MMP GE, Istochnoye GE, Kolichikanskoye GE, Dybrynskoye
–
–
7,920
2.5
15,800
2.3
GE, Namarusskoye
5,000
1
GE, Koretkondinskoye
5,000
0.8
Total, JSC Khiagda
33.72
6.6
4,000
0.5
18,378
–
GE, Berezovoe
–
–
Approbation of reserves, Khokhlovskoye
–
–
Condition Feasibility, Gornoe + Berezovoe
–
–
Condition Feasibility, Itmanovsky placer
–
2.3
Condition Feasibility, Olovskoye
–
–
109,650
32.5
GE, Streltsovskoye RP (JSC PIMCU) GE, Lunnoe (JSC Lunnoe)*
Total geological exploration in Russia
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Uranium production. Development of existing JSC Atomredmetzoloto companies
Production activity in Russia and abroad
Results in 2010 ■■ A temporary standard feasibility study and reserves at the Gornoe, Berezovoe, and Khokhlovskoye uranium deposits, and the Itmanovsky placer deposit of titanium-zirconium sands, were approbated at the Russian State Reserves Commission. ■■ Permanent standard feasibility studies were prepared for review by the State Reserves Commission on the Olovskoye deposit and five deposits in the Yuzhnaya Zone of the Elkon uranium ore district. A feasibility study of regional standards was started for the Khiagda ore field. ■■ Geological mathematical modeling was completed for deposits in the Yuzhnaya Zone of the Elkon uranium ore district, and also at the Argunskoye, Zherlovoye (mine # 6 at JSC PIMCU), Olovskoye, Gornoe, and Berezovoe deposits. ■■ Work continued on preparing databases of primary data and geological models for deposits at existing JSC PIMCU mines, the North Elkon district and the Khiagda ore field. ■■ An evaluation to JORC standards was received for deposits in the Yuzhnaya Zone (229,800 tons of uranium), the Olovskoye deposit (13,800 tons of uranium), and an evaluation is being completed for the Argunskoye and Zherlovoye deposits.
exploration in Kazakhstan
Exploration work continued in 2010 at the Budennovskoye deposit (JSC JV Akbastau) and began at Yuzhnoye Zarechnoye (ZARECHNOYE). New exploration work was also conducted on the South Inkai (LLP Betpak Dala) and Budennovskoye (Karatau) deposits. In 2010, an estimate of NI 43-101 resources was received for Budennovskoye, section 1, 3 (36,000 tons of uranium) and Zarechnoye deposit (16,500 tons of uranium).
Exploration in Armenia
Exploration and evaluation work was conducted at the Pkhrut ore field in 2010, including lithogeochemical studies and the drilling of assessment wells, revealing signs of uranium and gold mineralization. The completion of work at the Pkhrut site and exploration of prospects at the Kaler deposit are scheduled for 2011.
Exploration in Africa
In 2010, an ARMZ Uranium Holding Co. working group conducted reconnaissance work in Tanzania and Namibia, where it identified promising areas for prospecting and assessment work, both under licenses held by Mantra Resources Limited, and at new areas that are yet to receive licenses. This work will continue in 2011 in other countries in Southern Africa. There are also plans to begin prospecting and evaluation work at promising sites.
■■ Automatization process of the holding company as part of a program to transform the IT and financial economic units of Rosatom was started. The computerization program includes the upgrading of the holding company’s IT infrastructure and the introduction of modern software systems, including those unmatched elsewhere in the world (in-situ leaching modeling complex). As a result of the introduction of software systems for enterprises based on three-dimensional geological and mathematical models, contingency planning will be conducted and mining operations will be optimized to reduce the cost of uranium production and increase the profitability of businesses wherever possible.
JSC Atomredmetzoloto 2010 Annual Report
46
Plans for 2011 ■■ The completion of geological exploration work at the main deposits of the Khiagda ore field and the Yuzhnaya Zone of the Elkon district, continuation of work in the North Elkon area and the Dalmatovskoye and Berezovoye fields, and the start of work at the Vershinnoye deposit. Total investment in geological exploration will amount to RUB 1.2 billion. ■■ R eceipt of licenses to explore and develop the Khokhlovskoye deposit.
■■ Geological work at the following deposits: Akdala (LLP Betpak Dala), Budennovskoye (JSC JV Akbastau), Kharasan-1 (LLP Kyzylkum), Yuzhnoye Zarechnoye (ZARECHNOYE). Condition feasibility studies will be completed and reports prepared, including reserve estimates based on geological exploration work at the South Inkai (LLP Betpak Dala) and Budennovskoye (Karatau, JSC JV Akbastau) deposits.
> 6.2 < Uranium production. Development of existing JSC Atomredmetzoloto companies The key strategic objectives of the long-term (2010-2020) development of Russian uranium mining companies: »» Russian energy security, with respect to ensuring independent production of natural uranium at Russian deposits; »» Maintaining and developing domestic natural uranium production capacity in Russia; »» Ensuring annual uranium production of 6,400 tons by 2020.
Main results of production activity at uranium mining companies Table 6.
Uranium production volumes by main ARMZ Uranium Holding Co. companies over a 3 year period, tons* 2008
2009
2010
Share in overall output, 2010, %
3,050
3,005
2,920.0
56.4
410
463
507.8
9.8
61
97
135.1
2.6
166**
245
386.5
7.5
JSC JV Akbastau*
0
195
369.8
7.2
Karatau*
0
619
854.2**
16.5
3,687
4,624
5,173.4
100
Company
JSC PIMCU JSC Dalur JSC Khiagda ZARECHNOYE*
Total output:
* Including the Holding Company’s share in relevant companies. ** According to off-take contract.
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Designing of new mining ventures
Production activity in Russia and abroad
Main results of Company activity in Russia JSC PIMCU (Trans-Baikal Territory, Krasnokamensk) 2008 Production, tons Reserves, thousand tons
2010
2009
3,050
3,005
2,920
129.530
118.341
115.379
JSC PIMCU conducts underground mining of uranium based at four underground mines: Mine No. 1, Mine No. 2, Glubokiy mine and the Shaft 6R mine. Ore processing is carried out using heap leaching and at a hydrometallurgical plant. The company’s finished product is uranium oxide - U3O8. Targets »» Ensure cost-effective production in conditions of falling uranium content. »» Ensure stable output of uranium.
RESULTS IN 2010 »» 2,920 tons of uranium were produced. »» Work was conducted on an audit of technical health and safety standards at a combined heat and power plant, hydro-metallurgical plant and the Urtuiskoye open mine. »» New Level 13 was commissioned at the Glubokiy mine, which will ensure an increase in opened, prepared reserves. »» Scoping Study has been prepared for the company. »» Construction of Mine No. 8 continued. »» A comprehensive technical development program was launched at JSC PIMCU. A state inspection was conducted, and a positive evaluation received, for the project to build Mine No. 6. »» Capital investments totaling RUB 1,111,600 were made, and a number of projects were implemented within production modernization program: ›› As a part of a technical upgrade, 32 mining assets were acquired, and leased equipment purchased, totaling RUB 120 million. A service center was set up to repair and service imported mining equipment.
JSC Atomredmetzoloto 2010 Annual Report
›› Ore loading complex No. 1K was launched, with a capacity of 250 cars per day. ›› A pilot project was launched to introduce a system for developing horizontal beds in ascending order. ›› A method was designed to develop bumphazardous sections and tested at the Glubokiy mine. ›› Work commenced on a project to create and install a complex automated planning, design and maintenance system for mining operations. ›› A meter system was installed to monitor technical and commercial electricity use. ›› Work is underway to create digital block and frame models for all deposits.
Problem Falling uranium content in ore.
Solution Increasing the efficiency of production.
Plans »» Conduct R&D on in-situ block leaching technology in order to increase production efficiency. »» Continue building Mine No. 8 on schedule. »» Continue work to optimize the design solution for the construction of Mine No. 6. »» Maintain uranium output at 2,600-3,000 tons in the short-term, launch new production capacity (Mines Nos. 6, 8).
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JSC Dalur (Kurgan Region, Uksyanskoye) 2008 Production, tons Reserves, thousand tons
2009
2010
410
463
507.8
8.056
7.509
11.660
JSC Dalur produces uranium on an industrial scale using in-situ leachig (ISL) at the Dalmatovskoye deposit and is continuing pilot operations at the Khokhlovskoye deposit. The company’s finished product is yellowcake. Results in 2010
Plans
»» Production in 2010 amounted to 507.8 tons of uranium, up 9.7% from 2009. »» A total of 194 production and 3 semi-wildcat wells were drilled. »» Work was carried out to automate the main technological processes at ISL, sorption and regeneration sites. »» A method was introduced to intensify ISL, with industrial-scale use of an oxidant (sodium nitrate). »» A temporary standards feasibility study at the Khokhlovskoye deposit showed positive results, and the reserves were added to the state register. »» A capital investment plan was implemented in the amount of RUB 594.144 thousands.
»» Expand pilot uranium mining at the Khokhlovskoye deposit. »» R&D to increase the quality on pregnant solution processing, to increase finished-product output, and to develop and install information systems for the mining complex/reservemovement monitoring. »» Improve technology for outfitting high-productivity wells. »» R&D to build a permanent model of the geotechnological field, to optimize ISL technology so as to reduce the use of reagents at all mining stages, and to develop a comparative multi-factor analysis of mining blocks.
Plans for 2011 »» To produce 485 tons of uranium in 2011. »» To launch fixed assets in 2011 amounting to RUB 754.4 million »» To carry out appraisal and exploration work to bring the reserves of the Ust-Uksyansky section into production beginning in 2012.
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Designing of new mining ventures
Production activity in Russia and abroad
JSC Khiagda (Republic of Buryatia, Bagdarin) 2008 Production, tons Reserves, thousand tons
2010
2009
61
97
135.1
26.805
26.683
26.514
JSC Khiagda produces uranium at the Khiagda ore field using in-situ leachig (ISL). Pregnant solutions are processed into the end product – “yellowcake” – at an experimental industrial unit. Results in 2010
Plans for 2011
»» Growth in uranium production of 39%: from 97 tons in 2009 to 135.1 tons in 2010. »» 161 production wells built (4 of which were observational wells). »» A geological exploration program was conducted with 33,700 linear meters drilled (Kolichikanskoye – 7,900 l.m, Dybrynskoye – 15,800 l.m, Koretkondinskoye – 5,000 l. m, Namarusskoye – 5,000 l.m). Fieldwork was completed at the Istochnoye and Kolichikanskoye deposits, and the processing of materials, laboratory work and report development is underway. Exploration drilling and hydro-geological studies are being carried out at the Dybrynskoye, Koretkondinskoye and Namarusskoye deposits. »» Binding has been completed at five beds at blocks No. 16, 17, and 18 at the Khiagda field and at six beds at blocks No. 1 and 2. »» Design and construction work has been carried out at the site of a sulphuric acid plant, and the frame of the building has been erected, with enclosures and foundations for equipment. »» The main building has been outfitted and the main equipment installed.
»» Ensure growth in uranium production to 175 tons in 2011.
JSC Atomredmetzoloto 2010 Annual Report
Plans »» Annually ensure timely growth in operating reserves so as to increase uranium output. »» Continue increasing the effectiveness of production by introducing cutting-edge technology, developing new and improving existing technology in line with the company’s R&D plan. »» Complete construction of all production infrastructure to reach planned capacity on schedule.
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Companies in Kazakhstan ZARECHNOYE
Production*, tons Reserves*, thousand tons
2008
2009
2010
166**
245.386
386.52
9.285
9.010
8.578
* including the ARMZ Uranium Holding Co. share ** according to the off-take contract
The Zarechnoye deposit is located in Southern Kazakhstan on the southern bank of the Syrdarya River. ZARECHNOYE has been producing uranium in-situ leachig (ISL) since 2007. In 2010, the company began geological exploration work at the Yuzhnoye Zarechnoye deposit.
Results in 2010 The uranium-production rate continued to grow: »» Production targets were exceeded, with 778.176 tons of uranium produced (uranium mining amounted to 783 tons of uranium). An additional sorption column was installed in the pregnant solution processing unit, along with an automated, highproductivity press filter. »» An additional sand pond was built, the productivity of a pump station for pregnant and leaching solutions was increased. »» To carry out repair work, the company acquired three mobile well-flushing units, which significantly increased the number of repaired wells and, as a result, improved performance of wellfield of in-situ leaching. »» Work was carried out to reconstruct the ventilation system in the pregnant solution processing unit, which improved the microclimate in the unit and ensured compliance with health and safety standards in conditions of increased production capacity. In compliance with environmental protection requirements, design and surveying work was carried out at the ZARECHNOYE ISL mine to build an additional sludge dump. Construction is scheduled for 2011.
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»» An additional sulphuric acid warehouse was built at the railroad base at Timur station, linked to rail sidings. This reduced the risk of supply disruptions by supporting required sulphuric acid stock level. »» Work was carried out to build a gravel road to bypass the village of Koksarai. »» ZARECHNOYE began developing the Yuzhnoye Zarechnoye deposit: an annual work program and an environmental impact study were prepared and approved during preliminary development of the Yuzhnoye Zarechnoye deposit and drilling commenced: 50 exploration wells and 1 hydrogeological well (31,979 l. m) have been drilled.
Designing of new mining ventures
Production activity in Russia and abroad
JSC JV Akbastau 2009
2010
0
195
369.806
6.275
12.326
17.576
2008 Production*, tons Reserves*, thousand tons
* Including the ARMZ Uranium Holding Co. share
The Budennovskoye deposit covers the Southwest section of the Mynkuduk ore field, which is part of the Chu-Sarysui uranium ore province. Administratively, the area is part of the Suzak District of Southern Kazakhstan. The Budennovskoye deposit is being developed using ISL: JSC JV Akbastau operates sections No. 1, 3 and 4, while Karatau operates section No. 2. JSC JV Akbastau solutions from section No. 1 are pumped to Karatau for processing. Results in 2010 »» Stable growth in uranium production: 739.612 tons of uranium produced (761 tons of uranium mined), which is 349.191 tons more than in 2009; »» 131,896.9 l. m of geological exploration work were carried out; a feasibility study of permanent standards was carried out at section No. 1 of the Budennovskoye deposit. »» A feasibility study of permanent standards was carried out at section No. 3 of the Budennovskoye deposit with calculation of reserves. »» Pilot uranium production commenced at section No. 3 of the Budennovskoye deposit. »» A range of work was conducted to expand production infrastructure at the sections in order to reach capacity production.
JSC Atomredmetzoloto 2010 Annual Report
Plans at Kazakh uranium mining companies »» Under 51.4% shares consolidation deal with Canada’s Uranium One Inc. in 2010, ARMZ assets in the Kazakh uranium mining companies ZARECHNOYE and JSC JV Akbastau have been transferred to that company.
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> 6.3 < Designing of new mining ventures Olovskoye (JSC OMCC) values Uranium reserves, (C1+C2), t
11,726.0
Content
0.082%
The objective of the Olovskoye project is to create a uranium-mining company to develop the Olovskoye deposit with a capacity of 600 tons of uranium per year. The Olovskoye deposit is located in the Chernyshevsky District of the Trans-Baikal Territory of the East Siberian Economic District of the Siberian Federal District, and is a promising deposit on Russian soil. Reserves at the deposit have been approved by the State Reserves Committee and added to the register for industrial exploitation. The Olovskoye project is being carried out by JSC Olovskaya Mining and Chemical Company (JSC OMCC). The company was set up in 2007 to mine the Olovskoye uranium ore deposit and process the ore, using heap leaching, to produce yellowcake.
Results in 2010
Plans
»» A Pre-Feasibility Study conforming to international standards was obtained from the appropriate authority. »» Assessment drilling and geomechanical studies have been carried out at the Olovskoye deposit to JORC standards. »» Block model was updated after assessment drilling to JORC standards. »» An audit of mineral resource estimates at the Olovskoye uranium deposit was conducted to international standards and duly certified. »» A check of groundwater was conducted for water supplies to the company. »» A report on a feasibility study of permanent exploration standards, with recalculation of reserves, was received and submitted to the State Reserves Committee for confirmation of the deposit’s reserves. »» An independent examination of permanent exploration standards was conducted, including recalculation of reserves.
»» Defense of the feasibility study of permanent exploration standards and inclusion of reserves at the Olovskoye deposit in the state register at the State Reserves Committee. »» Search for a co-investor to implement the Olovskoye project (being implemented by JSC Atomredmetzoloto).
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Service and other companies
Production activity in Russia and abroad
Berezovoe-Gornoe (JSC UMC Gornoe) gornoe Uranium reserves (C1+C2), t Content
berezovoe
3,897
716
0.312%
0.173%
The objective of the Berezovoe-Gornoe project is to create an economically-effective uranium-mining company to develop small deposits based at JSC UMC Gornoe with a capacity of 300 tons of uranium per year, with the possibility of a capacity increase to 1,000 tons by using the raw material base of adjacent deposits in Trans-Baikal Territory, Buryatia and Khabarovsk Territory. The project involves the industrial production of uranium at the Gornoe and Berezovoe deposits to produce yellowcake and uranium oxide (U3O8). The Berezovoe deposit is to be open-mined, with the ore being processed using heap leaching. The Gornoe deposit will be mined using ISL, with partial supply of ore to the heapleaching unit. Results in 2010
Plans for 2011
»» Recommendations have been prepared on documenting core samples and preparing preliminary information on increasing the effectiveness of the Gornoe and Berezovoe deposits. »» Research has been carried out on large representative samples and a system has been developed for processing ore at the Gornoe deposit. »» A feasibility study of temporary standards at the Gornoe and Berezovoe deposits has been prepared and approved by the State Reserves Committee; reserves have been entered into the state register. »» A declaration of intent has been prepared and public hearings held on the Gornoe deposit. »» A geological-mathematical model has been produced for the Gornoe and Berezovoe deposits. »» A study has been made of the technological qualities of ore at the Berezovoe deposit in the contours of the planned open pits; initial information has been put together for the preparation of pilot production.
»» Development of a project for pilot production at the Berezovoe deposit (including a solution-processing plant, open pit, an industrial zone with housing, internal roads, a road between Arei and Berezovoe, a heap leaching unit and a crushing and screening unit). »» Receipt of a license to handle nuclear materials.
JSC Atomredmetzoloto 2010 Annual Report
Plans »» Design and survey work. »» Geological exploration work at the Berezovoe deposit. »» Pilot work on ISL at the Berezovoe deposit.
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Elkon (JSC Elkon MMP) values Uranium reserves (C1+C2), t
319,186
Content
0.147%
The objective of the Elkon project is the development of the Southern group of deposits in the Elkon uranium ore district in Sakha Republic (Yakutia) and construction of the Elkon Mining and Metallurgical Plant (Elkon MMP). The Elkon uranium ore district, which is located in Aldan District, is the second-largest in the world by reserves. JSC Elkon MMP currently has a license to explore and develop the Elkon, Neprokhodimoye, Elkon Plateau, Kurung and Druzhnoye (Yuzhnaya Zone) deposits as well as the Severnoye and Zona Interesnaya deposits with aggregate reserves of 319,000 tons. The development of deposits in the Yuzhnaya Zone is an important task for the development of the Russian nuclear sector. Achieving this objective will, in the future, supply up to 30% of Russia’s natural uranium requirements. Development of deposits in the Southern group will make it possible to build a company with a capacity of 5,000 tons of uranium, with supplementary production of gold, silver and molybdenum. Moreover, the construction of Elkon MMP will have a major social economic impact on the development of South Yakutia. This project has been included in a program for the Comprehensive Development of South Yakutia and has been included, by Russian government decree, on a list of investment projects to be financed with funds from the Russian Investment Fund. Rosatom has been appointed as the entity responsible for the project.
Results in 2010 »» A technical report and a report on investment decisions have both been prepared. »» Geological exploration work has been carried out in full at the Elkon and Neprokhodimoye deposits. Geological exploration has commenced at the Severnoye deposit, on schedule. Leases have been formalized for land to be explored. »» An R&D program has been carried out in full, including the development of a technological plan for the processing of ore, research into the physical and mechanical characteristics and Bond index of ores at the Elkon uranium ore
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»» »» »» »» »»
district, and semi-industrial testing of filterless technology for the comprehensive processing of ore. Public hearings have been held on the Elkon project in Sakha Republic (Yakutia). An archaeological survey has been carried out at the plant site. Topographical maps have been drafted for public use, with scales of 1:100,000 and 1:25,000. Licensing obligations foreseen for 2010 have been met. Funding of 2010 investment programs amounted to RUB 1,125,149 thousand.
Plans for 2011 »» Confirmation of a feasibility study for the Yuzhnaya Zone by the State Reserves Committee, along with a report on reserves at the Yuzhnaya Zone. »» Renewal of licenses to handle nuclear materials. »» Planned 2011 financing at JSC Elkon MMP amounts to RUB 1,920.3 thousand.
Plans »» R&D work to produce project documentation and improve the technical aspects of the project. »» A range of drilling work (hydro-geological research, geo-mechanical surveys at the Elkon Plateau and Kurung deposits) to prepare initial information for a feasibility study. »» Meeting terms of licensing agreements (geological work at the Elkon, Neprokhodimoye, Druzhnoye, and Zona Interesnaya deposits, work to monitor environmental impact). »» Completion of project documentation for Elkon MMP.
Service and other companies
Production activity in Russia and abroad
Lunnoe (JSC Lunnoe) U
Reserves (C1+C2), t Content
AU
Ag
408
3.0
36.2
0.054%
3.9 g/t
47.5 g/t
Project objective – developing the Lunnoe uranium-gold ore deposit in the Aldan District of Sakha Republic (Yakutia). This deposit is to be open-mined, with ore being transported to a heap-leaching unit, with subsequent leaching of gold and uranium. The Lunnoe deposit is being developed with funds from a strategic investor – JSC Zoloto Seligdara, which owns 49% of the shares in JSC Lunnoe.
Results in 2010
Plans
»» The necessary documentation was drawn up to lease a section of forest, and a plan for development of the forest was drawn up and approved. »» A geological-mathematical model has been prepared for the license zone. »» Plans for the open pit and for mining work have been prepared as part of a project to build a pilot industrial unit. »» A section of the Environmental Impact Assessment has been prepared. On 02.07.2010, JSC Lunnoe held a public hearing on the Environmental Impact Assessment. »» Geological exploration work involving 18,378 linear meters of coring has been carried out.
»» C onducting a range of scientific research and experimental work to develop a technological system for heap leaching in field conditions.
Plans for 2011 »» Complete the development, assessment and approval of a project to build a pilot industrial unit at the Lunnoe deposit, preparation of working documents. Receive planning permission. »» Begin construction work on the pilot industrial unit and other infrastructure. »» Bring in processing and mining equipment. »» Complete geological exploration work (of oxidized ores). Prepare a feasibility study for permanent standards, a report with calculations of reserves and the subsequent registration of reserves with the State Reserves Committee.
JSC Atomredmetzoloto 2010 Annual Report
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> 6.4 < Service and other companies The role of service companies is to ensure the effective operation of the main production companies; in particular, in the implementation of drilling operations, reserves assessment, repair work, geophysical support, and supplies to the main industrial enterprises. The service companies contribute significantly to efficiency gains at ARMZ Uranium Holding Co.
RUSBURMASH INC The main mission of RUSBURMASH INC is to provide drilling services in Russia. Drilling work, incl.: 2009
2010
137.4
252.2
For JSC Dalur (production drilling and exploration), wells
250
207
For JSC Dalur (exploration drilling), thousand l. m
78.0
–
For JSC Khiagda (production drilling and exploration), wells
140
168
For JSC Khiagda (exploration drilling), thousand l. m
25.8
33.7
For JSC Elkon MMP, all types of work, thousand l. m
–
68.5
For JSC PIMCU, all types of work, thousand l. m
RUSBURMASH INC results in 2009–2010
Results in 2010 »» Work carried out by the company increased significantly. »» A unified technical policy was introduced for drilling work, geological work and work to build production wells for companies in ARMZ Uranium Holding Co. »» The company’s inventory of drilling and other equipment was significantly expanded. »» С1 reserves increased as a result of geological exploration work at the following deposits: Kolichikanskoye – 2,500 tons, Dybrynskoye – 2,300 tons, and Elkon – 23,100 tons. »» The company entered the external financing market: four renewable credits lines were opened for RUB 1.3 billion. »» Using its own resource base, the company carried out work for JSC PIMCU, JSC Khiagda (drilling), and JSC Dalur (drilling). »» Using its own resource base and subcontractors, the company carried out geological exploration work at JSC Khiagda.
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»» The company continued working at JSC Dalur, JSC Elkon MMP, JSC UMC Gornoe, and JSC OMCC and is carrying out geological exploration work at deposits in the Khiagda group.
Plans for 2011 »» Ensure timely execution of high-quality drilling and geological exploration work as well as geophysical and repair work at Russian uranium deposits.
Plans »» Increase production and exploration drilling. »» Increase inventory of drilling and auxiliary equipment.
Projects with nonnuclear materials
Production activity in Russia and abroad
LLP JV RBM-Kazakhstan (Republic of Kazakhstan) The main mission of LLP JV RBM-Kazakhstan is to drill exploration and production wells at uranium deposits in Southern Kazakhstan. Drilling work, thousand l. m, incl.: 2009
2010
For JSC JV Akbastau (production drilling)
47.2
127.0
For JSC JV Akbastau (exploration drilling)
156.2
131.9
For JSC JV Akbastau (all types of work)
203.4
258.9 31.9
For ZARECHNOYE (exploration drilling) TOTAL
203.4
290.8
LLP JV RBM-Kazakhstan results in 2009–2010
Results in 2010
Plans
»» Using its own resource base and subcontractors, the company carried out exploration and extraction drilling at JSC JV Akbastau and ZARECHNOYE. »» In 2010, the company drilled 440 wells totaling 290,910 l.m, up 143% from 87,540 l.m in 2009. »» The company’s drilling fleet grew by 6 units to 15 rigs.
»» Carry out all types of drilling work at uranium deposits in Southern Kazakhstan managed by ARMZ Uranium Holding Co. »» Strengthen the company’s position on the market for drilling services in Kazakhstan. »» Radio-ecological support at industrial and drilling sites. »» Provide a full range of geological support for drilling work, create the company’s own accredited laboratory, and prepare reports with subsequent registration at the State Reserves Committee. »» Development work to increase production capacity and reduce the cost of drilling work with a view to entering potential drilling sites.
Plans for 2011 »» Increase exploration and production drilling by 22% year-on-year. »» Increase its drilling fleet to 21 drilling rigs.
JSC Atomredmetzoloto 2010 Annual Report
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JSC VNIPIPROMTECHNOLOGII The main mission of JSC VNIPIpromtechnologii is to carry out design and research work for the integrated design of uranium mining and processing facilities.
Revenue from the sale of services (work), excluding VAT
2008
2009
2010
380,194
728,558
1,264,489
JSC VNIPIpromtechnologii results in 2008–2010 (RUB thousands)
Results in 2010 »» Developed Rules for Radiation Safety During the Operations of Uranium Mining Companies. »» Developed and delivered a design and work papers for a water treatment facility at mines Nos. 2, 4 and 6 at JSC PIMCU (Krasnokamensk), which will significantly improve the ecological situation at the company. »» Adjustments were made to a project to build JSC PIMCU mine No. 6 in Chita Region in line with requirements for project documentation, in compliance with a Russian government resolution from 16.02.2008. »» The company carried out geological, hydrogeological, surveying, hydro-meteorological and ecological engineering work, along with engineering work for seismic exploration, geological surveys for structural wells, and topo-geodesic surveys for JSC Elkon MMP Project.
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plans
»» Create an engineering center based at JSC VNIPIpromtechnologii in accordance with an existing concept, which will provide quality engineering solutions for ARMZ Uranium Holding Co. and its subsidiaries, subsidiaries of Rosatom, and for other companies in Russia and abroad.
Projects with nonnuclear materials
Production activity in Russia and abroad
JSC SY Corporation The company’s main objective is to implement an investment project for the comprehensive development of South Yakutia (the Project). The aim of the Project is to provide conditions based on state-private partnerships for the creation in the Russian Far East of a new, large industrial district based on hydroelectricity and a cluster of industrial companies involved primarily in processing of the region’s mineral wealth. The state coordinator of the project is the Government of Sakha (Yakutia). Investors in-
clude the State Investment Fund, the federal hydro-generating company Hydro OGK (JSC South Yakutia HEC), JSC Alrosa Investment Group, JSC Atomredmetzoloto, and LLC Kolmar (JSC Yakutia Coal – New Technologies). The main executors are the Federal Road Agency, the Federal Railways Agency, Rosenergo and Rosatom. A key element of this project is the construction of Elkon Mining and Metallurgical Plant.
LLC USC ARMZ The company’s main area of activity is the supply of materials and equipment to companies in ARMZ Uranium Holding Co. as needed for their core business and investment activity. Logistics became a new business area for the company beginning in September 2010.
JSC PIMCU
2009 RUB thous.
2010 RUB thous.
3,128,204
1,797,367
JSC Dalur
251,398
200,491
JSC Khiagda
234,169
274,910
Coal sales
420,271
434,612
0
101,023
41,037
30,712
4,075,079
2,839,115
Leasing Sales of goods, services to third parties Total
Supplies to the ARMZ Russian uranium mining companies and third parties in 2009–2010
A key event in the Company’s development was the decision to change its business focus. »» The function of signing agreements with outside suppliers of materials and equipment has been transferred to the uranium mining companies, and the function of placing orders and selecting suppliers to JSC Atomredmetzoloto. »» Rights and obligations under existing contracts have been transferred to the uranium mining companies. »» Organizational structure has been optimized. »» Lease agreements have been signed for rolling stock to carry out logistic activity.
JSC Atomredmetzoloto 2010 Annual Report
Plans »» Participate in procurement procedures at JSC Atomredmetzoloto. »» Supply materials and equipment to uranium mining companies in Kazakhstan. »» Organize supplies of materials and equipment to consignees using leased rolling stock.
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> 6.5 < Projects with non-nuclear materials In accordance with a decision by Rosatom, a strategic initiative for Diversification into Strategic and Innovative Metals has been approved as part of the ARMZ Uranium Holding Co. business strategy. The main aims of the strategic initiative are: »» meeting the current and future needs of the nuclear power sector in Russia for construction materials; »» business growth; »» diversifying the JSC Atomredmetzoloto product portfolio and entering promising markets,
minimizing risks in the event of a drop in profitability on the uranium market; »» expanding the Company’s activities abroad. Developing the mining and production of rare and rare-earth metals is considered one of the priorities of the strategic initiative. Plans for 2011 include a pre-project study and selection of assets/projects for possible participation in Russia and abroad that are promising in terms of growth in market capitalization and the competitive cost of rare-earth metals production.
Zirconium project The project envisages the creation of a cost-effective production complex for the extraction and processing of titanium-zirconium sands based at the Itmanovsky placer deposit at the Lukoyanovskoye field (Nizhny Novgorod Region, Russia). Results in 2010 »» Development of a production system for the enrichment and separation of ilmenite, chromite and hematite concentrate was completed. »» A feasibility study on exploration conditions and a report with reserve calculations for
the Itmanovsky titanium-zirconium sands deposit were both prepared and submitted for approval.
Plans for 2011 »» Confirm the feasibility study on conditions and reserves at the State Reserves Committee.
Promising projects with non-nuclear materials Results in 2010 »» A preliminary assessment was carried out of the investment attractiveness of a number of investment projects involving the development of deposits of polymetal ore, rare-earth metals and other minerals. The projects considered, which are located in Russia, Canada, Australia and Africa, are among the major mining sites worldwide in terms of mineral reserves.
Plans for 2011
›› establishing the investment attractiveness of projects in order to reach a decision on JSC Atomredmetzoloto participation; ›› finding and inviting strategic partners for projects among Russian and foreign companies with experience in mining and processing minerals as well as financial and investment companies. »» Continuing to identify and initiate promising new projects with non-nuclear materials, in which the possible participation of ARMZ Uranium Holding Co. would meet the Company’s strategic objectives.
»» Continuing work on promising projects with non-nuclear materials in 2011. Priority tasks in this area include:
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Innovation and performance management
JSC Atomredmetzoloto 2010 Annual Report
62
Innovation and performance management
7 Performance management Innovation
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Innovation and performance management
> 7.1 < Performance management One of the most important strategic objectives at ARMZ Uranium Holding Co. is to increase the efficiency of existing production. The Company developed a comprehensive Program in 2010 that established the management parameters for a process to improve Company performance. Implementation of the Program began at the end of 2010. The core aspect of the Program is a permanent process whereby employees at existing companies can submit proposals, along with a system for resolving production problems (removal of bottlenecks in the production process, or identifying sources of loss, etc.) involving small working groups at the companies, based on an evaluation of the economic effect of optimization work. For companies under construction, the Program will concentrate on R&D to increase the
effectiveness of deposits development. Use of new technologies and cutting of production costs at Company facilities: mining complex, ore enrichment and processing, coal production, production of heat and electricity, auxiliary and service work. The effectiveness of measures to improve efficiency is confirmed by the following indicators (see table 7). Growth in EBITDA, a drop in the share of administrative costs and an increase in labor productivity confirm the impact of the Company's efforts to implement a comprehensive Program to improve efficiency.
Table 7.
Performance indicators Indicator EBITDA Production at enterprises in Russia
Activities undertaken at existing companies in 2010: »» optimizing consumption rates of materials and reagents by the rational organization of operations; »» replacement of obsolete equipment with highperformance narrow-web machines; and »» storage of a number of stock items was changed at JSC PIMCU.
Results: »» »» »» »» »»
Unit
2008
2009
2010
RUB mln
3,412
10,079
11,578
tons/ person
0.29
0.34
0.39
Plans: »» The main efforts to increase performance will be aimed at replenishing exhausted reserves at Russian deposits, which have been developed over a long period. The use of new technologies will make it possible to increase production performance while maintaining production levels at existing companies. A pilot project aims to increase production efficiency at JSC PIMCU.
production time was reduced; production space was reduced; a drop in costs; improved quality; and response time to queries was reduced.
JSC Atomredmetzoloto 2010 Annual Report
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A comprehensive program to conserve energy and increase energy efficiency
»
According to a draft program to conserve energy and increase energy efficiency at companies managed by JSC Atomredmetzoloto, the following technical work was carried out in 2010:
»» At JSC Khiagda, work was completed on a commercial and technical electrical power meter system (ACEMS, ATEMS), a system for exchanging technological information (SETI), and R&D was carried out on the installation of a variable frequency drive (VFD). Work was completed on dedicating a satellite channel to send information from the JSC Khiagda mine to Chita. »» At JSC Dalur, work was completed on a commercial and technical electrical power meter system (ACEMS, ATEMS), a system for exchanging technological information (SETI), and R&D was carried out on the installation of a variable frequency drive (VFD). »» At JSC PIMCU, work planned for 2010 to set up a commercial and technical electrical power meter system (ACEMS, ATEMS) was fully completed. »» Completion of all work on a system for exchanging technological information (SETI) is planned for 01.07.2011.
A significant contribution to the overall growth in Company efficiency will be made by A COMPREHENSIVE PROGRAM TO CONSERVE ENERGY AND INCREASE EFFICIENCY »» Project documentation has been prepared for a commercial and technical electrical power meter system (AERMS), and implementation of the project is planned for 2011–2012. »» An energy audit has been carried out at JSC PIMCU. Based on the results of this audit, an energy conservation program for 2011–2014 was developed and submitted for approval. »» Thermal vision research is underway at companies, and work is expected to be completed on 31.07.2011.
Table 8.
Gross energy consumption at main production companies Year
Company
Coal TJ*
Fuel oil TJ*
2008
JSC PIMCU
25,217.1 –
JSC Dalur JSC Khiagda JSC Atomredmetzoloto Total 2009
JSC PIMCU JSC Dalur JSC Khiagda JSC Atomredmetzoloto Total
2010
JSC PIMCU JSC Dalur JSC Khiagda JSC Atomredmetzoloto Total
Natural gas TJ*
Electricity TJ*
39.84
–
3,216.7
–
46.79
93.003
28.61
–
–
13.84
–
–
–
1.343
25,245.71
39.84
46.79
3,324.886
24,462.8
52.4
–
3,186.02
–
–
47.89
107.421
44.35
–
–
31.667
–
–
–
3.439
24,507.15
52.4
47.89
3,328.457
25,220.1
141.4
–
3,214.7
–
–
52.62
115.723
49.88
–
–
41.94
–
–
–
4.001
25,269.98
141.4
52.62
3,376.364
* Terajoules
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Innovation
Innovation and performance management
As a result of organizational and technical work carried out by companies in the group in 2010 as part of an energy conservation program, a 7% reduction in consumption of energy resources in monetary terms was achieved under comparative production conditions against 2009 – higher than the target of 5%. The companies neither receive nor consume any intermediate energy from renewable energy sources (solar power, geothermal energy, hydro-power, biomass energy, or hydrogen-based energy).
The creation of an automated commercial and technical electrical power meter system will allow JSC PIMCU:
Plans
■■ to create a unified center at the company to gather and analyze information, making it possible to have commercial metering of electricity and information transfer in real time.
Based on the energy research conducted, the companies have developed long-term programs to conserve energy and increase energy efficiency, and company energy passports have been prepared. These energy conservation programs will reduce energy consumption at the companies by at least 15% in 2010-2014.
■■ to become a fully-fledged participant on the wholesale energy market; ■■ to increase the sale of combined heat-andpower plant capacity by 8 MW as a result of technical work to install fast-acting protection and automated systems;
> 7.2 < Innovation Constantly improvement of uranium-producing technology and equipment, reduction of production costs, and increase of automation level at existing companies – these are the Company’s main innovations. In 2010, the Company continued to implement an innovation project to create a corporate Engineering Center. This center aims to meet growing Company requirements for a full cycle of services to design, build, commission and operate new production facilities, and also to modernize and increase the efficiency of existing facilities. Development of technology to reduce the cost of yellowcake production is aimed at increasing the overall competitiveness of JSC Atomredmetzoloto on the world market. In 2010, JSC Atomredmetzoloto acquired a Rosatom core asset for developing projects to create new and modernize existing uranium mining companies – the Design-Prospecting and Scientific-Research Institute of Industrial Technology (JSC VNIPIpromtechnologii). The 2010-approved concept for setting up a JSC Atomredmetzoloto Engineering Center based on JSC VNIPIpromtechnologii and other relevant assets calls for the creation of a leading engineering center for the design of
JSC Atomredmetzoloto 2010 Annual Report
both mining companies and facilities for the storage of radioactive materials in Russia and the CIS. The entire capacity chain needed to develop mining company projects will be consolidated at JSC VNIPIpromtechnologii, including preliminary research, scientific work, developing optimal technological solutions for infrastructure construction, preparation of design, technical and economic documentation, construction, and the commissioning and safe decommissioning of production facilities. Consequently, the consolidation of the maximum number of the Company’s own capacities at the Engineering Center will minimize risks arising at the point where the responsibilities of those involved in preparing company documentation intersect, reduce critical dependence on resources provided by subcontractors, increase transparency during the development of project documentation, and create a single point for the coordination and management of projects to develop mineral deposits.
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The implementation of innovative technology projects aims to achieve the following objectives: »» Develop technology for well construction, forming heaps, ore shrinkage, optimal reserve development, acidification and processing of operating blocks, and soil reclamation to reduce the cost of the end product. »» Reducing capital expenditures and operating costs for the processing of uranium ore at the world’s largest Elkon and Streltsovskoye uranium ore districts, ensuring profitability at uranium mining companies at current market prices for natural uranium. »» Installing a system for the geological modeling of mines and planning of mining operations, setting up a single geological database. »» Development of a modern logging complex, to international standards, for the direct determination of uranium right at the deposit.
Results in 2010 »» In 2010, actual funding for R&D at JSC Atomredmetzoloto amounted to RUB 142.0 million. »» Underground mining was optimized for deposits in the Yuzhnaya Zone of the Elkon uranium ore district based on a calculation of minimal excavation blocks and the building of operational models. »» Frame and block geological-mathematical models were built for the Argunskoye and Zherlovoye deposits of Streltsovskoye ore field. »» A method was developed for diagnosing and forecasting rock bumps at JSC PIMCU mines, reducing the risk of their occurrence during mining work. »» A conceptual model was proposed for uranium levels in sedimentary rock at the Khiagda ore field, which significantly expands the potential of the raw material base at JSC Khiagda. »» A range of computer programs were developed to support mining and preparatory work and to optimize the development of operational blocks. »» Technological research was carried out on aggregate ore samples from the Elkon ore district. »» New technology was developed for purifying leaching and productive solutions in fiber filters. »» Technology for processing ore at the Elkon uranium ore district with extraction of uranium, gold and silver was developed and tested at the Leading Scientific-Research Institute of Chemical Technology (ECTP VNIIKhT). »» Work was continued on the development of software for geo-technological modeling.
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Plans »» Developing and improving in-situ leaching (ISL) technology. »» Developing modern geophysical equipment for the in-situ determination of uranium using prompt fission neutrons. »» Installation of modern IT systems to design, plan and optimize mining operations. »» Development of software to evaluate the geoecological consequences of developing uranium deposits using ISL and planning environmental protection work. »» Development of comprehensive technology for extracting uranium and gold from refractory ore and concentrates at the Elkon uranium ore district. »» The JSC Atomredmetzoloto plan for 2011 calls for a two-fold increase year-on-year in financing for R&D to RUB 282.27 million. »» In the period from 2011 to 2015, in line with its future R&D plans, JSC Atomredmetzoloto forecasts investment of RUB 1,500 million in scientific research and experimental modeling aimed at resolving current problems at its companies. »» The expected economic effect from the R&D plan, according to expert estimates, amounts to over RUB 2,148 million.
Management system
JSC Atomredmetzoloto 2010 Annual Report
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Management system
8 Management by objectives. KPI Corporate governance system Key risks and risk management
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Management system
> 8.1 < Management by objectives. KPI In 2009, ARMZ Uranium Holding Co. Organizations introduced a Management by Objectives (MBO) system (key performance indicators).
»
This system involved:
■■ establishing priority objectives for the Holding Company and conditions (restrictions) for achieving them;
■■ creating an “objectives tree” broken down to the level of organizations in the Holding Company; and ■■ motivating management to achieve key performance indicators while complying with approved corporate standards. The KPI system makes it possible to translate strategic priorities and motivate staff to achieve them throughout the management vertical. In Q1 2010, KPI results for 2009 were calculated for the Director General of JSC Atomredmetzoloto and his deputies, as well as for the director generals of subsidiaries and associates. Based on KPI results, company management was paid an annual bonus, which reflected the contribution of each to achieving key objectives. The JSC Atomredmetzoloto Board of Directors has confirmed KPI for 2010, calling for: ■■ implementation of uranium production programs; ■■ control of production costs per 1 kg of uranium for companies in the Russian Federation;
KPI at ARMZ Uranium Holding Co. reached 108% in 2010 ■■ implementation of priority development (the first phase of resource base diversification project); ■■ growth in production efficiency (reducing constant production and administrative costs and increasing labor productivity); ■■ no incidents of level 2 or higher on the INES scale. This indicator evaluates emergency situations involving the emission of radioactive materials into the environment at civilian atomic facilities. KPI at ARMZ Uranium Holding Co. reached 108% in 2010. Payment of annual bonuses to ARMZ Uranium Holding Co. managers is carried out in compliance with all necessary corporate procedures.
plans ■■ The further improvement of JSC Atomredmetzoloto management systems, aimed at increasing the competitiveness of the Holding Company, optimizing business processes based on the objectives and requirements set by the shareholders, and considering the best corporate governance practices.
JSC Atomredmetzoloto 2010 Annual Report
■■ The strategic objectives of the Holding Company will be broken down to 4th level of subordination to the Director General of JSC Atomredmetzoloto (with the exception of specialists) and to 3rd level of subordination to the director generals of associates (excluding specialists and workers).
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> 8.2 < Corporate governance system Increasing the quality of corporate governance and the transparency of activity is considered to be one of the most important objectives of the Company’s strategy, the main aim of which is to maximize the value of the mining business for shareholders.
Priority objectives are: ■■ Complying with Russian and international corporate governance standards. ■■ Protecting the rights and interests of minority shareholders. ■■ Increasing the efficiency of management bodies.
In its operations, the Company complies with the laws of the Russian Federation and those of other countries where it operates, and the corporate governance system is being improved based on the best Russian and global practice, OECD corporate governance principles and the directives of the Russian Corporate Governance Code recommended by the Federal Securities Commission and the Federal Financial Markets Service (FSC/FFMS).
■■ Achieving growth in the level of openness for investment and industry organizations, business partners, workers and other interested parties.
Equity capital As of 31.12.2010:
Rosatom State Corporation
»
■■ JSC Atomredmetzoloto charter capital amounted to RUB 20,257,239,961;
100%
JSC Atomenergoprom
100%
»
JSC TVEL
»
»
■■ The Company issued 20,257,239,961 ordinary registered shares with a par value of RUB 1.00 each (registration number — 1-01-03912-А);
20.021%
79.979%
JSC Atomredmetzoloto
■■ The total number of registered shareholders was 2 (JSC Atomenergoprom and JSC TVEL).
Table 9.
Ratio of net asset value to charter capital Net asset value (NA), RUB thous.
Charter capital (CC), RUB thous.
Ratio (NA/CC)
31.12.2008
29,408,887
3,956,040
7.43
31.12.2009
36,457,711
3,956,040
9.52
31.12.2010
109,136,142
20,257,240
5.39
Period
* According to Russian Accounting Standards date
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Key risks and risk management
Management system
Changes in the structure of equity capital in 2010 Table 10.
Shareholders Share in ARMZ charter capital, % No.
Name of shareholder
As of 01.01.2010
As of 31.12.2010
11
JSC Atomenergoprom
0.002
79.979
22
JSC TVEL
19.653
20.021
33
State Atomic Energy Corporation Rosatom
80.345
-
To finance its investment program in 2010, the Company carried out an additional share issue by closed subscription of 129,915,429 ordinary shares in favor of JSC Atomenergoprom and JSC TVEL. The additional issue raised a total of RUB 805.5 million.
To optimize the ownership structure, Rosatom divested its stake in JSC Atomredmetzoloto (16,171,284,635 shares) in favor of JSC Atomenergoprom in 2010.
Governance and control bodies General Shareholders' Meeting
Board of Directors
The highest governance body at JSC Atomredmetzoloto is the general shareholders’ meeting. In 2010, there were 3 general shareholders' meetings:
The Board of Directors is responsible for the running of the Company and plays a key role in its strategic management. The Board of Directors consists of five members, elected at the annual general shareholders' meeting, mainly from among outside directors not employed at the Company. All board members have extensive professional experience in the nuclear industry.
■■ at an extraordinary meeting on 09.03.2010, shareholders approved major transactions to sign term deposit contracts; ■■ at an extraordinary meeting on 16.04.2010, it was decided to increase charter capital by placing an additional share issue; ■■ at the annual general meeting on 30.06.2010, shareholders approved the annual report for 2009, the annual financial statements for 2009 and distribution of profits, elected the Board of Directors and Audit Committee, and appointed a company auditor.
JSC Atomredmetzoloto 2010 Annual Report
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At the JSC Atomredmetzoloto annual general meeting on 30.06.2010, the Board of Directors was elected for a new term with the same members, namely:
Lokshin, Alexander Markovich Board member since 30.06.2009 From 16.07.2010 to 04.05.2011 – Chairman of the Board of Directors Born in 1957 in Chita, graduated from the Kalinin Polytechnic Institute in Leningrad. Veteran of the energy industry of the Russian Federation. 04.2006 – 06.2008 »» 06.2008 – present »»
First Deputy Director General, Acting Director General, FSUE Rosenergoatom Concern Deputy Director General; Director, Nuclear Power Complex (NPC) Directorate; First Deputy Director General; Director, NPC Directorate, Rosatom
Zhivov, Vadim Lvovich Board member since 07.09.2007. Since 04.05.2011 – Chairman of the Board of Directors.
Born in 1963 in Moscow, graduated from Moscow Energy Institute. 03.2006 – 08.2007 »»
Advisor to the Director General; First Deputy Director General for Raw-Material Resource Management; First Deputy Director General; First General Deputy Director, Director; Raw-Material Procurement Directorate, JSC TENEX
06.2007 – 05.2011 »»
First Deputy Director General, Director General, JSC Atomredmetzoloto
12.2010 – present »»
President, Uranium One Inc.
04.2011 – present »»
Advisor to the Director General, Rosatom
Korogodin, VLADISLAV Igorevich Board member since 07.09.2007.
Born in 1969 in Moscow, graduated from Moscow Physics-Technical Institute. 06.2004 – 10.2007 »»
Deputy Head, Nuclear-Material Industrial Administration; Deputy Head, Atomic Energy and Nuclear Fuel-Cycle Administration, Federal Atomic Energy Agency
10.2007 – 03.2010 »»
Director, Marketing and Sales Markets Department; Deputy Director, JSC Atomenergoprom
03.2010 – present »»
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Deputy Director, NPC Directorate, Rosatom
Key risks and risk management
Management system
Olenin, Yury Alexandrovich Board member since 07.09.2007.
Born in 1953 in Kirovabad, Azerbaijan SSR, graduated from Marx Polytechnic Institute in Yerevan and Penza State Technical University. 01.2004 – 03.2007 »» 03.2007 – present »»
Director General, FSUE PA Start, Zarechniy, Penza Region First Vice President, President, JSC TVEL
Travin, Vladimir Valentinovich Board member since 07.09.2007, acted as Chairman of the Board of Directors from 07.09.2007 to 30.06.2009.
Born in 1960 in Bolshoye Kozino, Balakhnin District of Gorkiy Region, graduated from Moscow Physics-Technical Institute, Arzamas Polytechnic. 12.2005 – 07.2007 »»
Advisor to the Director, Deputy Director, Federal Atomic Energy Agency
07.2007 – 04.2010 »»
Director, JSC Atomenergoprom
The members of the Board of Directors do not own shares in JSC Atomredmetzoloto. Remuneration was not paid to board members in 2010. The Chairman of the Board of Directors is not a Company executive.
JSC Atomredmetzoloto 2010 Annual Report
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COMPANY MANAGEMENT (as of 31.12.2010)
Zhivov, Vadim Lvovich
Khachaturov, Tigran Garikovich
Yampolsky, Ilya Mikhailovich
Boytsov, Alexander Vladimirovich
Director General of ARMZ Uranium Holding Co. (JSC Atomredmetzoloto)
First Deputy Director General
Deputy Director General
Deputy Director General
Liborakina, Marina Ivanovna
Tokmachev, Yury Anatolievich
Pozdeeva, Anna Dmitrievna
Zhilkin, Igor Yevgenievich
Deputy Director General for Strategy
Deputy Director General â&#x20AC;&#x201C; Security Director
Chief Accountant
Director of Finance
Kudoyarova, Olga Anatolievna
Servetnik, Vladimir Alexeevich
Director for Sales and Marketing
Director for Non-Uranium Projects
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Key risks and risk management
Management system
Director General The Director General is the sole executive body at JSC Atomredmetzoloto, responsible for management of the Company’s day-to-day activities. In 2010, the function of Director General was performed by Vadim Lvovich Zhivov, who was elected to this post on 19.11.2007. Mr. Zhivov does not own shares in JSC Atomredmetzoloto.
The wage of the Director General is established in an employment contract concluded between the Company and the Director General. By decision of the Board of Directors, the Director General is paid a bonus for his work during the year based on JSC Atomredmetzoloto’s achievement of the key performance indicators set by the Board of Directors.
Significant information outside the reporting period At an extraordinary meeting of JSC Atomredmetzoloto shareholders on May 3, 2011, Yakov Mikhailovich Polunkin was elected Director General. On May 4, 2011, V. L. Zhivov was elected as Chairman of the Board of Directors at a meeting of the Board.
Audit Committee The functions of the Audit Committee involve control of the Company’s financial and economic activity, including: »» audits of financial records, inventories, regulatory compliance, legality of contracts; »» analysis of the Company’s financial situation, its liquidity and solvency; and »» analysis of decisions by the Company’s executive bodies to ensure their legality and compliance with the Charter. At the annual general meeting of JSC Atomredmetzoloto shareholders (Minute # 5 dated 30.06.2010), the Audit Committee was elected with the following members:
»» Andrienko, Viktoria Alexandrovna – Chief Accountant at Rosatom; »» Burel, Oksana Vladimirovna – Chief Specialist at the Monitoring and Analysis Division of Rosatom’s Internal Control and Audit Department; and »» Zakharov, Alexei Mikhailovich – Treasury Deputy Director for Corporate Financing at Rosatom. The members of the Audit Committee do not own Company shares. Audit Committee members were not remunerated in 2010.
Dividends The JSC Atomredmetzoloto dividend policy is established by the executive bodies based on investment requirements under the Company’s strategy. Table 11.
Information on dividend payments by the Company Period for which dividends were paid Total dividends, RUB thous.
2007
2008
2009
87,861
0
0
All dividends declared were paid in full.
JSC Atomredmetzoloto 2010 Annual Report
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Major and interested-party transactions The JSC Atomredmetzoloto Board of Directors and extraordinary shareholders’ meeting approved the following transactions in 2010,
in accordance with the requirements of the RF Federal Law “On Joint Stock Companies.”
Table 12.
Information on major transactions No. Management body decision (date/number)
Contract (date/number)
Subject of contract
Counterparty
Value of deal, RUB
1
Decision of the extraordinary
Agreement No. 1552 dated
Placement of
Gazprombank (JSC)
33,000,000,000
shareholders’ meeting
19.05.2008 on transac-
funds on deposit
(Minutes No. 3
tion conditions (confirmation of
dated 09.03.2010)
Deposit Transaction No. 1 dated Gazprombank (JSC)
28,200,000,000
Gazprombank (JSC)
19,000,000,000
07.12.2009) 2
Decision of the extraordinary
Term deposit agreements:
Placement of
shareholders’ meeting
20.01.2010 No. 018/2010,
funds on deposit
(Minutes No. 3
20.01.2010 No. 019/2010,
dated 09.03.2010)
20.01.2010 No. 020/2010, 20.01.2010 No. 021/2010, 20.01.2010 No. 022/2010, 20.01.2010 No. 023/2010, 20.01.2010 No. 037/2010
3
Decision of the extraordinary
Term deposit agreements:
Placement of
shareholders’ meeting
20.01.2010 No. 024/2010,
funds on deposit
(Minutes No. 3
20.01.2010 No. 025/2010,
dated 09.03.2010)
20.01.2010 No. 026/2010, 20.01.2010 No. 027/2010, 20.01.2010 No. 028/2010, 20.01.2010 No. 029/2010, 20.01.2010 No. 030/2010, 20.01.2010 No. 031/2010, 20.01.2010 No. 032/2010, 20.01.2010 No. 033/2010, 20.01.2010 No. 034/2010, 20.01.2010 No. 035/2010, 20.01.2010 No. 036/2010
In 2010, the Company concluded no interested-party transactions requiring the approval of its executive bodies under the RF Federal Law “On Joint Stock Companies.”
CONTACT INFORMATION FOR THE Company registrar The Company’s register is held by Open Joint Stock Company Registrar R.O.S.T. Registrar’s details: OGRN 1027739216757, INN 7726030449. Address: 18, Ul. Stromynka, Building 13, Moscow. Telephone/fax: (495) 771-73-36.
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Key risks and risk management
Management system
Report from the Board of Directors on priority activities In 2010, the Board of Directors held 16 meetings, at which it reached decisions on important management issues.
■■ A number of M&A deals were approved, including the acquisition of shares in Mantra Resources Limited.
Strategic management:
■■ A number of large deals were approved for the Company to open credit lines.
■■ The Company’s strategic objective was established. ■■ Key performance indicators (KPI) were set for ARMZ Uranium Holding Co. ■■ The Company’s organizational structure was adjusted.
Key investment projects and future projects:
Remuneration of senior management: ■■ A system was developed for remunerating senior management. ■■ The amounts of remuneration and compensation for senior management were approved.
■■ A list of investment projects was approved, along with a financing limit for investment programs.
plans Improve the performance of the Company’s management bodies.
> 8.3 < Key risks and risk management Risk management is an integral part of ARMZ Uranium Holding Co.’s strategy, and involves early risk identification, assessment, ranking, selection of the method to deal with risk as well as monitoring of the effectiveness of measures. The Company develops risk management methods as a continuous process, covering strategic and operational levels of management, aimed at identifying and minimizing the impact of events that could influence the Company's activities.
activities in 2010 »» Implementation of an insurance policy for the Holding Company, which regulates the amount of coverage for each company, the order and timing of insurance contracts, and insurance reporting;
JSC Atomredmetzoloto 2010 Annual Report
»» selective risk audits at companies in ARMZ Uranium Holding Co, which made it possible to identify a number of risks in a timely fashion and take preventative measures to manage operational risks;
78
»» effectiveness analysis of risk management methods, correction and improvement of these methods (review of existing insurance contracts in response to changing external conditions); »» an evaluation was carried out of ARMZ Uranium Holding Co. production companies, based on which property insurance contracts were signed; »» implementation of a consistent, socially-oriented policy for staff insurance (guaranteed voluntary health insurance for all personnel, accident insurance).
In 2010, ARMZ Uranium Holding Co. operations were associated with a number of risks that were of major significance to the Holding Company. Steps taken to manage these are indicated in the table below.
Operational risks
Production risk: risk that the company is unable to meet its obligations due to the interruption of production as a result of any event (property damage, including such instances related to the illegal actions of third parties, the absence/ disruption of supplies, etc.).
To manage production risks, a strict system of control of production indicators was introduced, ensuring constant monitoring of activities at ARMZ Uranium Holding Co. companies, as a result of which timely decisions were reached based on the current state of implementation of production programs. Property is being insured at market value, and companies are acquiring third-party civil liability insurance.
Legal risks
JSC Atomredmetzoloto and its subsidiaries and dependent companies are constantly monitoring changes in the legislation of the Russian Federation and the jurisdictions where it operates related to the mining of mineral resources and the use of nuclear power, marketing, and export control and nonproliferation, and follows all of the recommendations made by regulatory and control bodies concerning these issues at the international and national level. All contracts signed by the Holding Company receive compulsory approval from the respective company’s legal department (and in some cases, independent consultants are used).
Regulatory risks
Industry regulation is an important factor for ARMZ Uranium Holding Co. Active cooperation between the Company and Rosatom significantly reduced these risks. Social risks
Staff and social risks
ARMZ Uranium Holding Co implements an active staff incentive policy, in particular: »» programs are being implemented to attract workers with experience in the mining industry from other regions, and also to attract highly-qualified workers from related sectors; »» a progressive wage, benefit and social security system has been developed and introduced, aimed at retaining qualified personnel; »» a comprehensive program is being implemented to train staff at all levels, including a talent bank for management positions;
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Sustainable Development
Management system
»» the Holding Company actively participates in developing infrastructure in the regions where it operates and builds staff housing (JSC Dalur). A modern workers settlement is under construction (JSC Khiagda), and old housing is being reconstructed (JSC PIMCU). Occupational safety and health
Ensuring the health and safety of workers is one of the Company’s main priorities. Therefore, a range of measures is being implemented at each production facility in order to improve labor safety and reduce factors that tend to increase accident frequency and threaten employee health and safety. Companies in the group have third-party liability insurance, with limits sufficient to cover existing risks (higher than the level required by Russian Federation legislation). All workers in the Holding Company have accident and health insurance.
Ecological risks. Nuclear and radiation safety risks
Technological risks, nuclear and radiation safety
The minimization of technological risks in the mining and processing of natural uranium, including the risks of nuclear and radiation safety, is ensured through a number of special activities, both of a preventive nature and in case risk arises, including: »» implementing equipment modernization programs at companies in ARMZ Uranium Holding Co. »» complying with existing technological and operational standards; »» monitoring and control, both by sub-divisions and by outside organizations; and »» third-party and worker civil liability insurance at companies.
Risks connected with environmental impact. Ecological risks.
ARMZ Uranium Holding Co. companies, both mining and processing natural uranium, monitor compliance with all standards set by the legislation of the countries where they operate regarding environmental impact, and implement an active policy to reduce this impact and increase the ecological safety of production. The companies insure against environmental risks. Financial risks
Currency risks
The Holding Company’s currency risk in 2010 was estimated as insignificant compared with the situation in 2009, which was primarily due to the setting of ruble prices in the companies’ main contracts. Moreover, as in 2009, management of currency risk in 2010 was handled by centralizing risks at JSC Atomredmetzoloto, which allowed production companies in the Holding Company to concentrate on their core activities. The reduction in currency risks was achieved by hedging and managing the currency position of JSC Atomredmetzoloto, as a result of which a policy was introduced to change the structure of the credit portfolio in order to balance the currency assets and liabilities of the parent company.
Interest risks
This risk was minimized during the signing of credit agreements by establishing a balance between floating and fixed interest rates. Thus, in early 2010, most borrowing was carried out by ARMZ Uranium Holding Co. at a floating rate tied to the
JSC Atomredmetzoloto 2010 Annual Report
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MosPrime rate, which has a downward trend. However, in the second half of 2010, when rates reached “an all-time low,” fixed rates started to predominate in the ARMZ Uranium Holding Co. portfolio. Liquidity risks
Liquidity risks did not significantly influence the activities of JSC Atomredmetzoloto due to the implementation of a focused standing policy for the management of this risk, which included: »» regular liquidity monitoring for companies in the group (gathering and analysis of the payment schedules of companies in the group); »» setting limits for the ARMZ Uranium Holding Co. group of companies in several banks; »» restructuring of the credit portfolio to expand the longterm component of the portfolio.
Credit risks (counterparty default on financial obligations)
The main buyers of products produced at ARMZ Uranium Holding Co. enterprises are Rosatom companies, thereby significantly reducing the credit risk of the Holding Company, which is highly reliable and solvent.
Equity risks
Given that one of the main priorities for JSC Atomredmetzoloto as a mining division with maximum business value continues to be the global expansion of State Atomic Energy Corporation Rosatom, ARMZ is implementing a number of investment projects, including on foreign markets. This gives rise to the appearance of equity risks, which are currently managed at the level of detection, classification, monitoring and preliminary assessment. The Company is currently looking into the possibility, and necessity, of introducing Directors & Officers Liability Insurance.
Commodity risks
ARMZ’s stable market position is primarily due to a long-term growth trend in world demand for natural uranium and ARMZ products on the world market, guaranteed by the current and future requirements of the global atomic energy sector. Specific risks: uranium mining risks
Risk of errors in assessments of the quality and volume of deposits
The use of the most modern methods of calculating reserve balances and resources, applied in best international and Russian practice, allows ARMZ Uranium Holding Co. companies to receive the fullest and highest-quality information on its deposits at the geological exploration stage. The latest geological exploration methods, using geological-mathematical models, significantly reduce the risk of inconsistencies between geological data and actual reserves.
Risks associated with the territorial restrictions of deposits
The Company is taking steps to diversify its uranium rawmaterial base by creating uranium-exploration and mining joint ventures abroad (Kazakhstan, Namibia, etc.).
Risk of political instability/ political changes in operational regions capable of influencing
Historically, the main JSC Atomredmetzoloto assets have been concentrated within the Russian Federation and the Republic of Kazakhstan. At the beginning of 2009,
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Sustainable Development
Management system
achievement of the Company’s objectives
the Company decided to expand the geography of its raw material base and launch an active-expansion phase. This approach will, in the future, ensure a reduction in ARMZ Uranium Holding Co. exposure to potential geopolitical risk, should it arise in any given region.
Risk of dependency on the chain of suppliers and subcontractors, risk of their default
To reduce ARMZ Uranium Holding Co. reliance on suppliers and subcontractors, special companies have been set up, the aim of which is to centralize supply of the main auxiliary processes for mining companies (engineering, drilling). These companies ensure continuity of production processes and cost control, making it possible to manage a number of financial risks. Additionally, a procedure was introduced at the Holding Company – as at all companies within the Rosatom system – of selecting suppliers based on a single industry procurement standard, which allowed for the introduction of a number of additional measures to ensure contracts were honored (advance payments, guarantees).
Risk of dependence on a single product
As a mining division, the Holding Company also has a policy of product-line diversification and searching for new products, in connection with which it is involved in the management of enterprises engaged in mining gold and non-nuclear materials.
Risk of a drop in product demand
To minimize the impact of market risks and to ensure the stability and continuity of ARMZ Uranium Holding Co. activity, sales markets for uranium products are being expanded, for which JSC Atomredmetzoloto provides centralized marketing of Holding Company products, including: »» developing natural uranium sales systems; »» expanding the volume and geography of natural uranium sales; and »» ensuring sources of financing for programs to develop uranium production in Russia and abroad based on longterm contracts for produced product.
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Priority areas for developing risk management systems in 2011: »» Harmonization in ARMZ Uranium Holding Co. of documents, approved by Rosatom as part of the formation of a corporate risk management system (hereinafter, CRMS). »» The systematization and practical implementation of an approach to the management of monetary, credit and commodity risk at ARMZ Uranium Holding Co. based on the CRMS. »» Introduction of risk-reporting systems. »» Improving insurance systems at companies, including insuring assets at replacement value. »» Carrying out selective risk audits at ARMZ production companies. »» Development of sales and marketing systems for Holding Company products (long-term contracts with consumers) to ensure sales of produced product.
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The further development of ARMZ risk management systems is planned in the following areas: »» Management of individual risks (credit, currency, commodity, equity, etc.) as part of the established practice of a “traditional” decentralized system of risk management, the regulation of business processes for the management of individual risks in the Holding Company. »» Integration of ARMZ Uranium Holding Co. into the Rosatom CRMS, in the context of Rosatom’s strategic objective of developing the organizational structure of risk management and the subsequent consolidation of the CRMS organizational structure at the Holding Company. »» The development and improvement of CRMS as part of its transition to quantitative indicators and linking to specific key performance indicators, namely, the fullest-possible use of quantitative methods in determining risk-readiness. »» Integrating CRMS processes into all of the Holding Company’s key processes. »» Use of software to automate processes and reduce costs as part of the CRMS process.
Sustainable Development
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Sustainable Development
9 Personnel Social policy Security Health and safety Environmental protection and ecological safety Development of territories where the Company operates Charity and sponsorship activity Cooperation with interested parties
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Sustainable Development
ARMZ Uranium Holding Co. understands sustainable development to be a system of consistent economic, environmental and social measures aimed at managing the full life-cycle of mining. These issues are highlighted, not only in the section on sustainable development, but also in describing the strategy of development and production activities. Establishment of effective and safe jobs, professional development and social support for employees, environmental protection, support for education, culture and sport are priorities. All activities in the area of sustainable development are carried out based on continuous interaction with interested parties and aim to increase competitiveness.
> 9.1 < Personnel The current stage of development at JSC Atomredmetzoloto, aimed at increasing the effectiveness of existing production and expanding the Company’s global presence, requires the creation of conditions for high-performance and proactive work, high staff motivation to achieve ambitious goals, continuous development and the improvement of their skills and knowledge. That is why an effective human resource policy is one of the Company’s highest priorities.
»
Priority human resource policies include:
■■ ensuring that personnel have the required qualifications to perform current and future tasks;
■■ developing worker potential in line with the requirements of employees of world-class companies;
■■ the ARMZ Uranium holding Co. payroll amounted to 10,700 people.
■■ use of modern social technology, based on principles of partnership and cooperation; and
■■ A single unified wage system was introduced at key companies in the Holding Company.
■■ creating platforms for effective generation change.
■■ An annual personnel assessment program was launched. ■■ A unified social policy was introduced.
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Number and make-up of ARMZ Uranium Holding Co. staff in 2008–2010 2009
12,000
10,414
14,000
2010
11,565
12,701
2008
10,000 8,000 6,000 4,000 2,000 0 figure 12
Average ARMZ Uranium Holding Co. headcount in 2008–2010 Remaining workers
Workers under 35
14,000
2008
12,000 10,000
2009
2010
6,287 4,063
6,263 4,437
8,000 6,000
8,072 4,979
4,000 2,000 0 FIGURE 13
Staff dynamic at ARMZ Uranium Holding Co. broken down by age group Men 7,116
Women
4,266
6,000 4,000
2,980
8,000
2,986
6,855
8,692
10,000
2009
2010
2,000 2008
0 FIGURE 14
Gender staff structure at companies in ARMZ Uranium Holding Co. Men
Total turnover
Women
13%
2010
4%
4%
9%
2009
1%
14% 12% 10% 8% 6% 4% 2% 0
2%
Headcount at the main Russian companies of ARMZ Uranium Holding Co. increased by 621 over 2009 figures to reach 10,700 people in 2010 (from the inclusion of JSC VNIPIPro mtec h n o lo g ii in ARMZ Uranium Holding Co.). Generally all of the Company’s workers work full time. In 2010, headcount at JSC Atomredmetzoloto fell by 7%, which made it possible to reduce the number of management levels. At most companies in ARMZ Uranium Holding Co., the share of young specialists is increasing. Ensuring generational continuity is one of the Company’s key human resource objectives. Most employees of ARMZ Uranium Holding Co. companies are male which is primarily due to the specific nature of the work required of them. The implementation of programs aimed at maintaining staff stability made it possible to reduce or leave staff turnover levels unchanged in 2010 at most companies in ARMZ Uranium Holding Co. At most companies, locals predominate among employees (including managers), on average – 82% in 2008, 87% in 2009 and 91% in 2010. Most teams in Uranium ARMZ Holding Co. companies are multinational. There were no registered cases of discrimination at ARMZ Uranium Holding Co. based on gender, national origin, or other characteristics in 2010. Professionals and managers are employed from other regions, in case of lack of local specialists with the required qualifications and as a result of the restricted structure of the local labor market (the main production facilities of a number of enterprises are located at quite a distance from major population centers). The Company is actively developing an internal rotation system, which allows maximum use of the most successful workers and managers, as well as the adoption of the best practices throughout the entire Holding Company.
FIGURE 15
Information on staff turnover at ARMZ Uranium Holding Co. Russian companies, broken down by gender
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Sustainable Development
Payroll In 2010, key enterprises in the Holding Company introduced a unified payroll system, which aims to eliminate different approaches and technologies in the area of remuneration and disproportions in the wages paid for work
in comparable positions. In 2010, a single unified wage system was introduced for all workers at JSC Khiagda, JSC PIMCU and JSC Dalur. This made the payroll payment system more transparent and understandable for each worker.
Table 13.
Standard wage amounts in major regions of operations Company
Year
Standard company wage, RUB
JSC PIMCU
2008
17,073
2009
19,412
2010
23,654
2008
15,683
2009
18,612
2010
23,025
2008
21,415
Trans-Baikal Territory / Republic of
15,147/14,142
2009
26,382
Buryatia
16,607/18,673
2010
36,393
2008
41,020
Moscow, Kurgan Region, Chita Region,
-
2009
44,520
Republic of Buryatia
-
2010
63,066
2008
48,520
JSC Dalur
JSC Khiagda
RUSBURMASH INC
JSC VNIPIpromtechnologii
Region of operations
Trans-Baikal Territory
Standard regional wage, RUB
15,153 16,554 19,036
Kurgan Region
11,319 12,663 13,090
18,608/21,388
Moscow
29,000
2009
65,800
33,000
2010
73,200
46,000
QUALIFICATION IMPROVEMENT, TRAINING AND DEVELOPMENT Taking the needs of workers in ARMZ Uranium Holding Co. companies into account, a corporate training and staff development system was set up. The main objective of the system
is to ensure development of staff knowledge and the skills needed to achieve ARMZ Uranium Holding Co. business goals.
Activities and results in 2010 ■■ The Company has implemented a system of long-distance learning, offering 10 training courses; since remote learning was introduced, 120 workers have taken courses.
■■ Work was started as part of a “Career Planning” program, which allows each worker to plan their career development and identify opportunities within the Company.
■■ A “Leadership Academy” expertise continuity program was launched, involving the identification and development of employees who are ready to effectively manage the units. The program gives employees the opportunity to obtain the knowledge and skills necessary to participate in achieving the strategic goals facing the Company.
■■ A program was implemented to offer opportunities for workers to have training at companies in the Group, in the Rosatom management chain, and at other companies involved in the same sphere of operations.
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Plans for 2011 ■■ Transfer JSC VNIPIpromtechnologii and RUSBURMASH INC to unified payroll system. ■■ Harmonize the unified payroll system at JSC Khiagda, JSC PIMCU and JSC Dalur.
■■ Continue implementing programs aimed at worker-capability enhancement (“Leadership Academy,” “Career Planning” and an internship program). ■■ Establish a functional talent bank at subsidiaries.
■■ Include the activity of workers up to specialist level in the annual performance assessment procedure. ■■ Clarify the system concerning professional competencies to assess performance of workers at production sub-divisions (work specialization).
■■ Extend the remote learning portal: integrate the system at subsidiaries, install an additional “virtual classroom” module for the remote training of workers at subsidiaries. ■■ Implement a Company continuous professional development program to retain core competencies.
> 9.2 < Social policy One of the most important principles of ARMZ Uranium Holding Co. operations is careful attention to the interests of society, promoting the social and economic development of the regions in which the Company operates, creating a favorable business climate, maintaining decent working conditions, and social and spiritual well-being. In this regard, JSC Atomredmetzoloto seeks to ensure sustainable business development, paying attention not only to the economic but also the social component of its operations. In 2010, expenditures on social benefits for workers were distributed among the following areas: Table 14.
Amount and terms of social benefits in 2010 Types of social benefits, RUB mln
ARMZ
JSC PIMCU
JSC Dalur
JSC JSC VNIPIKhiagda PROMTECHNOLOGII
7.9
30
2.7
1.5
0
0.02
4.4
0.02
0
0
–
10.6
10
0
0
Sporting and cultural events
0.6
4
0.2
0
0.8
Material aid
0.8
VMI VMI, accident & life Pension benefits
3.6
4.8
2.7
0.01
Payment of holiday fares, treatment
–
14.9
–
0
0
Supplementary payments upon retirement
–
–
1.3
0
0.4
Once-off holiday and anniversary payments
0.2
6
0.2
0.01
0.3
Compensation of housing/hostel rental
0.7
1.4
0.6
5.6
0
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Security
Sustainable Development
The Company pays great attention to the non-material motivation of Holding Company employees. State, government and industry awards for the most distinguished employees
are highly appreciated. In particular, 50 workers were awarded the “65 Years of the Nuclear Industry” anniversary medal in 2010.
Activities and results in 2010 ■■ In 2010, ARMZ Uranium Holding Co. companies began implementing a unified social policy that stipulates the standardization of benefits and guarantees for all employees, considering the specifics of operations, business location and social infrastructure development. ■■ Work of the implementation of the unified principles for ensuring the employees of the Holding against accidents has begun. All workers at ARMZ Uranium Holding Co. are covered against accidents and illnesses. ■■ Companies in the Holding Company have joined an agreement with the Russian Federal Medical and Biological Agency, fixing sources of funding and the types and amounts of services provided by compulsory health insurance programs through the federal budget and Company funds within the framework of voluntary insurance. ■■ Companies in the Holding Company have begun implementing industry standards in the field of pension benefits. Several pensioner status levels have been introduced: veteran pensioner, honorary pensioner, and pensioner. Each group receives a certain set of benefits and guarantees. ■■ JSC PIMCU has launched a housing program. The program involves compensating workers' mortgage interest payments, the sale of housing owned by JSC PIMCU in Krasnokamensk, allowing workers to pay in installments over 5-10 years, providing workers with temporary housing owned by JSC PIMCU in Krasnokamensk under commercial tenancy agreements, and purchasing housing under construction, including outside Krasnokamensk.
■■ A draft JSC PIMCU collective employment agreement for 2011-2013 has been developed and approved, according to the industry agreement on nuclear energy, industry and science for 2009–2011. ■■ In line with the employee bonus system of industry and corporate awards for outstanding professional achievements, JSC PIMCU employees were awarded the following types of awards to mark professional holidays and anniversaries: ›› state award Honored Geologist of the Russian Federation– 1 person; ›› industry awards – 452 people (Veteran of Nuclear Energy and Industry medal – 363 people); ›› Ministry of Energy of the Russian Federation awards – 13 people; ›› Trans-Baikal Territory awards – 63 people (including 3 employees awarded the title of Honorary Employees of Trans-Baikal Region); ›› Krasnokamensk and Krasnokamensk District awards – 108 people; ›› JSC PIMCU awards – 481 people. ■■ In order to ensure the social protection of former employees at JSC PIMCU, additional payments to personal pensions were received by 1,276 retired employees. ■■ Based on the agreement between the Company and a non-state pension fund (First National Pension Fund), and on the basis of Regulations Governing Private Pensions for employees at JSC Dalur, workers receive additional private pensions upon their retirement.
■■ Collective agreements have been signed between JSC PIMCU, JSC VNIPIpromtechnologii, JSC Dalur and the trade unions of these companies that provide social protection to company employees, including health and safety. The collective agreements cover all the employees of these companies, including those working part-time.
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Plans for 2011 ■■ Bring all companies’ social programs into compliance with unified corporate standards. ■■ Standardize compensation packages for Holding Company’s employees.
with the industry agreement for atomic energy, industry and science for 2009–2011. ■■ Step up cooperation with the Russian Federal Medical and Biological Agency in expanding the types and number of services offered under compulsory medical insurance from federal funds and Company funds as part of voluntary health insurance programs.
■■ Bring collective employment agreements at JSC PIMCU, JSC Dalur and JSC VNIPIPromtechnologii into compliance
Youth policy Company management is implementing an active policy to attract and retain young
specialists, which will allow the Company to look to the future with confidence.
Table 15.
Main results in 2010 JSC PIMCU
JSC Dalur
JSC Khiagda
RUSBUR- JSC VNIPIPROMTECHNOLOGII MASH INC
Young workers hired
1,348
57
–
3
41
Total number of employees under 35
3,659
188
144
183
127
42.2
43.7
44
28
28.7
6
1
1
0
0
1,050
–
30
–
–
183
9
8
1
9
Share of employees under 35 Targeted contracts Number of young specialists to have undergone second-profession training Number of interns
On March 25, 2011, as a part of preparing the Company’s annual report for 2010, a dialogue was held with interested parties on staff development and the training of young specialists. The dialogue was held with the participation of Company management, representatives from
Rosatom, regional and local authorities, and public organizations, and dealt with important areas of the Company’s youth policy. More detailed information is presented in Section 9.8 “Cooperation with interested Parties.”
Activities and results in 2010 ■■ Long-term contracts have been signed with educational institutions to jointly organize and conduct educational and informational, vocational and undergraduate internships for students studying key industry disciplines.
■■ Y oung professionals who attended training and improved their qualifications receive second/related professions.
■■ Informational work is being carried out at schools on an on-going basis, aimed at attracting in future young professionals to the Company (participation in job fairs, career days).
■■ Sports and cultural events have been organized.
■■ The practice of teaching employees and their family members at academies – with mandatory employment at the Company – has been implemented.
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■■ A coaching system has been organized at companies.
■■ JSC PIMCU has formalized a youth policy; the company has a Youth Council. The “Best Young Professional” contest was held. ■■ JSC VNIPIpro mtec h n o lo g ii has a School for Young Specialists. Lectures were
Security
Sustainable Development
held on the history of the institute and its main achievements over 60 years (speakers included the company director and his assistants) and 2 lectures on the main activities of JSC VNIPIpro mtec h n o lo g ii (design and research, given by key experts in these fields) were also conducted. ■■ A remote graduate school is in operation to support master's theses on topics of inter-
est to Rosatom (a scientific and technical advice service is in place for dissertations). Two young professionals have proved their master's theses. ■■ Pavel Vereshchagin, a young specialist from JSC VNIPIpro mtec h n o lo g ii, received the Rosatom “Nuclear Industry Youth Researcher Prize,” worth RUB 100,000.
Plans for 2011 ■■ Support of existing programs for young professionals at companies within the Holding Company. ■■ Conducting training for professionals responsible for implementing youth policy at companies within the Holding Company. ■■ Carrying out activities for young professionals at the Holding Company: competition for
scientific papers, with students being awarded scholarships and included on the Holding Company’s register of young specialists; holding the “Best Young Professional” youth competition. ■■ Development of a youth housing policy at JSC PIMCU.
> 9.3 < Security In 2010, security activity at ARMZ Uranium Holding Co. was carried out in compliance with Russian legislation, regulatory documents and the plans of Rosatom and JSC Atomredmetzoloto. Operating indicators developed by Rosatom for security divisions include: ■■ meeting criteria for the physical security of nuclear facilities and materials (no violations of established access controls, which could lead to sabotage or a terrorist attack against nuclear facilities); ■■ compliance with criteria for protecting state secrets (no evidence of leaks of information constituting state secrets that could damage the interests of defense and state security);
■■ implementation of a plan for regular inspections of physical security at subordinate organizations (enterprises); and ■■ disbursement of funds allocated for the upgrading and improvement of physical security at organizations (enterprises). All of the abovementioned KPIs were met in full.
■■ implementation of a plan for regular inspections to ensure secrecy and control the protection of information constituting state secrets in subordinate organizations; ■■ implementation of a plan for the certification of equipment intended for work with information constituting state secrets;
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Results in 2010 ■■ A semi-annual extended meeting of the JSC Atomredmetzoloto Security Directorate and the security units of subsidiaries and affiliates was held. The meeting was attended by representatives of the Russian Federal Security Service, Rostekhnadzor (Russian Technical Supervisory Authority), the Rosatom State Secret and Information Protection Department, the Federal State Unitary Enterprise Atom-Okhrana, and subcontractors, as well as the directors of internal control and procurement departments. ■■ A secure electronic-documents workflow infrastructure was launched with a legally- binding electronic signature based on the Crypto-Pro certification authority; a system for monitoring the movement of restricted information was introduced, and the first stage of the work on setting up a system to protect personal data at the Company was completed in compliance with applicable legislation. Work along these lines has been positively evaluated by State Atomic Energy Corporation Rosatom and taken into consideration when setting up a unified document for the industry. ■■ The Company has actively participated in implementing a Rosatom program to transform the financial-economic and IT units by meeting requirements for information security, including
projects to implement a unified system of electronic document management for the industry, creation of corporate data networks, the introduction of automated library management for geological-mathematical models at JSC Atomredmetzoloto and the automation of mine planning, the creation of key public infrastructure based on a single certification center, and the creation of a unified system of information security for the industry. A significant volume of work was completed in an extremely short time, without any leaks of restricted information or violations of the RF Federal Law “On Personal Data”. ■■ The secrecy protection system installed at the Company prevented the loss of secret documents and/or or the leaking/divulging of information constituting a state secret. ■■ Comprehensive inspections were carried out at JSC Khiagda, JSC Dalur and JSC PIMCU on issues of secrecy and secret record management, data protection and information security, physical security, etc. The acts prepared as a result of the inspections were sent to the Rosatom State Secret and Information Protection Department. Checks were also carried out on the state of information security and the protection of restricted information at JSC VNIPIpromtechnologii and JSC Elkon MMP.
Plans ■■ Provide methodical and practical support to subsidiaries and dependent organizations on the protection of information constituting a state secret, and also on information security and the protection of restricted information, including organizing work to protect personal data and implementing projects to create document management systems. ■■ Strengthen control over compliance with regulatory documents with regard to international cooperation. ■■ Completion of the second stage of a project to create a personal data security system at the Company in compliance with the RF Federal Law “On Personal Data” and the launch of personal data security systems.
the subsequent certification of systems as complying with this standard. ■■ The preparation and introduction of a regulatory base dealing with information security (policies, regulations, guidelines, etc.). ■■ A range of activities aimed at increasing awareness among Company workers regarding the ensuring of information security. ■■ The launch of an automated staff monitoring system.
■■ Start working on the introduction at JSC Atomredmetzoloto of a system to manage information security in compliance with the international standard ISO 27001:2005 and
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Health and safety
Sustainable Development
> 9.4 < Health and safety JSC Atomredmetzoloto recognizes the impact its production has on the environment and considers the health and safety of its employees to be an absolute priority.
Ensuring radiation safety At JSC PIMCU, the average effective dose fell from 3.6 mSv in 2009 to 3.2 mSv. No employees were exposed to an annual dose exceeding 20 mSv (11 people in 2009). No employees were exposed to the individual dose above 100 mSv in the period 2006–2010. At JSC Dalur and JSC Khiagda no employees were exposed to the individual effective dose of more than 20 mSv. Average annual exposure amounted to 1.64 mSv and 1.02 mSv, respectively.
»
ARMZ Uranium Holding Co. is organizing the effective management of radiation safety work at all companies in the group. In its work, the Company’s Radiation Safety Department is guided by the legislation and other regulatory acts of the Russian Federation governing radiation safety. Personnel is not exposed to an individual radiation risk exceeding 10-3. The average effective dose for Holding Company personnel does not exceed 10% of the permissible level. The objective of the Radiation Safety Service is to carry out status checks and to ensure the radiation safety of work during the mining, processing, storage and transportation of radioactive substances and waste. External radiation exposure for Group A personnel at ARMZ Uranium Holding Co. is controlled with the help of individual thermoluminescent dosimeters. Individual doses are assessed taking the internal radiation exposure of personnel into account. The main radiation factors (volume activity of radon, the power of the equivalent/exposure dose of X-ray and gamma radiation, radioactive contamination of surfaces with alpha- and beta-nuclides) are controlled using modern certified equipment.
In 2006-2010, no one at ARMZ Uranium Holding Co. exceeded the radiation security norm NRB-99/2009 dose limit of 50 mSv.
Activities and results in 2010 ■■ In 2010, there were no Level 2 incidents or higher on the INES scale: no employees were exposed to the dose above limit (20 mSv in 2010) – for the first time in the history of JSC Atomredmetzoloto and JSC PIMCU. These results were achieved due to the timely rotation of Group A personnel with dose exposure of 80% of the admissible annual effective dose, and also thanks to the installation of new mining equipment and the modernization of ventilation systems.
JSC Atomredmetzoloto 2010 Annual Report
■■ The Company continued implementing its program to modernize radiation control and reduce personnel exposure at JSC PIMCU in 2009–2010. ■■ No one exceeded the dose set by safety regulations NRB-99/2009 of 50 mSv at ARMZ Uranium Holding Co. facilities in 2006–2010. There were no incidences of loss of license in the area of nuclear power use.
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»
At JSC PIMCU:
■■ A mobile radiation laboratory was purchased and installed; ■■ 66 insulating concrete and wooden brattices were installed at underground mines; ■■ 11 DV-1000 ventilation doors were installed in automatic mode; ■■ timely personnel rotations were carried out based on individual dosimeter checks; and ■■ 12 intake shaft heaters were repaired and replaced.
1 fuel pellet contains the equivalent energy of 50 barrels (about 8,000 liters) of oil, 40 tons of coal or 900 cubic meters of gas. A single power block at a nuclear plant contains over 17 million of these pellets.
Health and safety
»
In order to achieve its strategic goals, the Company is actively develop technology, and systems for organizing, planning and controlling production processes. Work to prevent occupational injuries is being carried out within the framework of an industry-wide system for labor safety management, approved by Rosatom. Main steps to improve the technical level of subsidiaries and reduce dangerous working conditions:
“A BASIC CONDITION FOR THE GLOBAL DEVELOPMENT OF NUCLEAR POWER INDUSTRY IS THE COMPLETE OPENNESS OF THIS PROCESS AND ABSOLUTE ■■ The design and construction of new GUARANTEES OF PUBLIC production capacities that take modern safety SAFETY IN ALL CIRCUMrequirements into consideration and ensure STANCES.” high productivity, maximum automation of production, and a reduction in the number of dangerous works;
■■ Technical improvements to remove obsolete equipment from existing production facilities;
S. V. Kirienko, Director General, the STATE ATOMIC ENERGY CORPORATION Rosatom
■■ Internal and external audits of production facilities to identify and eradicate previouslyaccumulated violations of health and safety requirements; ■■ Organisation of activities to strengthen discipline and provide additional training.
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Environmental protection and ecological safety
Sustainable Development
Activities and results in 2010 ■■ Growth in the number of fatal accidents was halted. There was 1 fatal accident at an ARMZ Uranium Holding Co. facility in 2010 (1 in 2009, 5 in 2008). ■■ At JSC Dalur and JSC Khiagda, there were no accidents in 2010. ■■ Total expenditures on health and safety at ARMZ Uranium Holding Co. companies amounted to RUB 184 million.
At JSC PIMCU:
»» Work began on a technical upgrade program for mining work in 2010–2012, which aims to put an end to manual labor in the main production processes and reduce radiation exposure and the risk of injury. »» An industrial safety audit was carried out at the hydrometallurgy plant, the combined heat and power plant and the Urtuiskoye mine. »» Competitions were continued between sections of mines and employees were motivated to work without accident.
»» Automatic medical examination cabins were purchased and installed as part of a staff medical examination system. »» An information campaign was organized to bolster work discipline. »» Restructuring of the health and safety service commenced. »» The practice of the internal investigation of incidents was introduced.
At JSC Khiagda:
»» A site for the storage of solid domestic waste was launched.
At JSC Dalur:
»» Construction of a road and bridge over the Barneva River – from the solution-processing unit to the Ust-Uksyanskoye local sorption unit – was completed to prevent the transportation of hazardous freight through populated areas.
Problem The continuing relatively-high rate of workrelated injuries at JSC PIMCU.
Solution
Further improvement of health and safety systems. Table 16.
Accident frequency rate JSC PIMCU
JSC Dalur
jsc khiagda
1.3
0
0
Severity coefficient
78.4
0
0
Number of lost days*
816
0
0
Frequency coefficient
* Loss of capacity to work for 1 working day or more (days are scheduled working days)
plans ■■ B egin implementation of a comprehensive plan of action in 2011–2012 to reduce the accident rate at JSC PIMCU divisions.
■■ Ensure the implementation of programs to introduce advanced types of reinforcements for underground mining operations.
■■ Implement an approved program for the technical improvement of existing production facilities in 2011 amounting to RUB 288.5 million.
■■ Revise existing Occupational Health and Safety (OHS) systems to take Rosatom analysis, risk assessment and recommendations into consideration.
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> 9.5 < Environmental protection and ecological safety ARMZ Uranium Holding Co.’s environmental policy is based on principles of rational natural-resource management and environmental protection. The main objectives of environmental policy are: ■■ Developing and implementing measures to reduce negative environmental impact as much as possible. ■■ Protection of the natural environment in areas of operations, land reclamation. ■■ Reducing discharges of industrial waste water and harmful substances. ■■ Rational use of energy resources. ■■ Constant ecological monitoring.
CANDU
Storage
200 g dump
Enrichment
coal fuel
LWR
»
230 g U3O8
8,000 kilowatt hours of electricity
»
»
»
230 g SNF
30 g of fuel
»
30–70 kg of ore
» » » » » »
8,000 kilowatt hours of electricity
nuclear fuel
30 g SNP
» » 20 ml waste
6g glass
»
8 000 kilowatt hours of electricity
»
3 tons of black coal or 9 tons of brown coal
CHP
»
+
8 tons of CO2, SO2, and other gas and aerosol emissions
300 kg of ash
figure 16
Comparative characteristics of coal and nuclear fuel
All ARMZ Uranium Holding Co. companies have developed and agreed regulatory limits on maximum permissible emissions, wastewater discharges and pollutants, and regulations on the formation and limits of waste disposal. The necessary permits for emissions, discharges and waste disposal are in place, and systems have been set up to monitor radiation, ecological and industrial safety. Modern laboratories for radiation safety and environmental protection are equipped with devices that provide for the continuous monitoring of emissions into the environment and keep an eye on the level of harmful substances
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at production facilities and company healthprotection zones. The Company has approved an implementation plan for its 2009–2015 environmental policy, which aims to ensure ecological safety and environmental protection at the territories of existing subsidiaries. The information provided in this section of the annual report is based on information contained in the environmental-safety reports prepared in 2010 by three companies in ARMZ Uranium Holding Co. – JSC PIMCU, JSC Dalur and JSC Khiagda – as the most ecologically-significant organizations in the industry.
Development of territories where the Company operates
Sustainable Development
Results in 2010 Internal dumps, mln tons
20
15.7
15
6.9
8.2
10
23.7
25
5 0
0
■■ Waste in Hazard Classes 1–3 is within permissible limits (see Table 17).
External dumps, mln tons
16.3
■■ The situation was significantly improved with the formation and disposal of waste at the Holding Company’s main production facility– JSC PIMCU. There was a significant reduction in original-ground waste disposal as compared with 2009, due to the disposal of 100% of overburden in internal dumps at the Urtuisky brown coal mine (technical phase of reclamation), and thanks to the shipment of previously-accumulated Hazard Class 4 waste (pyrite cinder from sulphuric acid production) to the cement industry. There is no overburden at JSC Dalur or JSC Khiagda.
FIGURE 17
Disposal of overburden from the Urtuisky brown coal mine (JSC PIMCU)
Table 17.
Generation of waste of all hazard classes (t) in 2009–2010 JSC PIMCU
JSC Dalur
JSC Khiagda
2009
2
0
0
2010
4
0
0
2009
1
0
0
2010
0
0
0
Hazard Class 3
2009
475
8
2
2010
253
2
1
Hazard Class 4
2009
28,881
27
3,864
2010
2,496
24
4,071
Hazard Class 5
2009
22,725,600
15
178
2010
23,909,745
9
9,027
2009
22,754,959
50
4,044
2010
23,912,498
35
13,099
99.60
0
99.90
0.40
100
0.01
No
No
No
Company/ Hazard class
YEAR
Hazard Class 1 Hazard Class 2
Total Waste used at the plant, placed at own facilities % Waste given to specialized contractors for use and disposal, % Exceeding of established limits
This cylinder represents the volume of long-life highly radioactive vitrified waste from the amount of nuclear fuel used to produce enough electrical energy to support a typical modern family for about 30 years in a fullyelectrified house with all amenities (HEATING, COOKING AND ALL OTHER HOUSEHOLD CONVINIENCES).
JSC Atomredmetzoloto 2010 Annual Report
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■■ The companies did not exceed the established norms for water intake (see Table 18). Companies managed not to exceed water-use limits by increasing the use of secondary technical
water supply resources , reducing pressure at night in the city pipes to the minimum level, and repairing leaks in emergency pipes.
Table 18.
Water draught by purpose and company, thousand cubic meters water intake for prod. needs
company
JSC PIMCU
water intake for domest. needs
total water intake
underground sources
surface sources
exceeding of limits
12,989
8,113
21,102
18,977
2,125
No
57.5
18
75.5
75.5
–
No
2.9
11.4
14.3
14.3
–
No
JSC Dalur JSC Khiagda
■■ Maximum emission limits were controlled. As a result of production activity at the three companies, the amount of pollutants released
into the atmosphere did not exceed the maximum emission limits set for the companies.
Table 19.
Emissions of pollutants into the atmosphere* at JSC PIMCU, 20101. Name of pollutant
actual emissions in 2010, t
established permissible emission limits, t
actual emissions in 2009, t
SO2 (sulfur dioxide)
6,162.1
11,678.1
6,211
Non-organic dust, ash
6,083.5
7,051.9
5,594
NOx (nitrogen oxides)
1,889.5
2,982.4
2,550
CO (carbon monoxide)
845.9
1,643.4
1,121
Non-organic dust, 20–70% SiO2
180.9
231.4
182
Here and after, for all subsidiaries: method for calculating regulated emissions as envisioned by the Draft Regulations for Emissions (DRE) for each company individually. Each method describes the characteristics as a source of air pollution, which lists pollutants emitted into the atmosphere, the quantitative and qualitative composition of feedstock used, and the basic characteristics of equipment used. Atmospheric emissions are calculated for each element of pollutant on the basis of the raw materials used.
■■ Emissions into the atmosphere were reduced. As a result of production activity at JSC Khiagda in 2010, 138,656 tons of pollutants were released into the atmosphere (61% of the admissible level). Most of these were
boiler-house emissions (86%) (see Table 20). The use of dust-catching equipment reduced emissions into the atmosphere by 22.5 tons in the reporting period.
Table 20.
Emissions of pollutants into the atmosphere at JSC Khiagda, 2010 Name of pollutant
2010, т
2009, т
Carbon monoxide
78.5
76
Sulfur dioxide
24.8
24
Non-organic dust, ash
12
11
Nitrogen dioxide
9.7
11
Soot
10
10
Other
3.6
7
Total
138.6
138
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Development of territories where the Company operates
Sustainable Development
■■ The total amount of emissions from all sources at JSC Dalur in 2010 amounted to 10.699 tons, or 59.8% of emissions limit. Table 21.
Emissions of pollutants into the atmosphere at JSC Dalur, 2010 Name of pollutant
2010, т
2009, т
Carbon monoxide
4.9
0
Manganese oxide
0.0003
0
Ammonia
1.8
1.4
Nitrogen dioxide
2.2
2.4
Sulfuric acid
0.5
0.3
0.351
0.4
Hydrogen chloride
0.1
0.1
Others
0.8
6
10.7
10.6
Nitrogen oxide
Total
Table 22.
Expenditure on environmental protection in 2010, RUB million JSC PIMCU
JSC Dalur
JSC KHIAGDA
Expenditure on minimizing environmental impact Air quality protection
28.5
0.1
1
Water protection
37.5
1.7
not required
Land protection
43.1
0.2
1
10.7
1.2
0
6.2
-
-
119.8
3.2
2
Expenditure on ecological management Environmental monitoring Environmental project work Total
Investments in environmental protection facilities in 2010 amounted to RUB 65.9 million.
essential work to reduce environmental impact At JSC PIMCU:
»» 3.1 km of metal sewer pipes were replaced with polyethylene pipes. »» Installation of drinking water disinfection units, operating on the principle of electro-dialysis: a synthesis of chlorine ions constantly added to drinking water. »» Disposal of 46,702.7 tons of fly ash in mining production. »» Storage of overburden in internal dumps only.
JSC Atomredmetzoloto 2010 Annual Report
At JSC Dalur:
»» Construction of a road and bridge over the Barneva River – from the solution-processing unit to the Ust-Uksyanskoye local sorption unit – was completed to rule out the transportation of hazardous freight through populated areas. »» An ecological audit was carried out at JSC Dalur in November 2010 by representatives from the Finnish company Fortum and JSC TVEL, which gave the company a high rating as a modern, technologically and ecologically safe production facility. During the audit it was
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also recommended to certify the Company as complying with ISO 9001, ISO 18001. Earlier, in May and September 2009, an ecological audit of JSC Dalur was carried out by representatives from Swedish energy companies and JSC TENEX, who also noted the high level of safe production. Based on the recommendations received during the audits, JSC Dalur and
JSC Atomredmetzoloto began evaluating the amount of work needed to introduce environmental and quality-control systems complying with ISO 9001 and ISO 18001.
At JSC Khiagda:
»» Launch of a solid domestic waste unit.
Areas of land disturbed or reclaimed JSC PIMCU
As of 31.12.2010, the total amount of natural territory polluted with radium-226 and uranium was unchanged as compared with 2009, amounting to 8,275,000 square meters. In 2010, under a contract with ATT LLC, a 14.07-hectare area of land was reclaimed near the hydrometallurgical plant and the Promyshlennaya railway station. The Company spent RUB 926,000 for this project. Systematic work is being conducted to reclaim developed areas of the Urtuisky brown coal mine. In 2010, 23,737 tons of overburden were buried inside the mine.
JSC Dalur
As of 31.12.2010, the total area involved in production amounted to 6.0 hectares.
JSC Khiagda
In 2010, 179.6 hectares of land were brought into development. This land is earmarked for construction of the main production units and well-fields. There were no claims for compensation filed in the courts or payments made by JSC Atomredmetzoloto companies over violations of environmental legislation in 2010.
plans In 2011–2015 the Company intends to implement a consolidated plan for the application of ecological policy, developed on the basis of ecological audits and agreed with Rosatom. The plan includes: ■■ Organizational work aimed at improving environmental safety: ■■ i ntroduction of an automated system of production and environmental monitoring (ASPEM) at JSC PIMCU; ■■ reducing the consumption of river water at JSC PIMCU to zero through the company’s own water supply; ■■ maintaining the design capacity of existing electric filters at the JSC PIMCU combined heat and power plant, and the installation of renovated dust control equipment at the boiler units (wet capture); and ■■ introduction of an ISO 14001:2004 ecological control system at JSC Dalur. ■■ technical work aimed at reducing the environmental impact at subsidiaries stemming from production processes, including as part of a targeted federal program to ensure nuclear and radiation safety in 2008 through
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2015, the reconstruction of treatment facilities, reclaiming of land, and carrying out of environmental monitoring:
At JSC PIMCU:
»» reconstruction and expansion of wastewater treatment plants with a capacity of up to 40,000 m3/day; »» reducing dust formation in cinder storage at the sulphuric acid plant by removing pyrite cinder from storage and filling the freed-up space with water-diversion water; »» designing and implementing a project to dispose of waste ash from the combined heatand-power plant in the Krasniy Kamen open pit (in accordance with the targeted federal program to ensure nuclear and radiation safety, as approved by the Government of the Russian Federation); »» selling 35,000–40,000 tons of cinder from the sulphuric acid plant to the cement industry until the permitted development of a cinder storage unit; »» rehabilitation of land near Oktyabrsky Village as residents move out; and »» reconstruction (expansion) of the radioactive waste storage unit at the Srednee Hydrometallurgical Plant (in accordance with the targeted federal program to ensure nuclear and radiation safety, as approved by the Government of the Russian Federation).
Development of territories where the Company operates
Sustainable Development
At JSC Dalur:
»» reclamation of territory polluted as a result of geological exploration and experimental work – decommissioning of in-situ leaching unit PV-89, operating units PV-2, 5-1, 5-2, and 5-3 and the reclamation of their territories; »» site improvements at the Ust-Uksyansky local sorption unit (preventing production impact on the soil); »» draining banks at Ust-Uksyansky (preventing ISL processes from affecting surface waters); and »» start of ISO certification processes.
»» construction of wastewater treatment facilities to treat storm-water and melt-water at industrial facilities; »» construction of a solid domestic waste unit – map No. 2, 3; and »» launch of Phase 1 radioactive waste storage point (map No. 1).
JSC KHIAGDA:
»» organization of solution-gathering systems during repair and reconstruction work on wells; »» construction of systems to divert flood waters and collect surface water from the territory of production units; »» launch of a facility for the complete treatment of wastewater from the workers’ village;
> 9.6 < Development of territories where the Company operates JSC Atomredmetzoloto policy is aimed at support and development of local communities and covers companies in all areas of its operations. In accordance with the Rosatom concept for interaction with local communities and charitable activities, JSC Atomredmetzoloto not only invests in social infrastructure, but also takes into account possible social and economic impact and regional risks when choosing strategic priorities for development, and participates in strategic development planning in the regions where it operates. ARMZ Uranium Holding Co. assists in the social development of all regions where it operates. Companies in the Holding make a significant contribution to the development of areas
where they operate, primarily as major employers and taxpayers, with steady growth in payments to regional budgets:
Table 23.
Tax payments by ARMZ Uranium Holding Co. subsidiaries to regional budgets (RUB thous.) company
2009
2010
JSC PIMCU
605,910
1,012,936
JSC Dalur
37,467
78,997
JSC Khiagda
23,230
49,834
JSC Atomredmetzoloto 2010 Annual Report
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An important part of the Company’s social policy is to maintain social stability in all areas of operations. ARMZ Uranium Holding Co. actively engages with local communities. On April 5, 2011, as part of a campaign to prepare the annual report in Moscow, a dialogue was held on developing
regions where JSC Atomredmetzoloto operates. The dialogue was attended by representatives from subsidiaries, local authorities and beneficiaries in order to identify issues and topics for joint discussion. More detailed information is presented in Section 9.8 “Cooperation with Interested Parties”.
JSC PIMCU JSC PIMCU is a core company in the singleindustry town of Krasnokamensk, Trans-Baikal Region. This status means that management at ARMZ Uranium Holding Co. has a significant social responsibility, because possible problems at core companies can affect the stable development of such towns and become a strategic challenge for the authorities at various levels. The
core company JSC PIMCU is the largest employer in Krasnokamensk, providing employment for 42% of the city's population and over 90% of total industrial production. In 2010, the company’s share in Krasnokamensk city budget revenue amounted to over 40%, and in municipal district budget revenue – to over 19%.
Activities and results in 2010
»
Housing and utilities
■■ RUB 3.1 million was spent on developing project documentation for the construction of a complex of treatment facilities in Krasnokamensk. The cost of capital repairs on the water supply system amounted to RUB 318 million, including RUB 159 million in JSC PIMCU funds.
“For our Trans-Baikal Region, JSC PIMCU is one of the main ■■ As part of a program to resettle villagers revenue-generating from the village of Oktyabrsky, 2 buildings enterprise in the were constructed and 216 families received budget, occupying fifth apartments. There are 138 houses remainplace in Trans-Baikal ing in the village with people still living in Region in terms of them, for whom construction is continuing. Resettlement of the last family is planned for budget contributions. And for our City of spring 2011. Krasnokamensk, JSC PIMCU is a core budget■■ When preparing its development program, forming company that JSC PIMCU carried out an evaluation of the impact of various company development largely determines scenarios on the social and economic situits entire economy and ation in the city and the region. Based on social policy”, recommendations from the Russian Regional Development Ministry, a system was established of Company impact indicators with respect to the budget, housing and utilities, amenities and other areas of city planning. The results of this evaluation were included in the JSC PIMCU development program.
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O. P. Nomokonov, a representative of the Governor of Trans-Baikal Region.
Charity and sponsorship activity
Sustainable Development
»
Social infrastructure
■■ Charity and sponsorship was provided to Krasnokamensk schools in the amount of RUB 3.4 million. Each secondary school and supplementary education school, including sports schools, art schools and a children's art school, has received patronage from the company’s divisions. They provide assistance in preparing the educational institutions for the new school year, as well as organizing travel for talented children to various competitions and festivals, and regional and nation-wide sporting events. In cooperation with technical academies, graduates of schools in the city and district have been sent for Company’s business-related training.
“The entire cultural life that GOES ON in the city exists in direct cooperation with the Argun Industrial Mining and Chemical Association. Not major event is conducted without the participation of the company: all matters are resolved ■■ Financial aid was provided to retired pentogether, we find sioners in Krasnokamensk totaling about RUB 10.6 million. mutual understanding and support, and ■■ Funds were allocated for the upkeep of social hope to continue this and cultural infrastructure (Dauriya Commu- cooperation”, nity Center and Argun Sports Center) – RUB 8.7 million.
■■ The book Argun Veterans was published, and the first documentary on the veterans of the City of Krasnokamensk was made.
L. S. Vasilenko, Deputy Director of the Krasnokamensk City and Krasnokamensk District Municipal Administration.
For the first time in the history of JSC PIMCU, a book was published about war veterans and home-front workers who worked at the Argun Industrial Mining and Chemical Combine in various years. The book was published to mark the 65th anniversary of Victory Day and the 65th anniversary of the nuclear industry. At the annual national Book of the Year contest, Argun Veterans book was recognized as the best book on the anniversary of the victory. Journalists from Krasnokamensk television studio produced a documentary about war veterans–former
home-front workers at JSC PIMCU. For the first time ever, a war veteran and veteran of JSC PIMCU, Arkady V. Sokin, took part in the Victory Day parade in Moscow as part of a delegation from Trans-Baikal Region and was invited to a reception with Russian President Dmitry Medvedev to mark the 65th anniversary of victory. Another representative of JSC PIMCU, the war and labor veteran Alexander G. Petrov, took part in a victory parade held in the regional
JSC Atomredmetzoloto 2010 Annual Report
104
center. For the first time in the history of JSC PIMCU and the city, a photographic exhibition dedicated to war veterans and home-front workers was held during the holidays at the Dauriya Community Center. On May 6, a traditional veterans` gala was held with managers from JSC PIMCU and youth
and community representatives, organized with the assistance of the newspaper Argun Miner. Along with words of gratitude and congratulations, each veteran received gifts from the company's management, including plasma TVs, copies of the Argun Veterans book and the Argun Veterans documentary.
plans ■■ Reconstruction of primary treatment facilities and reconstruction of water pipes. Upon completion of this reconstruction and the construction of Phase 2 of the treatment plant, the facilities will be handed over to the community.
As a result of the dialogue with interested parties that took place on April 5, 2010, a suggestion was made to the Board of Directors to speed up the decision to hand over ownership of the treatment plant and water pipes.
JSC Dalur JSC Dalur pays significant attention to social and economic issues and infrastructure development in the Dalmatovo and Shumikha districts. The company’s program for the
development of regions where it operates includes financing for sport, supporting local schools, and providing help for graduates from local schools upon university enrolment.
Activities and results in 2010
■■ Construction of a residential quarter for JSC Dalur workers was financed. Two buildings were commissioned, as was a small-family 24room hostel. ■■ 10 km of road were built to production facilities. ■■ Work was financed to design Uksyanskoye Middle School in the amount of RUB 1,500,000.
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■■ Charitable and sponsorship donations amounted to RUB 4,619,000, and were aimed at supporting education, culture and sport. ■■ Financial support was provided to Company’s workers whose children took part in festivals: Vadim Terletsky (1999 year of birth) took part in the 5th International Mozart Festival in Prague, Valeria Paderina (1997 year of birth) and Anton Mylnikov (1998 year of birth) took part in the national arts festival SochiFest in Sochi.
Charity and sponsorship activity
Sustainable Development
Plans ■■ Construction of a bridge over the Barneva River in Uksyanskoye (RUB 18,046,000). ■■ Repairs to an Uksyanskoye stadium (RUB 300,000). ■■ Construction of 2 residential buildings in Uksyanskoye and 1 residential building in Shumikha. ■■ According to the license agreements, the administration in Dalmatovo Region will receive RUB 2,500,000, and in Shumikha Region – RUB 380,000.
■■ It is planned to continue work to support culture, sport and education in these areas and to allocate RUB 557,000 to finance these efforts. Within the context of a dialogue with interested parties, a proposal was made to continue work under the license agreement and to develop infrastructure – particularly at rural municipal formations, and there was also a request to motivate management at RUSBURMASH INC to build the same mutually-beneficial relations as JSC Dalur, so as to improve development of the Dalmatovo Administrative District.
JSC Khiagda. Activities and results in 2010 ■■ Financial and sponsorship aid provided in the amount of RUB 196,000. ■■ To celebrate the 65th anniversary of the Victory Day, sponsorship was provided to veterans of the Great Patriotic War and the labor front, as well as to elderly pensioners living alone in Trans-Baikal Region and the Buryatia Republic: ›› teams of veterans from Trans-Baikal Region were put together and sent to take part in an international football tournament in Sochi, organized to mark the 65th anniversary of the Victory Day; ›› veteran conferences and rallies were held; and ›› housing conditions were improved for veterans of the Great Patriotic War and the labor front and for elderly people living alone. ■■ Sponsorship was provided to re-establish the Federal Security Service’s Border History Museum for Trans-Baikal Region. ■■ Support was provided for sporting events in Buryatia and Trans-Baikal Region.
JSC Atomredmetzoloto 2010 Annual Report
■■ Aid was provided to a specialized Olympic reserve school, sporting equipment was purchased, and trips organized to Mezhdurechensk, Belovo, Novosibirsk and Novokuznetsk. ■■ Nine children of the Company’s workers got the opportunity to attend hockey sections. ■■ JSC Khiagda acted as general sponsor of the fishing competition Yeravna-2010. During one of dialogues with interested parties, representatives from local authorities made a number of proposals to JSC Khiagda: ■■ to assist in the tax registration of newlyinvolved subcontractors; ■■ to undertake to maintain the conditions of roads used to transport heavy vehicles using local workers; ■■ to sign social and economic agreements with the regional administration to identify specific measures for possible compensation of losses caused by production activity.
106
> 9.7 < Charity and sponsorship activity In its sponsorship and charitable activity, the Company focuses on supporting areas of public life such as culture, sport, education and science.
Activities in 2010 ■■ Sponsorship was provided to the charity project “Illustrated Books for Blind Children”. JSC Atomredmetzoloto has been a partner in the Regional Charity Foundation “Illustrated Books for Blind Children” since 2000; the foundation specializes in publishing books for partially sighted and blind children. The books, which are published to suit a child's perception and psychic, expand opportunities for kids suffering from visual impairment to interact with the outside world and support their social adaptation. Expenditures on this project in 2010 amounted to RUB 600 thousands.
One problem highlighted during the dialogue with interested parties was the lack of a unified concept of Corporate Social Responsibility. As a solution, the Company proposes to take steps in 2011 to develop a Memorandum on Corporate Social Responsibility at ARMZ Uranium Holding Co. The Memorandum will establish priorities and areas of Company activity in the area of CSR.
■■ JSC Atomredmetzoloto sponsored a concert by the Dominatus Orchestra at the Galina Vishnevskaya Opera Center on April 26, 2010. The sponsorship costs for this project amounted to RUB 1.581 million. ■■ Scholarships for two students at the Institute of Modern Arts were set up using the private funds of Company employees.
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Cooperation with interested parties
Sustainable Development
> 9.8 < Cooperation with interested parties ARMZ Uranium Holding Co. implements a consistent policy of effective cooperation with interested parties, aimed at strengthening cooperation and confidence, based on the following principles: ■■ Active communication to identify and address expectations ■■ Mutual respect for interests and productive cooperation ■■ Honoring commitments ■■ Providing full and timely information on Company’s activities to interested parties ■■ Active cooperation with interested parties in all regions of operations.
Based on its long-term development strategy, and taking into account the practice of interacting with key interested parties, the Company drew up a chart of interested parties in 2010 (Table 24).
“…Maximum openness of information,this is a basic condition for the existence of nuclear industry.”. S. V. Kirienko
Table 24.
Chart of key interested parties Key interested parties
Key issues
Cooperation
Product consumers
• Stability, reliability and continuity of product supplies.
Feedback from consumers: gathering proposals, conducting interviews and surveys, studying complaints and claims.
Shareholders: Rosatom, JSC TVEL, JSC Atomenergoprom
• Implementation of strategy to expand and diversify resource base.
Preparing and implementing long-term development strategy.
• Effectiveness of investments.
Active participation in industry projects,
• Unconditional priority for security.
introducing industry standards.
Business partners on the global
• Stable cooperation.
Holding meetings and negotiations, signing
market
• Protecting shareholders’ rights and interests.
strategic cooperation agreements.
• Implementing joint projects. State and local government bod-
• A responsible, balanced Company policy regarding
Actively informing authorities about the
ies, local associations in regions
personnel.
carrying out of activities under agreements.
of operations
• Safety and no negative environmental impact
Communications within the framework of
• Tax payments.
themed meetings and dialogues.
• Developing infrastructure in regions of operations.
Meeting with representatives from regional authorities.
Investment community
• Effectiveness of investment and quality of growth.
Meeting with representatives of the investment community, adhering to principles of openness and transparency.
• Social responsibility.
Assessing staff satisfaction.
• Training and developing personnel.
Regular dialogues with trade union
• Decent wages.
participation.
Mass media, public organiza-
• Effectiveness of Company operations.
An active information policy, meetings,
tions and society at large
• Social responsibility.
briefings, regular comments from management
ARMZ personnel
to the press on all key events at the Company and the industry.
JSC Atomredmetzoloto 2010 Annual Report
108
Implementation of plans indicated in the 2009 annual report Section
plans
Implementation in 2010
Production Activity Geological exploration
• Carry out geological exploration at 10 deposits.
• Geological exploration was carried out at 10
• Defend temporary-condition feasibility studies
deposits.
for 3 deposits at the State Reserves Commission,
• Temporary conditions and reserves regis-
and permanent-condition studies for 6 deposits.
tered with the State Reserves Commission
• Prepare a report with reserve calculations for the
for the Gornoe, Berezovoe, and Khokhlovskoye
Istochnoye deposit.
deposits.
• Receive development licenses for the Khokhlovskoye,
• Permanent-condition feasibility studies were
Vershinnoye, and Tetrakhskoye deposits.
prepared for 5 deposits in the Yuzhnaya Zone, the Olovskoye deposit, and the Itmanovsky titanium-zirconium sands placer deposit. • A report with reserve calculations for Istochnoye deposit was defended at the State Reserves Commission.
Uranium production JSC PIMCU
• Increase production efficiency.
• As part of a modernization program: 32 piec-
• Launch new capacity.
es of mining equipment were acquired, service centers were organized to service and repair imported mining equipment; an ore production complex was launched for mine No. 1K; a pilot project was launched to introduce a system for developing horizontal beds in ascending order. Level 13 launched at the Glubokiy mine. • Expanded project begun for the technical development of JSC PIMCU. A state inspection was carried out, and a positive evaluation received, for the project to build Mine No. 6 at JSC PIMCU.
JSC Dalur
• Produce 460 tons of uranium.
• 507.8 tons of uranium produced.
JSC Khiagda
• Ensure growth in uranium production to 150 tons.
• 135.1 tons of uranium produced.
• Continue to build industrial complex.
• Company construction continued. • Design and construction work has been carried out at the site of a sulphuric acid plant, and the frame of the building has been erected, with enclosures and foundations for equipment. • The main building has been fitted out, and the main equipment installed.
ZARECHNOYE
• Increase uranium production to 772 tons.
• 778.176 tons of uranium produced.
• Various activities to develop production base.
• Work was carried out to develop production, an additional sand pond was built, and the productivity of a pump station for pregnant and leaching solutions was increased. Work was carried out to reconstruct the ventilation system in the solution-processing unit.
JSC JV Akbastau
• Produce 600 tons of uranium.
• 739.62 tons of uranium produced.
• Amend subsoil use contracts.
• A feasibility study of permanent standards was carried out at section No. 3 of the Budennovskoye deposit, with calculation of reserves.
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Review of financial situation and results
Sustainable Development
Karatau
• Reach uranium production of 2,000 tons.
• Left the JSC Atomredmetzoloto management chain in 2010.
Construction of new mining companies in Russia JSC Elkon MMP
• Continue to calculate and confirm reserves, and also
• Implementation of the project continued: a
to design the enterprise in compliance with Russian
technical report and a report on investment
and international standards.
decisions have been prepared; an R&D program has been carried out in full.
JSC UMC Gornoe
• Confirm a feasibility study of temporary conditions
• A feasibility study of temporary standards at
at the Gornoe and Berezovoe deposits.
the Gornoe and Berezovoe deposits has been
• Carry out a geological and economic evaluation of
prepared and approved by the State Reserves
small-reserve uranium deposits in the region.
Committee.
• Complete geological exploration at the Berezovoe
• A declaration of intent has been prepared
deposit.
and public hearings held on the Gornoe deposit.
• Development of a project for pilot production at the
• Research has been carried out on large
Berezovoe deposit.
representative samples and a system has been
• Hold public hearings on a declaration of intent for
developed for processing ore at the Gornoe
development of the Berezovoe deposit.
deposit. • A study has been made of the technological qualities of ore at the Berezovoe deposit in the contours of the planned open pit; initial information has been put together for the preparation of pilot production.
JSC OMCC
• Carry out a range of pre-project and design work.
• A great deal of design and pre-project work
• Carry out research and prepare Pre-Feasibility Study
has been carried out: assessment drilling and
and Feasibility Study.
geo-mechanical studies have been carried out
• Prepare and approve the feasibility study.
to JORC standards. • An international-standard Pre-Feasibility Study was carried out. • A report on a feasibility study of permanent exploration standards, with recalculation of reserves, was submitted to the State Reserves Committee.
JSC Lunnoe
• Complete the development of a project to build a pilot
• A geological-mathematical model has been
industrial unit at the Lunnoe deposit.
prepared for the license zone; a forested-area
• Hold public hearings on an environmental impact
development plan was drawn up and approved;
study for the project.
the necessary documentation was drawn up to
• Start construction of a pilot industrial unit.
lease a section of forest.
• Carry out a range of scientific research and experi-
• Public hearings were held on an
mental work to develop a technological system for heap
environmental impact study for the project.
leaching in field conditions.
• Plans for the open pit and for mining work
• Carry out geological exploration work.
have been prepared as part of a project to build a pilot industrial unit. • Geological exploration work involving 18,400 linear meters of coring has been carried out.
. Service and other companies RUSBURMASH INC
• Ensure the timely execution of high-quality drilling
• Work carried out in a timely and high-quality
and geological exploration work and also geophysical
manner.
and repair work at Russian uranium deposits.
• Inventory of drilling and auxiliary equipment significantly increased.
LLP JV RBM-Kazakhstan
• Increase its drilling fleet to 15 drilling rigs.
• The company’s drilling fleet grew by 6 units
• Offer a new type of service on the market – repair of
to 15 rigs.
production wells.
• Offering of a new type of service-repair of production wells – is planned for 2011.
JSC SY Corporation
• Continue work to coordinate the project.
• Work to coordinate the project was continued.
JSC Atomredmetzoloto 2010 Annual Report
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LLC ESC ARMZ
• Set up a service centre to handle imported equipment.
• The company’s profile was changed in 2010.
• Reach annual coal supplies from the Urtuiskoye deposit of 1 million tons. • Organize direct supplies of Urtuiskoye coal to the international market. Projects with non-nuclear materials Current projects (Zirconium
• Complete all necessary pre-project work.
• The development of a production system
Project)
• Prepare a feasibility study of permanent exploration
for the enrichment and separation of ilmenite,
conditions and defend the document at the State
chromite, and hematite concentrate was
Reserves Commission.
completed.
• Perform an assessment of reserves to international
• A feasibility study on exploration conditions,
JORC standards.
along with a report including reserve calculations, was prepared and submitted for the Itmanovsky titanium-zirconium sands deposit.
Promising projects with non-
• Continue searching for promising projects with non-
• A preliminary assessment of the investment
nuclear materials
nuclear materials.
attractiveness of a number of investment
• Carry out work to identify the investment
projects involving the development of deposits
attractiveness of the most promising projects.
of polymetal ore, rare earth metals and other
• Identify and invite strategic partners for projects
minerals was conducted.
among Russian and foreign companies with experience
• JSC NAC Kazatomprom and JSC
in mining and processing minerals.
Atomredmetzoloto signed a memorandum of intent on 30.03.2011 on cooperation in the industrial production of rare and rare-earth metals (event outside reporting period).
Performance management and innovation Performance management
• Create an automated commercial electrical power
• Work planned for 2010 to set up a
meter system at JSC PIMCU.
commercial and technical electrical power meter system was completed in full.
Innovations
• Produce block and frame models and databases for
• Block and frame models have been made for
all key deposits.
all deposits.
• Increase the innovative potential ratio to 0.135%.
• To be calculated following the receipt of final financial information.
Management system Management by objectives
• Implement a program to improve the company’s
• KPI results for 2009 were calculated for the
management system.
Director General of JSC Atomredmetzoloto and his deputies, as well as for the director generals of subsidiaries and dependent companies; KPI for 2010 were confirmed.
Sustainable development Personnel
• Introduce a remote-learning system.
• Remote-learning system introduced.
• Launch a Coaching Academy.
• Coaching Academy project was launched.
• Continue introducing a unified wage system at all
• Unified wage system introduced at key
companies in the group.
companies (JSC PIMCU, JSC Dalur, and JSC Khiagda).
Social policy
• Introduce unified social policy standards at all ARMZ
• Introduction of a unified social policy for
Uranium Holding Co. companies.
ARMZ subsidiaries and dependent companies
• Expand the incentive system for achievements by
was begun.
introducing a unified system of corporate contests and
• The company began standardizing all its social
competitions.
programs (plans to complete this work in 2012).
• Assess the effectiveness of expenditures on social
• An assessment was carried out of the ef-
programs and increasing the level of worker loyalty.
fectiveness of expenditures on social programs and increasing the level of worker loyalty. Based
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on the assessment, social programs were adjusted; steps were identified to increase worker loyalty (to be implemented by the end of 2011).
Review of financial situation and results
Sustainable Development
Environmental protection and
• Implement a consolidated plan for ecological policy.
• Steps are being taken to implement a
ecological safety
• Expand the practice of holding public hearings and
consolidated plan for ecological policy in 2011:
consultations with environmental organizations to
• The Company set up a department
Armenia and other countries.
responsible for health and industrial, environmental and radiation safety. Corresponding departments have been set up at subsidiaries and dependent companies.
Developing territory of opera-
• Develop a policy of cooperation with interested
• Development of the corresponding policy is
tions
parties, having systemized the experience of Company
planned for 2011.
participation in the development of territories where it
• Development of an ARMZ Uranium Holding
operates.
Co. Memorandum on Corporate Social Responsibility is planned for 2011.
Charity and sponsorship activity
• Expand the geography and type of cooperation with
• The geography of charitable work has been
charitable organizations.
expanded to Armenia and Chelyabinsk Region. A new form of charitable activity was the support of cultural initiatives using the personal contributions of Company workers. • Within the framework of preparing this
Cooperation with interested
• Develop a policy of cooperation with interested par-
annual report, the form of cooperation with
parties
ties, expand the form of cooperation, and make it more
interested parties was expanded by holding
systematic.
dialogue with interested parties and attaining the public certification of this report. • Development of a policy for cooperating with interested parties is planned for 2011.
Communication with interested parties As part of the preparation of the annual report on the results of work in 2010, two sets of dialogue with interested parties were held. A dialogue on “Staff Development: Training of Young Specialists” was held on March 25, 2011. It was conducted with the participation of Company management, representatives from Rosatom, representatives from regional and local governments in areas where the company operates, and from public organizations, and addressed important areas of the Company’s youth policy. Participants in the dialogue discussed the problem of the shortage of young specialists in the Company and the need to retain and develop them. One solution identified was the Company's growing cooperation with universities, its Coaching Academy, active social program, assistance in resolving housing issues, etc. During the dialogue a need was expressed to disseminate best practice in work with young people through the companies in ARMZ Uranium Holding Co., along with the need to actively include youth representatives in developing an effective youth policy. The comments expressed on expanding and focusing the results of implementation of the Company’s youth policy in 2010 were taken into account when preparing the annual report and reflected in Section 9.2. The text of the dialogue minutes is attached to the report.
JSC Atomredmetzoloto 2010 Annual Report
A dialogue on “The Development of JSC Atomredmetzoloto Regions of Operations” was held on April 5, 2011. The event was attended by representatives from Rosatom, key organizations from regions where the company operates, the regional and local authorities in these regions, local media and other interested parties. ARMZ Uranium Holding Co. companies are large taxpayers to regional budgets, and reliable employers. The companies provide substantial support for the socio-economic and infrastructure development of the regions. Participants in the dialogue expressed the wish to hold the event on a regular basis. During the dialogue, recommendations were made concerning the development of municipal infrastructure and the signing of socio-economic agreements between the administrations and businesses. Company management noted the need for the creation of a unified methodology to formalize all areas of cooperation with local communities.
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Public hearings The public hearings held on April 26, 2011, represented the final activity in cooperation with interested parties in preparation for the annual report. The hearings were attended by representatives from Rosatom, state authorities and local governments, customers and partners, financial, environmental, social, educational, sporting and charitable organizations, as well as consulting companies in the field of non-financial reporting. Participants from ARMZ Uranium Holding Co. management included two Deputy Directors General of Atomredmetzoloto, the director generals of JSC Khiagda and JSC Dalur and other management representatives. Participants were asked to evaluate the text of the annual report for compliance with standards and the requirements of stakeholders, as well as to express their opinions and suggestions regarding the information provided in the report, including public plans, and the Company's commitments included in the report, and to make recommendations for improving the Company’s reporting.
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The comments and suggestions expressed by the interested parties during the public hearings were drawn up into minutes. Three groups of questions and suggestions were highlighted. The first set of issues dealt with fuller disclosure of information on the deal with Mantra Resources Limited, a more accurate description of the information consolidation profile, and the disclosure of the Company’s performance in a competitive context. The second set of questions dealt with proposals to change priorities for the presentation of environmental protection and industrial safety topics. The third block dealt with proposals for a description of the management system and improving its effectiveness, procedures for interaction within the board of directors, and the improvement of management systems and staff management over the long-term. This information is presented in more detail in Sections 9.1 “Personnel”, 9.2 “Social Policy” and 8.2 “Corporate Governance System”.
Review of financial situation and results
Sustainable Development
Public certification In preparing its annual report, it was a priority for JSC Atomredmetzoloto to increase the transparency of the information provided, and to increase the confidence of stakeholders. In accordance with the international standard AA1000SES, Public Certification of the report was organized. Participants in the Public Certification process received the following documents: »» A draft of the Annual Report for 2010 for Public Hearings »» The final version of the JSC Atomredmetzoloto annual report for 2010
»» The minutes of the Public Hearings on the Report »» The minutes of dialogues with interested parties. JSC Atomredmetzoloto asked the certifying parties to assess information according to the following criteria: its “completeness,” “relevance” and “responsiveness.” The results of the evaluation of the Report by certifying parties are presented in the Conclusion on Public Certification.
Conclusion on Public Certification results General information
At the request of JSC Atomredmetzoloto (hereinafter, ARMZ Uranium Holding Co., ARMZ, the Society, the Company), on April 26, 2011 we took part in Public Hearings on the Company’s draft annual report (hereinafter, the Report) – an event that brought the discussion of the Report with interested parties to an end. Participants in the hearings, which were held for the second time in the history of the Company, included representatives from ARMZ clients and partners, credit organizations, the investment community, government bodies in the regions where the Company operates,
environmental and charity organizations, and so on. Beforehand, Company management provided the participants with a copy of the Report for discussion. The Hearings were chaired by an independent moderator, allowing for a free exchange of opinion. Earlier, during preparation of the Annual Report, dialogues were held with interested parties on: “Staff Development: Training of Young Specialists” and “The Development of JSC Atomredmetzoloto Regions of Operations.”
Assessment of cooperation with interested parties During the Public Hearings, we had the opportunity to assess the extent to which the comments expressed by interested parties during the dialogues were taken into account in the final version of the Report. During the Hearings, we evaluated the Report as a whole, and assessed the relevance and completeness of the information provided on the issues of most importance to interested parties, and the nature and methods of interaction with interested parties. In their assessments, participants in the Public Certification of the Report focused on an analysis of two versions of the Report (the draft for Public Hearings, distributed to all participants in advance, and the final version), taking
JSC Atomredmetzoloto 2010 Annual Report
into account the engagement with JSC Atomredmetzoloto management and staff during the Public Hearings and the previous dialogues. We can confirm the Company's active response to proposals and comments from participants in the dialogues and hearings. The Company took most of these suggestions and comments into account when preparing the final version of the document. The text of this conclusion shall be sent for approval to all participants in the hearings – it takes into account the comments received. We, as the certifying party, do not receive remuneration from the Company for participating in the Public Certification.
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Assessments, comments and recommendations The format, scope and content of the Report are to be commended. We note with satisfaction the Company's ability to identify problems, to set specific goals and objectives, and to formulate plans and commitments. We note in particular the timeliness of active interaction with interested parties in preparing the Report under difficult conditions for the nuclear industry. We evaluate the level of disclosure as high; we are unaware of any facts that might cast doubt on the correctness of the information provided. During the Public Hearings and other activities involving Public Certification of the Report in which interested parties participated, JSC Atomredmetzoloto provided detailed information on the Company’s strategic objectives and development potential, the results of the Company’s activities in the reporting period, ARMZ partici-
pation in developing the regions where it operates, and practically all aspects of the Company’s activities were reflected. In the Report, significant attention was paid to industrial safety and environmental protection, and the list of sustainable development indicators was expanded. Moreover, JSC Atomredmetzoloto demonstrated a willingness to hold an open dialogue with interested parties on relevant issues, such as youth policy and developing the regions in which it operates. Problems that arose in the Company’s activities were also reflected in the Report. Company management is making a significant effort to reduce the negative impact on the environment and to improve health and safety systems at its various enterprises.
Relevance of issues dealt with in the Report The report reveals the social significance of JSC Atomredmetzoloto strategic initiatives for the development of the uranium mining industry. The report reflects almost all the major issues for the Company, including aspects of economic impact, the social sphere and environment, and regional development.
We are unaware of any other issues of significance to interested parties that the Company should have included in the Report.
Completeness of information In terms of information completeness, the Report responds to most of the issues brought up by interested parties. Nevertheless, some of them – the nature of strategic challenges facing the Company, fuller disclosure of information on the acquisition of Mantra Resources, as well as a description of the international programs that were implemented or planned for implementation in 2010 – were not reflected in the document due to constraints on the volume of the annual report. We believe that JSC Atomredmetzoloto should
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disclose more fully information on such issues as the Company’s strategy, its investment policy (one of the channels to provide additional information on these topics could be the Company’s website), and environmental impact in areas where the company operates compared with that of similar companies (information could be provided for publication in the local media in the regions where the Company operates).
Review of financial situation and results
Sustainable Development
Company’s reaction to comments and suggestions from interested parties Company management reacted quickly and constructively to the comments, proposals and recommendations of interested parties. Changes were made to the text of the final version of the Report, it was augmented, and additional plans and commitments were formulated. In general, the Company has shown significant progress in developing engagement with interested parties.
We hope that our comments and suggestions will help further improve the completeness and quality of the Company’s reporting, and that JSC Atomredmetzoloto management will honor their commitments and implement the plans and intentions set down in the Annual Report for 2010.
Representatives of interested parties Nomokonov, Oleg Petrovich Representative of the Governor of Trans-Baikal Region
Pichkurenko, Boris Mikhailovich Head of the City Council for the City of Krasnokamensk
Kurochkin, Alexei Gennadievich First Deputy Chief of Dalmatovo District, Kurgan Region
Govorukhin, Valery Nikolaevich JSC Tekhsnabexport (TENEX) Deputy Director General
Trubin, Dmitry Yevgenievich Head of the Industry and Metallurgy Crediting Department, JSC Nordea Bank
Baranovsky, Sergei Igorevich Deputy Chairman of the Board at Russian Green Cross, Member of the Rosatom Public Council
Plyamina, Olga Vladimirovna Executive director of the international environmental organization GREENLIGHT
Feoktistova, Elena Nikolaevna Director of the Center for Corporate Social Policy and Non-Financial Reporting at RUIE
Shevtsova, Ludmila Ivanovna Trustee of the “Illustrated Books for Blind Children” Foundation
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Review of financial situation and results
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Review of financial situation and results
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Review of financial situation and results
The Financial Performance section has been prepared based on the information from the Financial Statements prepared under the IFRS for the year ended on December 31, 2010 (Appendix 12.6. Financial statements (IFRS)). In 2010 the Company improved its performance compared to 2009 results. The
growth in revenue that amounted to about 2% was due to the development of activities not connected with uranium sales. Acquisition of Uranium One Inc. contributed to significant growth in the financial result, in addition to non-current assets.
Table 25.
Profit and Loss Statement Item, RUB mln
2010
2009*
2008*
Change 2010/2009
2010/2009, %
Sales revenue
30,409
29,812
15,197
597
2.0
Cost of sales
-16,277
-16,778
-10,054
501
-3.0
Gross profit
14,132
13,034
5,143
1,098
8.4
-4,280
-4,165
-2,514
-115
2.8
9,852
8,869
2,629
983
11.1
Sales and general administrative expenses Operating income
8,689
414
-2,335
8,275
1998.8
Pre-tax income
18,541
9,283
294
9,258
99.7
Income tax
-6,209
-3,494
-5
-2,715
77.7
12,332
5,789
289
6,543
113.0
12,239
5,804
278
6,435
110.9
93
-15
11
108
-720.0
6 553
5 531
2 586
1 022
18,5
Other income and expenses, net
Net income Net income attributable to: Company’s shareholder Non-controlling interest Reference: Net operating profit after taxes (NOPAT)
* Indicators for 2008–2009 may differ from similar indicators contained in the annual report for 2009. See note **** to the table in section 1.1.
The main factors influencing net profit in 2010 are: ■■ profit from a fair value revaluation of investment in Uranium One Inc., held prior to the acquisition of controlling stake on the date of control acquisition; ■■ the share of losses of the affiliated company Uranium One Inc. for the period from January 1, 2010 to December 24, 2010 (before the date of the acquisition of control);
■■ reduced interest expenses due to the reduction of average debt balance and increasing own sources of funding against a backdrop of favorable financial market conditions; ■■ A 2% increase in profit from commercialization (primary due to research and advanced development services rendered by JSC VNIPIpromtechnologii).
■■ increased interest income due to effective cash management (including reserves for M&A deals);
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Table 26.
Balance Sheet Item, RUB mln
31.12.2010
31.12.2009*
31.12.2008*
Current assets
60,039
69,223
Cash and equivalents
41,666
52,683
6,863
change 2010/2009
2010/2009, %
14,388
-9,184
-13.3
2,626
-11,017
-20.9
8,688
3,504
-1,825
-21.0
10,439
4,467
7,433
5,972
133.7
118,548
39,522
17,850
79,026
200.0
28,653
18,453
14,690
10,200
55.3
29
9,047
19
-9,018
-99.7
178,587
108,745
32,238
69,842
64.2
19,046
14,770
13,588
4,276
29.0
Accounts payable
6,914
4,462
2,093
2,452
55.0
Short-term credits and loans
7,767
8,317
11,230
-550
-6.6
35,224
12,677
5,585
22,547
177.9
Accounts receivable Reserves Non-current assets Fixed assets Investments in associates TOTAL ASSETS Short-term liabilities
Long-term liabilities
20,236
9,824
3,549
10,412
106.0
Equity
124,317
81,298
13,065
43,019
52.9
TOTAL LIABILITIES
178,587
108,745
32,238
69,842
64.2
Long-term credits and loans
* Indicators for 2008â&#x20AC;&#x201C;2009 may differ from similar indicators contained in the annual report for 2009. See note **** to the table in section 1.1.
Currency growth in the balance sheet total of 64.2% in 2010 was primarily due to the acquisition of Uranium One Inc. Table 27.
Key financial indicators 2010
2009*
2008*
change 2010/2009
2010/2009, %
0.70
0.75
0.41
-0.05
-6.9
Current liquidity ratio
3.2
4.7
1.1
-1.5
-32.7
Quick assets ratio
2.5
4.2
0.5
-1.6
-38.7
46.5
43.7
33.8
2.8
6.3
Item
Financial soundness indicators Share of equity in assets Liquidity indicators, unit fraction
Sales profitability indicators, % Profitability of sales
* Indicators for 2008â&#x20AC;&#x201C;2009 may differ from similar indicators contained in the annual report for 2009. See note **** to the table in section 1.1.
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About the report
Review of financial situation and results
The values of key financial indicators remained within standard limits, providing the Company with a platform for further sustainable development. The substantial growth in investment envisaged in a medium-term plan is based on the harmonious growth in capital and company debt. Excessive liquidity is due to the creation of reserves for M&A deals. Profitability in 2010 continued to show a positive trend due to an increase in revenue and net income. In 2010, Uranium Holding ARMZ continued to implement a moderately conservative monetary policy, which is consistent with the purposes and principles of financial management, set down in the Rosatom financial policy. The Holding Company’s investment requirements are met with:
Using all these methods of financing allows the Company to make significant investment without worsening its creditworthiness. A constant requirement of the Uranium Holding ARMZ from all companies in the group is absolute compliance with the norms of acceptable debt level and risks related to specifics and development stage of each company. The Company prepares consolidated financial statements under International Financial Reporting Standards. Also, all companies in the Holding Company prepare stand alone financial statements in accordance with Russian Accounting Standards. The JSC Atomredmetzoloto financial statements for 2010 under Russian Accounting Standards are presented on the ARMZ website http://www.armz.ru/.
■■ funds allocated by the Company’s shareholder; ■■ the Holding Company’s own funds; ■■ financing received from the largest Russian and international financial institutions, many of whom support the Holding Company’s credit risk limit; ■■ loans from JSC Atomenergoprom; and ■■ Involvement of private strategic partners in the projects.
Budgeting and cost control In 2010 the Company took a number of steps to strengthen budget control and to reduce costs: 1. The introduction of a unified industry procurement standard increased the efficiency of procurement of goods, materials, services and equipment. 2. Steps to increase operating efficiency at uranium mining companies in Russia, including: ■■ Reducing specific consumption rates of materials by introducing a new staff incentive system;
3. Introduction of a SAP Budgeting model as a part of a Program to Transform the Rosatom Financial-Economic and IT Units, which provided the following results: ■■ Reduced labor costs for planning, monitoring and reporting for the main companies in ARMZ Uranium Holding Company; ■■ Reduced costs by increasing the efficiency of the analysis system for company operations.
■■ Intensifying the process of ISL with the use of oxidants.
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About the report
JSC Atomredmetzoloto 2010 Annual Report
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About the report
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About the report
Report boundaries This report presents the activities of Open Joint Stock Company Atomredmetzoloto (hereinafter, JSC Atomredmetzoloto, ARMZ Uranium Holding Co., ARMZ, the Company, the Holding Company) within the territory of the Russian Federation, Kazakhstan, Armenia, Namibia, Mongolia, and a number of other countries in 2010, and plans for 2011 and the long-term future. This report covers all of the Company’s main subsidiaries and affiliated companies. The results presented in the report relate to the following parameters: ■■ Production indicators presented are based on information from the companies: JSC PIMCU, JSC Dalur, JSC Khiagda, ZARECHNOYE, JSC JV Akbastau, JSC Elkon MMP, JSC UMC Gornoe, JSC OMCC, JSC Lunnoe, RUSBURMASH
INC, LLP JV RBM-Kazakhstan, JSC VNIPIpromtechnologii, JSC SY Corporation, and LLC USC ARMZ. ■■ Ecological indicators– JSC PIMCU, JSC Dalur, and JSC Khiagda. ■■ Indicators on staff, and health and safety – ARMZ Uranium Holding Co., JSC PIMCU, JSC Dalur, JSC Khiagda, RUSBURMASH INC, and JSC VNIPIpromtechnologii. ■■ Financial indicators – towards consolidating reports to IFRS.
General information about the report The report prepared by the Company for 2010 is the third report to include not only integrated financial and production performance indicators, but also information on sustainable development. This report contains an expanded description of indicators related to sustainable development, and significant attention has been paid to issues of safety, human resource and social policy, environmental impact and also cooperation with interested parties. The priority topics in the report are: ■■ Development and safety. The social significance and environmental safety of nuclear power and its role in economic development. ■■ Investment attractiveness, respect for investors’ rights and achieving a “synergy effect” in cooperation with foreign partners. The role of strategy as an element of investment attractiveness.
The Company’s development potential is considered on the basis of an analysis of global market trends for natural uranium and possible market development scenarios; therefore the report contains forward-looking statements. Terms such as “believes”, “anticipates”, “expects”, “intends”, “plans” and similar terms reflect Company’s management current forecasts and opinions regarding future results. However, there is always a risk that the predictions, forecasts, projections and other forward-looking statements will not be achieved. It must be borne in mind that, under the influence of a number of important factors, actual results could differ significantly from the plans and objectives, expectations, estimates and intentions expressed in such forward-looking statements.
The contents of the report were based on the priorities of Rosatom State Corporation and key interested parties: consumers of uranium products, business partners, regional and local authorities, local communities. Significant attention was paid to implementation of the Company’s development strategy, which involves expansion and diversification of its natural uranium mineral reserves through the acquisition of highlyeffective foreign assets.
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Regulatory requirements and standards used in preparing the Report The report was prepared in compliance with Russian legislation governing reporting by open joint stock companies, and also with Rosatom policy regarding public reporting. The financial information is based on information from the Consolidated financial statements prepared in compliance with IFRS standards. The IFRS report is presented in full on the ARMZ website at www.armz.ru. During preparation of the annual report, public dialogues and hearings on the report were held in compliance with the international standards AA 1000. Recommendations contained in the Guidelines for Reporting on Sustainable Development of the Global Reporting Initiative (GRI), as well as basic performance indicators developed by the Russian Union of Industrialists and Entrepreneurs (RUIE) were used. The text of the report presents a corresponding table determining the degree to which GRI and RUIE indicators were reflected.
The level of application of GRI systems corresponds to B+. The reliability of the data contained in the report was confirmed by the Audit Committee, and Internal Control and Audit Department in the form of opinions and the audit report. The Company’s external auditor is JSC BDO. An audit report was received on the level of compliance of the non-financial part of the Company’s Annual Report for 2010 with GRI G3 guidelines on sustainable development reporting, and also with criteria such as relevance, completeness and ability to respond, according to the standard AA1000AS. This report was prepared by the company JSC BUREAU VERITAS CERTIFICATION RUS.
Major changes in the Report There were no significant changes in the structure of the Company's assets, which could affect comparability from period to period on a consolidated basis. There were no
significant changes from previous reporting periods with respect to the scope, extent, or measurement methods applied in the report.
Annual report for 2009 In accordance with the current legislation, preparation and publication of annual reports is carried out every year. The Annual Report for 2009 was published on 07.07.2010. For the first time, in 2010 the Company submitted its an-
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nual report to the 13th Annual Competition for Annual Reports, conducted by the RTS Stock Exchange, and won an award for “Best Report by a State Corporation/ Public Company”.
annex
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Annex
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Annex
> 12.1 < Abbreviations and terms used in the report Abbreviations used in the report ACEMS – automated commercial electric meter system AERMS– automated energy resource meter system ASPEM – automated system of production and ecological monitoring ATEMS – automated technical electric meter system AW – average wage CHP – Combined Heat and Power Plant CRMS – corporate risk management system CSR – corporate social responsibility CSU – crushing and sorting unit DSW – design and survey work EIS – environmental impact study FEB – financial-economic block FMBA – Federal Medical and Biological Agency FP – finished product FS – feasibility study FSC – Federal Securities Commission GEW – geological exploration work GRI – Global Reporting Initiative HL – heap leaching HMP – Hydrometallurgical Plant HSCS – health and safety control systems IAEA – International Atomic Energy Agency IFRS – international financial reporting standards ISMS – information security management systems IT – information technology ISL – in-situ leaching JORC – Joint Ore Reserves Committee JV – joint venture KPI – key performance indicators LSU – local sorption unit NFC – nuclear fuel cycle NPP – Nuclear Power Plant OECD – Organization for Economic Cooperation and Development PP – pilot projects PS – pregnant solution PSPP – pregnant solution processing plant PSPU – pregnant solution processing unit R&D – research and development RW – radioactive waste RWDP – radioactive waste disposal point SAP – Sulphuric Acid Plant SDO – subsidiaries and dependent organizations
JSC Atomredmetzoloto 2010 Annual Report
SDW – solid domestic waste SRC – State Reserves Commission SUWS – single unified wage system TIES – technological information exchange system TTA – technical training aids UL– underground leaching UMD – uranium mining department VFD – variable frequency drive VHI – voluntary health insurance WNA – World Nuclear Association
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Terms used in the report Atom – the smallest particle of a chemical element that retains its properties. It consists of a nucleus with protons and neutrons, and electrons moving around the nucleus. The number of electrons in an atom equals the number of protons in the nucleus. Commissioning – a process, during which nuclear plant equipment and systems begin to operate and their compliance with plans are checked, this includes pre-launch adjustment work, the physical and power start-up and, finally, the launch of the nuclear power plant into commercial operation. Leaching – a method of extracting the individual components of a solid material, including radioactive elements, by means of a solvent; this is based on the ability of the substances being extracted to dissolve better than the other components of the material. Enrichment – a process, which results in the increased content of a particular isotope in a mixture of isotopes. Uranium ore processing – a set of processes for the primary processing of yellowcake aimed at separating uranium from the other minerals that make up the ore. In this case there is no change in mineral composition, only their mechanical separation to produce ore concentrate.
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Enriched uranium – Uranium, in which the concentration of the isotope Uranium-235 is higher than in natural uranium. Nuclear fuel cycle enterprise – enterprises dealing with nuclear fuel that require decommissioning at the end of their life, apart from nuclear power plants, these include uranium ore-processing plants, plants processing uranium hexafluoride and producing fuel elements, as well as plants for the reprocessing of spent fuel and disposal facilities for low-level waste. Uranium – Uranium (U) (Uranium) – a chemical radioactive element (metal) with the atomic number 92 and atomic mass of the most common and stable isotope 238. Natural Uranium consists of a mixture of three isotopes – Uranium-238, Uranium-235, and Uranium-234, of which the first two are of practical importance for nuclear power. Off take contract – an agreement to purchase future products. Pre-Feasibility Study – a preliminary analysis of project decisions. Scoping Study – preliminary assessment.
Company’s main deposits
Annex
> 12.2 < Companyâ&#x20AC;&#x2122;s main deposits List of uranium deposits in Russia No.
Deposit
Location (country, region, district)
License type
Mineral
1
Streltsovskoye
Russia, Trans-Baikal Region,
Extraction
Uranium,
Krasnokamensk District 2
Antei
Russia, Trans-Baikal Region,
Luchistoye
Russia, Trans-Baikal Region,
Extraction
Martovskoye
Russia, Trans-Baikal Region,
Extraction
Oktyabrskoye
Russia, Trans-Baikal Region,
Extraction
Tulukuevskoye
Russia, Trans-Baikal Region,
Extraction
Yubilenoye
Russia, Trans-Baikal Region,
Extraction
Novogodneye
Russia, Trans-Baikal Region,
Extraction
Vesenneye
Russia, Trans-Baikal region,
Extraction
Malo- Tulukuevskoye
Russia, Trans-Baikal Region,
Extraction
Argunskoye
Russia, Trans-Baikal Region,
Extraction
Zherlovoye
Russia, Trans-Baikal region,
Extraction
Streltsovskoye ore field
Russia, Trans-Baikal Region,
JSC PIMCU
Uranium,
JSC PIMCU
Uranium,
JSC PIMCU
Uranium,
JSC PIMCU
Uranium,
JSC PIMCU
Uranium,
JSC PIMCU
molybdenum Extraction
Krasnokamensk district 13
Uranium,
molybdenum
Krasnokamensk District 12
JSC PIMCU
molybdenum
Krasnokamensk District 11
Uranium,
molybdenum
Krasnokamensk district 10
JSC PIMCU
molybdenum
Krasnokamensk District 9
Uranium,
molybdenum
Krasnokamensk District 8
JSC PIMCU
molybdenum
Krasnokamensk District 7
Uranium,
molybdenum
Krasnokamensk District 6
JSC PIMCU
molybdenum
Krasnokamensk District 5
Uranium, molybdenum
Krasnokamensk District 4
JSC PIMCU
molybdenum
Krasnokamensk District 3
Name of entity
Uranium,
JSC PIMCU
molybdenum Geological exploration
Uranium
JSC PIMCU
Extraction
Uranium
JSC Dalur
Geological exploration
Uranium
JSC Dalur
Russia, Buryatia Republic,
Exploration
Uranium,
JSC Khiagda
Bauntovsky District
and extraction
scandium
Russia, Buryatia Republic,
Exploration
Uranium
JSC Khiagda
Bauntovsky District
and extraction
Russia, Buryatia Republic,
Exploration
Uranium
JSC Khiagda
Bauntovsky District
and extraction
Russia, Buryatia Republic,
Exploration
Uranium
JSC Khiagda
Bauntovsky District
and extraction
Russia, Buryatia Republic,
Exploration
Uranium
JSC Khiagda
Bauntovsky District
and extraction
Russia, Buryatia Republic,
Exploration
Uranium
JSC Khiagda
Bauntovsky District
and extraction
Russia, Sakha Republic (Yakutia),
Exploration
Uranium
JSC Elkon MMP
Aldan District
and extraction
Russia, Sakha Republic (Yakutia),
Extraction
Uranium
JSC Elkon MMP
Krasnokamensk District 14
Dalmatovskoye
Russia, Kurgan Region, Dalmatovo District
15
Khokhlovskoye
Russia, Kurgan Region, Shumikha District
16 17 18 19 20 21 22 23
Khiagdinskoye Istochnoye Kolichikanskoye Koretkondinskoye Namarusskoye Dybrynskoye Elkon Elkon plateau
Aldan District
JSC Atomredmetzoloto 2010 Annual Report
132
24
Kurung
Russia, Sakha Republic (Yakutia),
Extraction
Uranium
JSC Elkon MMP
Russia, Sakha Republic (Yakutia),
Exploration
Uranium
JSC Elkon MMP
Aldan District
and extraction
Russia, Sakha Republic (Yakutia),
Extraction
Uranium
JSC Elkon MMP
Russia, Sakha Republic (Yakutia),
Exploration
Uranium
JSC Elkon MMP
Aldan District
and extraction
Russia, Sakha Republic (Yakutia),
Exploration
Uranium
JSC Elkon MMP
Aldan District
and extraction
Russia, Sakha Republic (Yakutia),
Exploration
Uranium
JSC Lunnoe
Aldan District
and extraction
Russia, Trans-Baikal Region,
Exploration
Uranium
JSC UMC Gornoe
Krasnochikoisky District
and extraction
Russia, Trans-Baikal Region,
Geological exploration
Uranium
JSC UMC Gornoe
Uletovsky District
and extraction
Russia, Trans-Baikal Region,
Extraction
Uranium
JSC OMCC
Aldan District 25 26
Neprokhodimoye Druzhnoye
Aldan District 27 28 29 30 31 32
Severnoye Zona Interesnaya Lunnoe Gornoe Berezovoe Olovskoye
Chernishevsky District
List of other mineral deposits in Russia No.
Deposit
Location (country, region, district)
License type
Mineral
Name of entity
1
PGS-3
Russia, Trans-Baikal Region,
Extraction
Sand gravel mix
JSC PIMCU
Extraction
Coal
JSC PIMCU
Russia, Trans-Baikal Region,
Geological exploration
Manganese
JSC PIMCU
Priargunsky District
and extraction
Russia, Trans-Baikal Region,
Extraction
Zeolite tuffs
JSC PIMCU
Extraction
Limestone
JSC PIMCU
Geological appraisal
Titanium-zirconi-
and extraction
um sands
Krasnokamensk District 2
Urtuiskoye
Russia, Trans-Baikal Region, Krasnokamensk District
3 4
Gromovskoye Shivyrtuiskoye
Trans-Baikal District 5
Ust-Borzinskoye
Russia, Trans-Baikal Region, Mogoituisky District
6
Itmanovsky placer,
Russia, Nizhny Novgorod Region,
Lukoyanovskoye deposit Gaginsky District
133
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Geostar Ltd.
Stakeholder proposal status chart
Annex
List of uranium deposits in Kazakhstan No.
Deposit
Location (country, region, district)
License type
1
Zarechnoye
Kazakhstan, South Kazakhstan
Exploration
Region
and extraction
Kazakhstan, South Kazakhstan
Exploration
Region
and extraction
2 3
Yuzhnoye Zarechnoye
Budennovskoye (sect. 1) Kazakhstan, South Kazakhstan Region
4
Budennovskoye (sect. 3) Kazakhstan, South Kazakhstan Region
5
Budennovskoye (sect. 4) Kazakhstan, South Kazakhstan Region
6 7 8 9
Budennovskoye (sect. 3) Kazakhstan, South Kazakhstan Akdala South Inkai Kharasan
Exploration
Mineral
Name of entity
Uranium
ZARECHNOYE
Uranium
ZARECHNOYE
Uranium
JSC JV Akbastau
Uranium
JSC JV Akbastau
Uranium
JSC JV Akbastau
Uranium
Karatau
Uranium
LLP Betpak Dala
Uranium
LLP Betpak Dala
Uranium
LLP Kyzylkum
and extraction Exploration and extraction Exploration and extraction Exploration
Region
and extraction
Kazakhstan, South Kazakhstan
Exploration
Region
and extraction
Kazakhstan, South Kazakhstan
Exploration
Region
and extraction
Kazakhstan, South Kazakhstan
Exploration
Region
and extraction
List of Uranium One Inc. uranium deposits outside Kazakhstan No.
Deposit
Location (country, region, district)
License type
Mineral
Name of entity
1
Christensen Ranch /
USA
Exploration and extraction
Uranium
Uranium One Americas
Irigaray 2
Moore Ranch
USA
Exploration and extraction
Uranium
Uranium One Americas
3
Ludeman-Peterson
USA
Exploration
Uranium
Uranium One Americas
4
Allemand Ross
USA
Exploration
Uranium
Uranium One Americas
5
Barge Deposit
USA
Exploration
Uranium
Uranium One Americas
6
Ross Flats
USA
Exploration
Uranium
Uranium One Americas
7
Jab
USA
Exploration
Uranium
Uranium One Americas
8
West Jab
USA
Exploration
Uranium
Uranium One Americas
9
Jab RD
USA
Exploration
Uranium
Uranium One Americas
10
Red Rim
USA
Exploration
Uranium
Uranium One Americas
11
Clarkson Hill
USA
Exploration
Uranium
Uranium One Americas
12
South Sweetwater
USA
Exploration
Uranium
Uranium One Americas
13
Antelope
USA
Exploration
Uranium
Uranium One Americas
14
Twin Buttes
USA
Exploration
Uranium
Uranium One Americas
15
Cyclone Rim
USA
Exploration
Uranium
Uranium One Americas
16
New Velvet
USA
Exploration
Uranium
Uranium One Americas
17
Old Velvet
USA
Exploration
Uranium
Uranium One Americas
18
Wood
USA
Exploration
Uranium
Uranium One Americas
19
Frank M
USA
Exploration
Uranium
Uranium One Americas
20
Findlay Tank
USA
Exploration
Uranium
Uranium One Americas
21
Honeymoon
Australia
Exploration and extraction
Uranium
Uranium One Australia
22
Goulds Dam
Australia
Exploration
Uranium
Uranium One Australia
23
East Kalkaroo
Australia
Exploration
Uranium
Uranium One Australia
24
Billeroo
Australia
Exploration
Uranium
Uranium One Australia
JSC Atomredmetzoloto 2010 Annual Report
134
> 12.3 < Stakeholder proposal status chart No.
Stakeholder request
Status
1
Formulate a youth policy at enterprises
Included in plans for 2011
2
Reflect information connected with youth development more fully in the report, and describe
Covered in section 9.2. “Social
the requests of the youth section as accurately as possible
policy”
Form a targeted order for academies, the establishment of specialized departments, and the
Included in work plans for 2011
3
training of necessary specialists Formulate a single memorandum on corporate social responsibility, including a section on
Covered in section 9.7. “Charity
interaction with local communities in the regions
and sponsorship activity”
5
Turn engagements with interested parties into regular events, and invite regional media
Included in plans for 2011
6
Promote the development of infrastructure in rural municipalities and socio-economic part-
Covered in section 9.6. “Devel-
nership in regions where the Company operates
opment of territories where
4
the Company operates” More clearly articulate the Company’s strategy and goals, including in the area of sustainable
Covered in section 5.1. “Com-
development
pany development policy”
8
Describe sources of financing for investment activity
Covered in section 5.2. “Invest-
9
Add information on JSC PIMCU activity to support veterans
7
ment activity” Covered in section 9.6. “Development of territories where the Company operates” 10
Expand social programs and benefits for young professionals, motivate young people to
Included in plans for 2011
establish autonomous bodies 11
Ensure the expansion of intra-industry experience exchanges as part of the development and
Included in plans for 2011
training of young people 12
Describe the strategic challenges faced by the Company
Prompted by the situation at the Fukushima-1 Nuclear Power Plant (NPP)
13
Highlight in detail in the annual report aspects related to financial management, including a
Included in the draft structure
strategy to diversify the credit portfolio
of the 2011 report
135
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Use of standard elements of accountability and performance indicators
Annex
> 12.4 < Use of standard elements of accountability and performance indicators GRI sub-point
Base indicator number (RUIE)
Reflected in Page Report
Section/ Report point
Fully
2. Message
Comments
1. Strategy and analysis 1.1. Statement from the most senior
10–11
to shareholders
decision-maker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy
1.2. Description of key impacts, risks
Fully
78–83
8.3. Key risks and risk management
and opportunities 108–117
9.8. Cooperation with interested parties
32–33
5.1. Company development strategy
2. Organization profile 2.1. Name of the organization
Fully
126
11. About the report
2.2. Primary brands, products and/
Fully
47–52
6.2. Uranium production. Develop-
or services
ment of existing JSC Atomredmetzoloto companies 2.3. Operational structure of the
Fully
15–16
3.3. Structure
organization, including main divisions,
of ARMZ Ura-
operating companies, subsidiaries,
nium Holding Co.,
and joint ventures
geography of operations
2.4. Location of organization’s head-
Fully
168–170
12.11. Details, contact information,
quarters
feedback 2.5. Number of countries where the
Fully
15–16
3.3. Structure
organization operates, and names of
of ARMZ Ura-
the countries where major operations
nium Holding Co.,
are underway or those particularly
geography of
relevant to the sustainability issues
operations
covered in the report
JSC Atomredmetzoloto 2010 Annual Report
136
2.6 Nature of ownership and legal
Fully
126
11. About the report
Fully
15–16
3.3. Structure
form 2.7. Markets served (including geographic breakdown, sectors
of ARMZ Uranium
served, and types of customers/
Holding Co., geography of operations
beneficiaries) 27
4.2. Sales and marketing policy
2.8. Scale of the organization
Fully
6
1.1. Key figures
15–16
3.3. Structure of ARMZ Uranium Holding Co., geography of operations
2.9. Significant changes during the
Fully
86–89
9.1. Personnel
17–19
3.4. Main events of 2010
reporting period regarding size, structure, or ownership 2.10. Awards received in the
Fully
17–19
3.4. Main events of 2010
reporting period 126
11. About the report
Fully
126
11. About the report
Fully
126
11. About the report
3.3. Reporting cycle
Fully
126
11. About the report
3.4. Contact point for questions
Fully
168–170
12.11. Details,
3. Report parameters 3.1. Reporting period (e.g., fiscal/ calendar year) for information provided 3.2. Date of most recent previous report (if any)
contact information,
regarding the report or its contents
feedback Fully
126
11. About the report
3.6. Boundaries of the report
Fully
126
11. About the report
3.7. State any specific limitations
Fully
126
11. About the report
Fully
15–16
3.3. Structure
3.5. Process for defining report content
on the scope or boundaries of the report. 3.8. Basis for reporting on joint ventures, subsidiaries, leased
of ARMZ Uranium
facilities, outsourced operations
Holding Co., geogra-
and/or other entities capable of
phy of operations
significantly affecting comparability from period to period and/or between organizations 3.9. Data measurement techniques
Fully
126
11. About the report
and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report
» 137
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Audit report
Annex
GRI sub-point
3.10. Explanation of the effect of
Base indicator number (RUIE)
Reflected in Page Report
Section/ Report point
Fully
Comments
No such statements were made
any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods) 3.11. Significant changes from
Fully
126
11. About the report
Fully
136–148
12.4. Use of
previous reporting periods in the scope, boundaries or measurement methods applied in the report. 3.12. Table identifying the location of the Standard Disclosures in the
standard elements
report
of accountability and performance indicators
3.13. Policy and current practice with
Fully
155–160
12.7. Certification
regard to seeking external assurance
of non-financial
for the report
reporting
4. Governance, commitments and cooperation with interested parties 4.1. Governance structure of the
Fully
71–78
4.2. Indicate whether the Chair of the
8.2. Corporate governance system
organization Fully
71–78
8.2. Corporate governance system
highest governance body is also an executive officer 4.3. For organizations that have a
Fully
71–78
8.2. Corporate governance system
unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members. 4.4. Mechanisms for shareholders
Fully
71–78 108–117
recommendations or direction to the
9.8. Cooperation with interested parties
highest governance body.
4.5. Linkage between compensation
8.2. Corporate governance system
and employees to provide
Fully
70
8.1. Management by objectives. KPI
for members of the highest governance body, senior managers, and executives and the organization’s performance 4.6. Processes in place for the
Partially
Board members
highest governance body to ensure
undertake to refrain
conflicts of interest are avoided
from actions that could lead to conflict between their interests and the interests of the Company. In the event of such a conflict, a member of the
JSC Atomredmetzoloto 2010 Annual Report
138
Board of Directors shall notify the other members of the Board, and also abstain from voting on related issues.
Partially
4.7. Process for determining the
71–78
composition, qualifications, and ex-
8.2. Corporate gov-
The Board of Directors
ernance system
includes the heads of
pertise of the members of the highest
the executive federal
governance body and its committees,
authorities dealing with
including any consideration of gender
the relevant issues of
and other indicators of diversity
social responsibility.
4.8. Internally-developed statements
1.1
Fully
32–33
5.1. Company development strategy
of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation 4.9. Procedures of the highest
Partially
governance body for overseeing the
92–93
9.3. Security
94–96
9.4. Health and Safety
organization’s identification and man97–101
agement of economic, environmental,
9.5. Environmental
and social performance, including
protection and
relevant risks and opportunities,
ecological safety
and adherence or compliance with internationally-agreed standards, codes of conduct, and principles 4.10. Processes for evaluating the
Fully
71–78
8.2. Corporate governance system
highest governance body’s own performance 4.11. Explanation of whether and
Fully
78–84
8.3. Key risks and risk management
how the precautionary approach 94–96
or principle is addressed by the
9.4. Health and Safety
organization 97–101
9.5. Environmental protection and ecological safety
4.12. Externally-developed economic,
Partially
Company operations
environmental, and social charters,
comply with the principles
principles, or other initiatives to
cited in the “Social
which the organization subscribes or
Charter of Russian
endorses
Business”
4.13 Memberships in associations
Fully
Company actively par-
(such as industry associations) and/
ticipates in the affairs of
or national/international advocacy
WNA, IAEA
organizations
» 139
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Audit report
Annex
GRI sub-point
Base indicator number (RUIE)
4.14. List of stakeholder groups
Reflected in Page Report
Section/ Report point
Fully
9.8. Cooperation with
108–117
Comments
interested parties
engaged by the organization Fully
4.15. Basis for identification and
108–117
9.8. Cooperation with interested parties
selection of stakeholders with whom to engage Fully
4.16. Approaches to stakeholder
108–117
9.8. Cooperation with interested parties
engagement Fully
4.17. Key topics and concerns
135
12.3. Stakeholder
that have been raised through
proposal status
stakeholder engagement, and how
chart
the organization has responded to those key topics and concerns, including through its reporting 5. Management approach and
86–88
This information is
performance indicators
89–91
provided in sections
92–93
9.1. Staff, 9.2. Social
94–98
policy, 9.3. Security, and 9.5. Environmental protection and ecological safety
5.1. Economic performance indicators EC1 (core) Direct economic value
1.2
generated and distributed, including
1.3
revenues, operating costs, employee
1.4
compensation, donations and other
1.5
community investments, retained
1.6
earnings, and payments to capital
1.7
Partially
6
1.1. Key figures
39–41
5.2. Investment activity
107
9.7 Charity and sponsorship activity
providers and governments
86–89
9.1 Personnel
119–124
10 Review of financial situation and results
EC3 (core) Coverage of the
1.8
Fully
89–91
9.2. Social policy
89–91
9.2. Social policy
86–89
9.1. Personnel
organization’s defined benefit plan obligations EC5 (add) Range of ratios of standard entry-level wage by gender compared to local minimum wage at significant locations of operation
EC7 (core) Procedures for local
Fully
hiring and proportion of senior management hired from the local community at significant locations of operation.
JSC Atomredmetzoloto 2010 Annual Report
140
EC8 (core) Development and impact
Fully
102–107
9.6. Development of
of infrastructure investments and
territories where the
services provided primarily for public
Company operates
benefit through commercial, in-kind, or pro bono engagement
EC9 (add) Understanding and
Fully
102–107
9.6. Development of
describing significant indirect
territories where the
economic impacts, including the
Company operates
extent of impacts 5.2. Environmental performance indicators EN3 (core) Direct energy
2.2
Fully
64–65
7.1. Performance management
consumption by primary energy source EN7 (add) Initiatives to reduce
Fully
64–65
7.1. Performance management
indirect energy consumption and reductions achieved EN8 (core) Total water withdrawal
Fully
97–101
9.5. Environmental protection and
by source
ecological safety EN20 (core) NOx, SOx, and other
2.6
significant air emissions by type and
2.7
protection and
weight.
2.7.2
ecological safety
EN22 (core) Total weight of waste
2.8
Fully
Fully
97–101
97–101
9.5. Environmental
9.5. Environmental protection and
by type and disposal method
ecological safety EN26 (core) Initiatives to mitigate
2.11
Fully
97–101
9.5. Environmental
environmental impacts of products
protection and
and services, and extent of impact
ecological safety
mitigation EN28 Monetary value of significant fines and total number of nonmonetary sanctions for noncompliance with environmental laws and regulations EN30 (add) Total environmental
2.12
Fully
97–101
9.5. Environmental
protection expenditures and
protection and
investments by type
ecological safety
5.3. Labor practices and decent work performance indicators LA1 (core) Total workforce by em-
3.1.1
Fully
86–89
9.1. Personnel
LA2 (core) Total number and rate
3.1.2
Fully
86–89
9.1. Personnel
of new employee hires and employee
3.1.3
ployment type, employment contract, and region, broken down by gender
turnover by age group, gender, and region
» 141
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Audit report
Annex
GRI sub-point
Base indicator number (RUIE)
LA3 (add) Benefits provided to
Reflected in Page Report
Section/ Report point
Fully
89–91
9.2. Social policy
Fully
94–96
9.4. Health and
Comments
full-time employees that are not provided to temporary or part-time employees, by significant locations of operation
LA7 (core) Rates of injury
3.1.5 3.1.6
Safety
3.1.7 3.1.8 LA8 (core) Education, training,
86–89
9.1. Personnel
Fully
89–91
9.2. Social policy
Fully
136–148
12.4. Use of
counseling, prevention, and riskcontrol programs in place to assist workforce members, their families, or community members regarding serious diseases LA9 (core) Health and safety topics covered in formal agreements with trade unions LA10 (core) Average hours of
3.1.10
standard elements
training per year per employee
of accountability and performance indicators 5.4. Society performance indicators SO5 (core) Public policy positions
Partially
17
3.4. Main events of 2010
and participation in public policy development and lobbying 5.5. Product responsibility performance indicators. Aspect: marketing communications PR5 (add) Practices related to cus-
Partially
32–35
5.1. Company development strategy
tomer satisfaction, including results of surveys measuring customer satisfaction HR4 (core) Total number of inci-
Fully
86–89
9.1. Personnel
Fully
97–101
9.5. Environmental
dents of discrimination and corrective actions taken ММ1 The amount of land owned, leased or managed by the organi-
protection and
zation in production and extrac-
ecological safety
tion, which has been disrupted or reclaimed ММ3 The total volume of overbur-
Fully
97–101
9.5. Environmental protection and
den, rock waste and associated risks
ecological safety ММ9 Sites where relocation oc-
Fully
102–106
9.6. Development of
curred and the number of displaced
territories where the
households
Company operates
JSC Atomredmetzoloto 2010 Annual Report
142
Dynamics of headcount at major Russian enterprises in ARMZ Uranium Holding Co., by type of employment Company
Year
Full-time (number of people)
JSC Atomredmetzoloto
2010
217
4
221
252
2009
255
3
257
224
JSC PIMCU
JSC Dalur
JSC Khiagda
RUSBURMASH INC
JSC VNIPIpromtechnologii
Total
143
www.armz.ru
Part-time (number of people)
Payroll number
Average payroll number
2008
217
2
217
197
2010
8,667
39
8,669
8,408
2009
8,449
49
8,452
9,890
2008
11,619
0
11,619
11,382
2010
429
1
430
416
2009
383
2
383
411
2008
423
2
423
411
2010
284
0
284
262
2009
267
0
267
260
2008
237
0
237
218
2010
601
3
604
594
2009
509
0
509
321
2008
93
0
93
43
2010
471
21
492
482
2009
464
16
480
459
2008
445
16
461
450
2010
10,669
68
10,700
10,414
2009
10,327
70
10,348
11,565
2008
13,034
20
13,050
12,701
Audit report
Annex
Age structure of employees at major Russian subsidiaries of ARMZ Uranium Holding Co. Company
Year
JSC Atomredmetzoloto
2010
141
63.80%
68
30.80%
12
5.40%
2009
143
55.70%
78
30.30%
36
14.00%
2008
116
53.50%
72
33.20%
29
13.30%
2010
3,659
42.20%
2,753
31.80%
2,257
26%
2009
3,430
40.60%
2,779
32.90%
2,243
26.50%
2008
4,515
38.90%
3,918
33.70%
3,186
27.40%
2010
188
43.72%
154
35.81%
88
20.47%
2009
146
37.92%
164
42.59%
75
19.49%
2008
162
38.12%
177
41.65%
86
20.23%
2010
139
49%
79
28%
66
23%
2009
115
44%
81
30%
71
26%
2008
88
37%
94
40%
54
23%
2010
183
31%
340
56%
81
13%
2009
134
27%
245
48%
130
25%
2008
27
29%
48
52%
18
19%
2010
127
25.80%
68
13.80%
297
60.40%
2009
95
19.80%
124
25.80%
261
54.40%
2008
71
15.40%
177
38.40%
213
46.20%
2010
4,437
41.47%
3,462
32.36%
2,801
26.18%
2009
4,063
39.26%
3,471
33.54%
2,816
27.20%
2008
4,979
38.15%
4,486
34.27%
3,586
27.49%
JSC PIMCU
JSC Dalur
JSC Khiagda
RUSBURMASH INC
JSC VNIPIpromtechnologii
TOTAL:
Under 35
From 36 to 50
Over 50
Headcount and turnover at Russian subsidiaries of ARMZ Uranium Holding Co., by gender Company
year
JSC Atomredmetzoloto
2010
127
12.3%
94
9.1%
2009
154
13.62%
103
9.08%
22.7
2008
130
No data
87
No data
No data
2010
6,155
12.40%
2,514
1.30%
13.7
2009
5,946
12%
2,506
1.70%
13.7
2008
7,815
13.80%
3,804
2.50%
16.3
2010
339
2.64%
91
0%
2.64
2009
300
3.87%
85
0.72%
4.59
2008
331
3.63%
94
0%
3.63
2010
233
84%
51
16%
50.38
2009
214
92%
53
8%
35.77
2008
189
88%
47
12%
54.8
2010
–
68%
–
32%
31
2009
–
–
–
–
–
2008
–
–
–
–
–
2010
262
2.80%
230
3.80%
6.6
2009
241
5.70%
239
7.10%
12.8
2008
227
4.70%
234
4.20%
8.9
2010
7,116
9.28%
2,980
3.89%
13.17
JSC PIMCU
JSC Dalur
JSC Khiagda
RUSBURMASH INC
JSC VNIPIpromtechnologii
Total
men
women
Total turnover, %
21.41
2009
6,855
2.49%
2,986
1.06%
3.51
2008
8,692
No data
4,266
No data
No data
JSC Atomredmetzoloto 2010 Annual Report
144
Share of locals in workforce and senior management at Russian subsidiaries of ARMZ Uranium Holding Co. in 2010 Company
year
Share of local population (%)
Share of local population in senior management (%)
JSC Atomredmetzoloto
2010
100
100
2009
100
100
2008
99.5
0.05
2010
99.8
95
2009
99.6
85
2008
99.5
84
2010
98.6
40
2009
98.7
40
2008
98.8
40
2010
95
80
2009
93
66
2008
94.6
77.8
2010
–
–
2009
–
–
2008
56
73
2010
100
100
2009
100
100
2008
100
90
JSC PIMCU
JSC Dalur
JSC Khiagda
RUSBURMASH INC
JSC VNIPIpromtechnologii
Hours of worker training, by category Category
company
2008 Pers.
Hours
Hour/ Pers.
2009 Pers.
2010
Hours
Hour/ Pers.
Pers.
Hours
Hour/ Pers.
JSC Atomredmetzoloto
Management,
70
1,840
26.3
180
3,360
18.7
418
5,248
12.6
JSC PIMCU
specialists,
374
19,620
52.5
984
30,026
30.5
651
31,946.5
49.07
JSC VNIPIpromtechnologii
employees
407
1,573
3.9
423
1 810
4.3
435
2,365
5.4
JSC Dalur
0
0
0
0
0
0
9
72
8
RUSBURMASH INC
0
0
0
0
0
0
42
336
8
JSC Khiagda
8
472
59
8
396
50
23
1,226
53.3
2,517
27,095
10.8
3,588
41,464
11.6
2,855 44,116.5
15.5
54
432
8
57
456
8
57
456
8
118
2,614
22.2
123
2,590
21.1
128
2,989
23.4
Workers
ОАО ARMZ JSC PIMCU JSC VNIPIpromtechnologii JSC Dalur RUSBURMASH INC JSC Khiagda Total:
145
www.armz.ru
0
0
0
0
0
0
562
8,261
14.7
n/a
n/a
n/a
4
168
42
42
10,120
241
3,540 53,174
123.5
94.1 5,222 107,136
438.8
5,355 79,706
Audit report
Annex
Amount and terms of social benefits Types of social benefits, RUB mln
JSC ARMZ 2010 2009 2008
JSC PIMCU 2010 2009 2008
JSC Dalur 2010 2009 2008
7,9
-
-
30 39.6 37.5
0,02
-
-
4.4 3.8
-
-
-
-
10.6 9.3
8.1
10 8.7
Mass sporting and cultural events
0,6
-
-
3
0.7
Welfare assistance
4.8 3.3
4.4
VHI VHI life and accident Pension
4
3,6
-
-
Payment of fares for holidays, treatments
-
-
-
14.9 9.8 11.8
Supplementary payments on retirement
-
-
-
0,2
-
0,7
-
Once-off payments on anniversaries
2.7 2.3
JSC Khiagda 2010 2009 2008
JSC VNIPIPROMTECHNOLOGII 2010 2009 2008
1.5
1.5
1.2
3
0
2
0
0.02 0.2 0.02
0
0
0.2
0
0
0
8
0
0
0
0
0
0
0.2 0.2
0.2
0
0
0
0.8
2.7 1.5
2.3 0.01
0
0
0.8 0.8 0.6
-
0 0.01 0.01
0
1 0.7
-
-
- 39.3 11.7
1.3 2.4
2.7
0
0.4 0.6 0.4
-
6 3.7
7
0.2 0.2
0.2 0.01 0.01 0.02
0.3 0.4 0.2
-
1.4 1.5
1.4
0
0
0
0
and holidays
Third party verification
GRI verification
JSC Atomredmetzoloto 2010 Annual Report
В+
5.6
1.4
3.2
А
0
0
0
А+
report confirmed externally
POSSIBLE
В
-
externally
Self-declaration
С+
-
confirmed
MANDATORY
С
0.6
report
Level of application
report confirmed externally
Compensation for housing / hostels
146
Indicators found in the JSC Atomredmetzoloto public annual report per the Rosatom Public Reporting Standard Indicator
Name of indicator
Page
Report section
2.1. Economic performance
2.1.1. Profit
6
1. Main operation results
2.1.3. Financial stability
119–125
in 2010 10. Review of financial situation and results 2.3. Development of production
2.3.1. Investment in fixed assets in reporting period 39
5.2 Investment activity
9.1. Provision of qualified and com-
9.1.1. Provision of qualified personnel
86
9.1. Personnel
petent personnel
9.1.2. Training
88
9.1. Personnel
142
12.4. Use of standard elements
base
of accountability and performance indicators
10.1. Economic performance
10.1.1. Direct economic value generated and
6
1.1. Key figures
distributed, including revenues, operating costs,
39
5.2. Investment activity
employee compensation, donations and other
107
9.7 Charity and Sponsorship
community investments, retained earnings, and
activity
payments to capital providers and governments.
86
9.1 Personnel
EC1 GRI
119–125
10. Review of financial situation and results
10.3. Indirect economic impact
10.3.1. Development and impact of infrastructure
102–107
investments and services provided primarily for
9.6. Development of territories where the Company operates
public benefit through commercial, in kind, or pro bono engagement. EC8 GRI 10.3.2. Understanding and describing significant
102–107
indirect economic impacts, including the extent of
9.6. Development of territories where the Company operates
impacts. EC9 GRI
11.1. Managing environmental
11.1.3. Initiatives to reduce indirect energy
impact
consumption and reductions achieved. EN7 (add.)
65
7.1. Performance management
97–102
9.5. Environmental protection
GRI 11.1.6. Initiatives to mitigate environmental impacts of products and services, and extent of
and ecological safety
impact mitigation. EN26 GRI 11.1.8. Total environmental protection
100
expenditures and investments, by type. EN30 (add.)
9.5. Environmental protection and ecological safety
GRI 11.2. Use of materials, energy,
11.2.2. Direct energy consumption by primary
water
energy source. EN3 GRI 11.2.4. Total water withdrawal by source. EN8 GRI
65
7.1. Performance management
99
9.5. Environmental protection and ecological safety
» 147
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Audit report
Annex
Indicator
Name of indicator
page
Report section
11.3. Environmental impact
11.3.8. NOx, SOx, and other significant air emissions 99–100
9.5. Environmental protection
(emissions, effluent and waste),
by type and weight. EN20 GRI
and ecological safety
excluding radiation impact
11.3.10. Total weight of waste by type and disposal 98
9.5. Environmental protection
method. EN22 GRI
and ecological safety
12.1. Employment
12.1.1. Total workforce by employment type,
87
9.1. Personnel
employment contract, and region, broken down by
143
12.4.
12.1.2. Total number and rate of new employee
87
9.1. Personnel
hires and employee turnover by age group, gender,
144
12.4.
12.1.4. Share of specialists under 35
87
9.1. Personnel
12.1.7. Range of ratios of standard entry-level
88
9.1. Personnel
89
9.2. Social policy
146
9.2. Social policy
96
9.4. Health and Safety
88–89
9.1. Personnel
90
9.2. Social policy
12.4.5. Monitoring of staff radiation doses
94–95
9.4. Health and safety
12.4.6. Expenditures on staff health and safety
96
9.4. Health and Safety
gender. LA1 GRI
and region. LA2 GRI
wage by gender compared to local minimum wage at significant locations of operation. EC5 (add.) GRI
12.3. Worker welfare
12.3.1. Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation. LA3 (add.) GRI 12.3.5. Total expenditure on social programs for workers 12.4.2. Rates of injury, occupational diseases, lost days, and absenteeism, and total number of workrelated fatalities, by region and by gender. LA7 GRI 12.4.3. Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases. LA8 GRI 12.4.4. Health and safety topics covered in formal agreements with trade unions. LA9 (add.) GRI
13.1. Impact on social situation in
13.1.2. Procedures for local hiring and proportion of 145
regions of operations
senior management hired from the local community
12.4.
at locations of significant operation. EC7 GRI 13.4. Charitable activity
13.4.1. Charitable projects and amount of targeted 102–106
9.6. Development of territories
funding
where the Company operates 107
9.7. Charity and sponsorship activity
14.4. Ethics and human rights
14.4.8. Total number of incidents of discrimination
87
9.1. Personnel
and corrective actions taken. HR4 GRI
JSC Atomredmetzoloto 2010 Annual Report
148
> 12.5 < Audit report
149
www.armz.ru
Financial statements (IFRS)
Annex
> 12.6 < Financial statements (IFRS) CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2010 December 31, December 31, 2010 2009
January 1, 2009
ASSETS Non-current assets Property, plant and equipment
28,653
18,453
14,690
Intangible assets
65,725
6,132
1,030
Goodwill
11,400
–
–
9,036
3,341
1,817
Exploration and evaluation of mineral assets Investment in associates Other non-current assets Total non-current assets
29
9,047
19
3,705
2,549
294
118,548
39,522
17,850
10,439
4,467
7,433
468
145
393
6,863
8,688
3,504
Current assets Inventories Income tax receivable Accounts receivable and advances given Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS
603
3,240
432
41,666
52,683
2,626
60,039
69,223
14,388
178,587
108,745
32,238 3,956
EQUITY Share capital
20,257
20,127
Share premium
48,704
48,029
–
Merger reserve
7,201
7,114
7,147
(271)
(1,081)
(8)
Retained earnings
17,603
5,256
394
Equity attributable to the shareholders of JSC Atomredmetzoloto
93,494
79,445
11,489
Non-controlling interest
30,823
1,853
1,576
124,317
81,298
13,065
20,236
9,824
3 549
350
39
154
11,395
1,696
986
Currency translation reserve
TOTAL EQUITY LIABILITIES Non-current liabilities Long-term borrowings Long-term finance lease liability Deferred income tax liabilities
3,243
1,118
896
35,224
12,677
5,585
7,767
8,317
11,230
263
99
236
Accounts payable and accruals
6,064
3,865
1,743
Income tax payable
4,102
1,892
29
850
597
350
Total current liabilities
19,046
14,770
13,588
TOTAL LIABILITIES
54,270
27,447
19,173
178,587
108,745
32,238
Other non-current liabilities Total non-current liabilities Current liabilities Short term borrowings and current portion of long-term borrowings Short-term finance lease liability
Other taxes payable
TOTAL EQUITY AND LIABILITIES
In RUB millions, unless otherwise stated
JSC Atomredmetzoloto 2010 Annual Report
150
Consolidated Statement of Comprehensive Income for the year ended December 31, 2010 For the year ended December 31, 2010
For the year ended December 31, 2009
30,409
29,812
Cost of sales
(16,277)
(16,778)
Gross profit
14,132
13,034
Administrative and selling expenses
(4,280)
(4,165)
Operating profit
9,852
8,869
Gain from revaluation of the existing ownership interest
9,822
–
–
2,694
–
(822)
Revenue
Gain from disposal of investments Excess of the fair value of the identifiable net assets Share of (loss) / gain of associates
(1,819)
11
Financial income / (expenses), net
1,229
(2,704)
Other (expenses) /income
(405)
32
Foreign exchange (loss) / gain
(138)
1,203
Profit before income tax
18,541
9,283
Income tax expense
(6,209)
(3,494)
Profit for the year
12,332
5,789
12,239
5,804
Profit / (loss), attributable to JSC Atomredmetzoloto shareholders Non-controlling interest Profit for the year
93
(15)
12,332
5,789
810
(1,073)
13,049
4,731
Other comprehensive income after income tax Exchange differences on translation of foreign operations Total comprehensive income for the period attributable to JSC Atomredmetzoloto shareholders Non-controlling interest Total comprehensive income for the period
93
(15)
13,142
4,716
In RUB millions, unless otherwise stated
151
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Certification of non-financial reporting
Annex
Consolidated Statement of Changes in Equity for the year ended December 31, 2010 Share capital
share premium
Merger reserve
Currency transaction reserve
Retained Company’s earnings shareholders equity
Non-controlling interest
Total equity
13,065
3,956
–
7,147
(8)
394
11,489
1,576
Profit for the year
–
–
–
–
5,804
5,804
(15)
5,789
Other comprehensive income
–
–
–
(1,073)
–
(1,073)
–
(1,073)
–
–
–
(1,073)
5,804
4,731
(15)
4,716
16,171
48,029
–
–
–
64,200
–
64,200
On January 1, 2009
Total comprehensive income Issue of share capital
–
–
(33)
–
(942)
(975)
292
(683)
20,127
48,029
7,114
(1,081)
5,256
79,445
1,853
81,298
Profit for the year
–
–
–
–
12,239
12,239
93
12,332
Other comprehensive income
–
–
–
810
–
810
–
810
Total comprehensive income
–
–
–
810
12,239
13,049
93
13,142 805
Acquisition of shares of subsidiaries On December 31, 2009
130
675
–
–
–
805
–
Disposal of shares of joint ventures
–
–
87
–
(87)
–
–
–
Acquisition of shares of subsidiaries
–
–
–
–
205
205
28,877
29,082
Issue of share capital
Dividends On December 31, 2010
–
–
–
–
(10)
(10)
–
(10)
20,257
48,704
7,201
(271)
17,603
93,494
30,823
124,317
In RUB millions, unless otherwise stated
JSC Atomredmetzoloto 2010 Annual Report
152
Consolidated Statement of Cash Flows for the year ended December 31, 2010
For the year ended December 31, 2010
For the year ended December 31, 2009
18,541
9,283
1,592
1,092
Cash flows from operating activities: Pre-tax profit Depreciation of property, plant and equipment Amortisation of intangible assets (Release) / accrual of bad debt provision
134
118
(132)
233
(2,814)
(368)
Interest expenses
701
2,615
Foreign exchange loss / (gain)
371
(1,528)
Interest income
Interest on finance lease Excess of the fair value of the identifiable net assets Effect of discounting Dividends accrued Provision for bonuses Loss on derivative financial instruments Loss on disposal of other assets Gain from revaluation of investments Gain from sale of financial investments Share of loss / (profit) of associates. Other accruals Cash from operating activities before changes in working capital and income tax
37
91
–
822
846
82
–
(112)
654
259
55
396
–
105
(9,822)
–
–
(2,694)
1,819
(11)
230
48
12,212
10,431
Changes in working capital 5,913
(4,904)
Change in inventories
(3,268)
2,867
Change in other non-current assets
(2,273)
25
Change in accounts payable and accruals
(1,707)
2,500
(15)
193
Change in accounts receivable and advances given
Change in other taxes payable Change in other long-term liabilities Income tax paid
(242)
(38)
(4,525)
(1,795)
(720)
(2,493)
5,375
6,786
Interest income received
2,673
347
Long-term loans issued
(782)
–
Short-term loans issued
(936)
(172)
–
129
Interest paid Net cash generated from operating activities Cash flows from investing activities:
Repayment of long-term loans issued Repayment of short-term loans issued Purchase of property, plant and equipment
878
193
(5,120)
(5,130)
Proceeds from sale of property, plant and equipment
2,162
28
Purchase of intangible assets
(824)
(504)
–
(405)
2,660
254
Purchase of promissory notes Proceeds from sale of promissory notes Dividends received
–
112
Purchase of derivative financial instruments
–
(657)
Purchase of exploration and evaluation of assets
(1,674)
(1,475)
Acquisition of shares of Uranium One Inc.
(3,106)
–
(185)
–
Acquisition of interest on LLC Schekotovo
–
(119)
Acquisition of shares of Effective Energy N.V.
–
(17,027)
Acquisition of shares of JSC VNIPIPROMTECHNOLOGII
» 153
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Certification of non-financial reporting
Annex
Acquisition of shares of CJSC Rusburmash Other acquisitions Net cash used in investing activities
For the year ended December 31, 2010
For the year ended December 31, 2009
â&#x20AC;&#x201C;
(600)
(31)
(16)
(4,285)
(25,042)
Cash flows from financing activities: Proceeds from short-term borrowings
14,369
21,800
Proceeds from long-term borrowings
13,488
34,560
Repayment of short-term borrowings
(29,482)
(25,348)
Repayment of long-term borrowings
(11,128)
(26,587)
Proceeds from share issue
805
64,200
Pensions paid
(21)
(39)
(138)
(273)
Finance lease payments Net cash generated from / (used in) financing activities
(12,107)
68,313
Increase / (decrease) in cash and cash equivalents
(11,017)
50,057
Cash and cash equivalents at the beginning of the year
52,683
2,626
Cash and cash equivalents at the end of the year
41,666
52,683
In RUB millions, unless otherwise stated
JSC Atomredmetzoloto 2010 Annual Report
154
> 12.7 < Certification of non-financial reporting INDEPENDENT CERTIFICATION OF SOCIAL REPORTING Addressed to JSC Atomredmetzoloto
Introduction This audit certification applies to the 2010 Annual Report for JSC Atomredmetzoloto (hereinafter, the Report). The Report was prepared by JSC Atomredmetzoloto (hereinafter, the Company), which is responsible for collecting, organizing and presenting all of the information contained therein. Bureau Veritas Certification Rus is responsible only to the Company for work conducted on the certification of the Report, and assumes no liability to any party for decisions made or deferred on the basis of this certification.
Certification objectives and level 1. Evaluate the nature and degree of the Company’s compliance with the principles of inclusiveness, relevance and responsiveness, as set out in the AA1000 Accountability Principles Standard (APS) 2008. 2. Assess the quality of disclosure as regards the Company's sustainable development based on the АА1000 Assurance Standard (AS) 2008. 3. Assess the extent and quality of stakeholder engagement in the reporting process in accordance with the AA1000 Stakeholder Engagement Standard (SES) 2011. 4. Assess the degree of the Report’s compliance with the standard public annual report of Rosatom State Corporation in terms of reporting process requirements, as well as the structure and contents of the Report. 5. Assess the Report’s compliance with level B + (Company self-evaluation) of the Global Reporting Initiative Sustainability Reporting Guidelines, version G3 2006. 6. Make recommendations for the development of corporate governance within the context of social reporting.
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7. Apply a “reasonable” level of certification, as specified in the standards for report certification activities AA1000AS (2008) and the International Standard on Assurance Engagement ISAE-3000. During verification of the Report, information published on the Company’s corporate website http://www.armz.ru/ was taken into account, in addition to materials from various publications, the magazine Rosatom Country, federal and regional media, television broadcasts, and also the Public Reporting Policy of Rosatom and other intra-corporate regulations.
Methodology ■■ Interview senior management on significant economic, social and environmental aspects of Company operations, commitments, priorities and goals for sustainable development, tools to achieve these goals, and the level to which they have been achieved. ■■ Attending Company dialogues with interested parties, studying reports on the dialogues, interviews with management responsible for holding the dialogues, and also with participants in the dialogues. ■■ Attending Public Hearings on the Company’s Annual Report for 2010. ■■ Verification of the achievement of sustainable development objectives for 2010, as set down in the annual report for 2009. ■■ Verification of documents and data on the effectiveness of the approaches used at the Company for the management of economic, social and environmental aspects. ■■ Verification of collecting, processing, analyzing and documenting processes used at the
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Company for a sample of the representative data included in the report.
intentions of the Company to take any action in the future.
■■ Verification of the adequacy of a series of assertions, statements and information presented in the Report by: ›› a visit by the certifier in May 2011 directly to the Company, and interviews with managers and professionals in a number of departments dealing with environmental management, performance indicators, marketing activity, and corporate communications; ›› a visit by the certifier in May 2011 to industrial and social infrastructure at JSC Dalur, which is part of the Company, and situated in the Dalmatovo District of Kurgan Region. A meeting with the Director General of JSC Dalur, with the head of the personnel department, experts in environmental protection, health and safety, with the production staff. A meeting with the First Deputy Head of Dalmatovo District. A visit to social welfare sites (Uksyanskoe Secondary School, in the Village of Uksyanskoe, Dalmatovo District), a meeting with the school director. ■■ Analysis of a sample of data from the mass media and published statements by third parties describing the Company's commitment to the values of sustainable development, in order to verify the validity of the statements contained in the Report.
■■ At an operational level, certification was limited to visits to Company headquarters (Moscow) in April-May 2011 and one of the regions where the Company operates (Dalmatovo District, Kurgan Region, JSC Dalur) in May 2011.
■■ Verification of compliance of the Report and information published on the corporate website with the standards AA1000AS (2008), AA1000APS (2008), AA1000SES (2011), the Rosatom Standard and GRI guidelines. ■■ Performance test of the reporting feedback mechanism.
Certification limits ■■ Certification does not apply to the performance indicators that go beyond the timeframe of the current 2010 reporting cycle. ■■ Certification does not take into account statements, which express the opinions, beliefs or
JSC Atomredmetzoloto 2010 Annual Report
Basis for our opinion Certification work was based on an analysis of information provided by Company management, its structural divisions, subsidiaries, and representatives of a number of interested parties, on state statistical reports, and data from available sources with the use of analytical confirmation methods. Certification takes into consideration the industry-specific activities of the Company and objective limitations based on its confidential nature. Carried out within the framework of a “reasonable” level of certification, the selective verification of information in the Report provides a lower level of assurance for certification than a full inspection of all data (“high” level). With respect to the numerical information in the Report, the work carried out cannot be considered totally sufficient to identify all potentially inaccurate statements. Nevertheless, the data collected during our work is a sufficient basis for our findings, based on the applied “reasonable” level of certification as to the nature and extent of the Company’s compliance with principles of inclusiveness, relevance and responsiveness of standard AA1000APS (2008), as well as the quality of disclosure of information on sustainable development performance in accordance with the standard AA1000AS (2008).
Our opinion ■■ The Report accurately reflects the overall performance of the Company from the point of view of corporate public reporting. ■■ The Report is presented in an understandable form; it is accurate, objective, informative and balanced in content. The Report contains information to the extent required by interested parties, and at the same time avoids excessive detail. Abbreviations and technical terms are explained.
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■■ Individual errors in quantitative data identified during the certification are not fundamental and do not significantly affect the ability of stakeholders to reach conclusions about the Company’s results. ■ ■ The Company has an effective approach to management, enabling the identification of significant economic, social and environmental aspects of activities, and to plan, manage and improve the related pro-
cesses, to determine the expectations of stakeholders on these issues and respond to them. ■■ Company management’s control systems for public reporting are fully supported by the Company’s mission, its policies, procedures and resources, as well as the compliance of its activities with the principles of the “Social Charter of Russian Business.”
Compliance of the Report with AA1000APS (2008) Principle 1. Inclusiveness ■■ The information presented in the Report and objective and indirect evidence received suggest that in the preparation of information for the Report, the interests of key stakeholders were taken into account. ■■ The Company puts together a chart of interested parties, reflecting key issues and mechanisms for engagement. A table of stakeholder input is maintained. Stakeholders are involved in the identification of significant aspects of the Company’s activities. ■■ In case of divergent interests, the Company uses efficient mechanisms for their mutual coordination. ■■ The Company assesses the degree of implementation of identified stakeholder interests, and activities planned in the previous Report. ■■ The main means of communication and interaction with stakeholders are reports, including this Report, public hearings, dialogues, news reports, press releases, interviews, talks, surveys, the company website, and publications in the mass media. ■■ Structured interaction with interested parties is disclosed in the Report in information about two dialogues with interested parties and the public hearings on the Report, which were attended by a certification officer. The Company’s information transparency is illustrated by the provision of substantial presentations and
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a draft of the Report to stakeholders for their feedback and comments. ■■ The involvement of the regions where the Company operates is reflected in the published information on the implementation of Company restructuring programs and social projects. A certificate on the performance of social obligations to employees is also presented.
Principle 2. Relevance of information ■■ The Company has implemented a process to identify important (essential) aspects of its activity, providing clear and understandable criteria for relevance. During the reporting period, the process of updating the essential aspects was maintained on a continuous basis. ■■ The Report is a balanced and reasonable presentation of information essential for stakeholders regarding economic, social and environmental aspects, and defining the Company’s sustainable development indicators. ■■ The Report provides essential information about maintaining economic stability and the development of an investment program, and provides a self-assessment of the achievement of sustainable development and social commitments made in 2010, provides an assessment of the social and regional significance of investment projects, and sets the goal of optimizing the public reporting system. The degree of attention given to various topics in
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the Report is proportionate to their relative significance. ■■ The organization demonstrates an understanding of the concept of sustainable development and uses objective information in reflecting different topics in its Report. The report contains future sustainable development objectives for 2011 and the long term. ■■ Based on an analysis of data in the Report and interviews, not one significant aspect of sustainable development can be identified which was omitted or wrongly excluded from the Report. The Report covers the majority of GRI performance indicators. ■■ Information provided on essential aspects of the Company’s sustainable development has sufficient traceability in the process of data collection, processing, transmission and presentation. ■■ The information presented in the Report, the annual report and the Company's website, is of significance to interested parties, as it can affect their future decisions and behavior with respect to the Company. ■■ The report provides sufficient information about the Company's compliance with Russian laws, regulations and industry standards for the nuclear industry, as well as the provisions of the Code of Corporate Conduct recommended by the FSC (FFMS).
Principle 3. Responsiveness to stakeholders’ expectations ■■ We do not currently know of any possible areas not disclosed in the Report concerning which the Company would be unable to respond to reasonable inquiries from interested parties. ■■ The Company established the following priority topics for the Report: a) social relevance, environmental safety of nuclear energy and its role in economic development, and b) investment activity and respect for the rights of investors. ■■ The requirements of consumers are met with planned deliveries of products of guaranteed quality. In shaping a positive image of the
JSC Atomredmetzoloto 2010 Annual Report
Company as a reliable partner and of its competitive advantage, a significant role is played by expanding its international presence, investment and innovation, a tiered qualitycontrol system, high level of staff competence and continuous training and effective customer relations procedures. ■■ The opinions and expectations of shareholders are taken into account by implementing the principles of corporate governance, including holding annual shareholders’ meetings. ■■ The interests of the Company's workers are taken into account by the adoption of a collective agreement between management and a trade union committee (workers’ council). ■■ The needs of the regions are responded to by participating in targeted planning for the implementation of a wide range of social projects. Within the framework of agreements on social and economic partnership, the Company supports social-economic development in all regions where it operates, and together with the regional administrations is involved in financing major sporting and cultural facilities, assists in the improvement of cities and towns, implements sports, educational and cultural programs, and makes a significant contribution to the development of social infrastructure, the state of which dictates the quality of life of both staff and their families and the entire population in these regions. ■■ The right of the public to a favorable environment is provided for the Company’s planned environmental activities. The Company has adopted a plan for the implementation of environmental policy in 2009-2015, which aims to ensure ecological safety and environmental protection in areas where subsidiaries operate. As a result of a wide range of activities, positive changes have been achieved in key environmental impact indicators.
Report’s compliance with GRI guidelines The Report was drawn up using the recommendations in GRI guidelines for reporting on sustainable development, contains information on all standard reporting elements, as well as GRI per-
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formance indicators, and in general corresponds to a reporting level of B+. The fact that the Report does not contain detailed information about individual GRI performance indicators is due to the fact that at present these issues are of minor significance to stakeholders, and their contribution to the Report can be neglected compared with the Company’s core activities.
■■ A more balanced reflection in the Report of both positive and negative trends in the achieving of planned sustainable development objectives in the reporting period.
Level and quality of stakeholder engagement in compliance with АА1000SES (2001)
■■ Inclusion in reports for the subsequent period of supplementary and expanded recommendations for reporting on sustainable development (GRI guidelines: version G3.1 from March 23, 2011).
In general, the process of public accountability is consistent with the recommendations of AA1000SES (2011). This concerns the identification of stakeholders, the initial identification of significant issues, determining the strategy, objectives and scope of engagement, establishing a plan and timetable for the structuring of engagement, the organization of engagement, and responding to the challenges of engagement.
Compliance with the Rosatom Standard The process of public reporting and the structure of the Report are broadly consistent with the requirements of the Standard Model.
■■ Holding of an internal audit of the social accountability process in the Company and the presentation of related materials in subsequent reporting cycles.
■■ A fuller reflection in the Report of the Company's commitments in the field of sustainable development in relation to climate change and reducing carbon emissions (positive practice of AREVA Corporation, www.areva.com). ■■ The design and implementation of systems for the management of social responsibility in accordance with the international standard SA 8000 and the guideline ISO 26000. ■■ Improving the process of collecting, processing and documenting information on environmental aspects of the Company’s activities.
Recommendations for the development of corporate management of social accountability ■■ Fine-tuning of the process for deciding on Report content, and methods for measuring data and calculations, including assumptions and techniques used to prepare indicators and other information included in the Report (items 3.5, 3.9 in GRI guidelines for reporting on sustainable development). ■■ O rganization of annual publications on social accountability for each region where the Company operates.
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Statement from Bureau Veritas Certification Rus on independence, impartiality and competence ■■ JSC Bureau Veritas Certification Rus is an independent professional international company specializing in providing services for the accredited certification of various management systems (such as quality-control systems, occupational health and safety, environmental protection, social responsibility, etc.). ■■ Bureau Veritas Certification Rus officially states that this Conclusion is an independent assessment by a third party auditor. Bureau Veritas Certification Rus has no commercial interests in the Company except for the provision of certification services.
Certifier JSC Bureau Veritas Certification Rus May 18, 2011
Leonid Yaskin – Director General, Senior Auditor, Cand. Sc.
Vladimir Mityashin – Senior Auditor, Ph.D. in economics
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> 12.8 < Audit committee report Audit Committee Report on the findings of an audit of the business and financial performance and annual accounting (financial) statements of JSC Atomredmetzoloto for 2010 Moscow
04 May 2011
Pursuant to Minutes No. 5 of the Annual General Meeting dated 30.06.2010, the Audit Commission of JSC Atomredmetzoloto (hereinafter, the “Company”), elected to include the following members: Full name
Position occupied at the time of election
Andrienko, Viktoria Alexandrovna
Chief Accountant, State Atomic Energy Corporation Rosatom
Burel, Oksana Vladimirovna
Chief Specialist, Research Division, Internal Audit Department, JSC Atomenergoprom
Zakharov, Alexei Mikhailovich
Deputy Director, Corporate Financing Treasury Office, State Atomic Energy Corporation Rosatom
and guided by the scope of authorities established under the RF Federal Law “On Joint Stock Companies”, the Company Charter, and the Statute on the Company’s Audit Commission, conducted an audit of the Company’s business and financial performance for the period running from 01.01.2010 to 31.12.2010.
General Company information:
Full name: Open Joint Stock Company Atomredmetzoloto. Short name: JSC Atomredmetzoloto. Registered and mailing address: 22, Bolshoi Drovyanoi Lane, Moscow, 109004.
State registration: Company registered on 22.02.1995 by the Moscow Registration Chamber under No. 004.997; on 02.08.2002, an entry was made to the Unified State Register of Legal Entities to reflect the reregistration of JSC Atomredmetzoloto under number 1027700043645. As of 01 January 2010, the Company’s charter capital totaled RUB 3,956,039,897 (three billion nine hundred fifty-six million thirty-nine thousand eight hundred ninety seven rubles) divided into 3,956,039,897 (three billion nine hundred fifty-six million thirty-nine thousand eight hundred ninety seven) uncertificated ordinary shares. The par value of each such share totals RUB 1 (one ruble).
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At the Extraordinary General Shareholders Meeting held on 20.02.2009, a resolution was adopted to execute an additional securities issue of 16,372,795,900 shares with a par value of RUB 1 each. The RF FFMS Report dated 16.03.2010 and the additional securities-issue report registered 16,171,284,635 shares with a par value of RUB 1 each. On the basis of the amendment of the JSC Atomredmetzoloto Charter on 29.03.2010, the Company’s charter capital grew by RUB 16,171,284,635. At the Extraordinary General Shareholders Meeting held on 16.04.2010, a resolution was adopted to execute an additional securities issue of 129,915,429 shares with a par value of RUB 1 each. The RF FFMS Report dated 05.08.2010 and the additional securities-issue report registered 129,915,429 shares with a par value of RUB 1 each. On the basis of the amendment of the JSC Atomredmetzoloto Charter on 19.08.2010, the Company’s charter capital increased by RUB 129,915,429. As of 31 December 2010, the Company’s charter capital stood at RUB 20,257,239,961 (twenty billion two hundred fifty-seven million two hundred thirty-nine thousand nine hundred sixtyone rubles) divided into 20,257,239,961 (twenty billion two hundred fifty-seven million two hundred thirty-nine thousand nine hundred sixty-one) uncertificated ordinary shares. The par value of each such share totals RUB 1 (one ruble). On the basis of the Securities Exchange Agreement between State Atomic Energy Corporation Rosatom and JSC Atomic Energy Power Corporation (JSC Atomenergoprom) dated 02.08.2010, 16,171,284,635 ordinary shares were transferred from State Atomic Energy Corporation Rosatom to JSC Atomenergoprom. Company shareholder composition as of 31.12.2010 (reflecting shareholding as a percentage of total charter capital): JSC TVEL – 20.021%, JSC Atomenergoprom – 79.979%. The Company has no branches or representative offices. Pursuant to the Charter, the Company’s core operations encompass the geological exploration and mining of commercial minerals containing, inter alia, nuclear materials and radioactive substances, as well as the production of yellowcake. Company senior management during the period in question: Director General – Zhivov, Vadim Lvovich. Individual responsible for bookkeeping and the compilation of financial (accounting) statements: Chief Accountant – Pozdeeva, Anna Dmitrievna. The audit of the Company’s business and financial performance for 2010 was conducted according to the sampling method. The business and financial documents requested by the Audit Commission were submitted thereto and audited at random. On the basis of its audit, and in due consideration of the report submitted by the auditing firm LLC Nexia Pacioli on its audit of financial (accounting) statements, the Audit Commission affirms the accuracy of the Company’s Annual Report, Annual Financial (Accounting) Statements, and Business and Financial Performance for the period running from 01.01.2010 to 31.12.2010, inclusively, with the exception of the possible impact of the factors cited in Item 14 of the Audit Commission Report on the Company’s accounting statements. Audit data are presented in Appendix No. 1.
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Main audit conclusions: 1. Profitability index per 2010 net profit demonstrates growth from 29% to 33% due to increased financial earnings. 2. As of 31.12.2010, the Company's net asset value totaled RUB 109,156 mln and its charter capital stood at RUB 20,257 mln, which complies with the net-assets to charter-capital ratio requirements established under RF Federal Law No. 208-FZ dated 26.12.1995 “On Joint Stock Companies” (as amended and supplemented). The Company’s assets, liabilities and capital are reflected legitimately and comprehensively in its accounting statements. 3. Pursuant to the audit report issued by LLC Nexia Pacioli, the Company’s financial (accounting) statements accurately reflect, in all material respects, its financial position as of 31 December 2010 and its business and financial performance for the period running from 01.01.2010 to 31.12.2010, inclusively. 4. In the opinion of the Audit Commission, with the exception of the possible impact of the factors cited in Item 14 of the Audit Commission Report on the Company’s accounting statements, its accounting statements accurately reflect, in all material aspects, the Company’s financial position as of 31 December 2010, as well as its business and financial performance and cash flow movements for 2010, in accordance with established accounting rules.
Chairman of the Audit Commission
Members of the Audit Commission:
V. A. Andrienko
O. V. Burel
A. M. Zakharov
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> 12.9 < Internal audit report The internal audit department at JSC Atomredmetzoloto has conducted an audit of the reliability of information presented in the annual report. Preparation of the Annual Report (hereinafter, the “Report”) was conducted in accordance with Order No. 28 dated 28.02.2011 “On Organizing Work for Preparation of the Annual Report of JSC Atomredmetzoloto 2010”. Most of the relevant subdivisions of JSC Atomredmetzoloto and its subsidiaries (hereinafter, the Holding Company, ARMZ) participated in its preparation. The views of interested parties were taken into consideration. Reports on the implementation of plans for 2010 were critically evaluated. This Report reflects the main segments of the Holding Company’s activities and the indicators to which Holding Company management and staff pay special attention, and to which most resources are dedicated: »» increasing financial stability; »» risk management; »» social policy;
»» monitoring and improving health and safety systems; »» monitoring and improving environmental safety; »» improving production efficiency. The information reflected in the Report, assuming the sufficiency of the evidence presented, fully reflects in all material respects the main facts and achievements of ARMZ Uranium Holding Co. in 2010. The Report allows for the communication to users of information on existing systems for the effective management of various sustainability indicators, reflects the level of responsiveness to the opinions of interested parties, and reflects not only past events at ARMZ, but also plans for the short- and long-term future. The audit allows us to conclude that the information contained in the Report, accurately reflecting a favorable level of sustainable development at the Holding Company and the aspirations of its managers and workers to improve thereupon, is capable of influencing the findings and decisions of stakeholders.
Internal Audit Department Director
G. Ye. Fedichkin
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> 12.10 < Report on observance of the Corporate Code of Conduct The Report was prepared in accordance with the format established in guidelines for the composition and presentation of information on compliance with the Corporate Code of Conduct in the annual reports of joint stock companies, approved by Federal Securities Commission of Russia directive No. 03-849/p dated 30.04.2003. #
Corporate Code of Conduct provision
Observed or not observed
Note
Observed
When convening general shareholders’ meetings,
Respect for shareholders’ rights 1
Respect for the rights and legal interests of shareholders in compliance with applicable legislation
schedules are respected for the timely notification of
and adherence to the main rules of the Code of
such meetings, the right of shareholders to familiarize
Corporate Conduct.
themselves with the list of persons entitled to participate in the AGM is observed, shareholders are entitled to review materials (information) for the general shareholders’ meeting, and are entitled to include items on the agenda of the General Shareholders’ Meeting.
Board of Directors 2
The presence in the Company Charter of the authority Observed
In accordance with Sub-Clause 25, Clause 13.2 of the
of the Board of Directors to annually approve the
Charter, the remit of the Board includes approval of
Company’s financial and business plan.
annual plans, budgets and estimates for the Company's operations and progress reports on their implementation, and the Company’s financial and business targets.
3
The presence in the Company Charter of the right of
Observed
In accordance with Sub-Clause 23, Clause 13.2 of the
the Board of Directors to suspend the powers of the
Charter, the remit of the Board includes deciding on
Director General, appointed by the AGM.
the formation of a temporary sole executive body in the event of the termination of the office of the Director General, or their inability to discharge their duties for any reason, and to hold an Extraordinary General Meeting of shareholders to decide on the early suspension of the sole executive body and the formation of a new Company executive body.
4
The presence on the Board of Directors of at least
Not observed
Independent directors were not elected to the Board of Directors.
3 independent directors, in compliance with the requirements of the Corporate Code of Conduct. 5
The absence on the board of directors of a joint stock company of persons who were found guilty of
Observed
There are no such individuals on the Company’s Board of Directors.
committing economic crimes or crimes against the government, the civil service or local government services, or who were subject to civil penalties for violations in the field of business or finance, taxes, or the stock market.
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#
Corporate Code of Conduct provision
Observed or not observed
Note
6
The absence on the board of directors of a joint stock
Observed
Members of the Company’s Board of Directors do not
company of persons who are party to, the director
hold positions on the management boards of competing
general (manager) of, member of the governing body
companies.
or employee of a legal entity competing with the company. 7
8
The holding of meetings of the Board of Directors
Observed
Used in the practice of corporate governance. In 2010,
during the year for which the annual report of the joint
there were 16 meetings of the Board of Directors. A
stock company is being prepared, at intervals of not
meeting frequency of at least once every six weeks was
less than once every six weeks.
observed.
The presence in the Company’s internal documents of Observed
Section 10 of the Statute on the Company’s Board of
an order on the holding of board meetings.
Directors established the basic rules for the holding of meetings of the Company’s Board of Directors.
9
The presence in the Company’s internal documents
Observed
In accordance with Sub-Clause 12, Clause 2.1 of the
of the need for approval by the Board of Directors of
Statue on the Board of Directors, the remit of the Board
Company transactions worth more than 10 percent
of Directors includes approving a transaction or series
of Company assets, except for transactions made in
of related transactions involving property whose value
the ordinary course of business.
ranges from 10 to 50 percent of the book value of Company assets.
10
The presence in the Company of Board of Director
Not observed
committees.
The Company has not set up Board of Director committees.
Executive bodies (Director General) 11
The absence in executive bodies of persons who are
Observed
The Company has not established a collegial executive
party to, the director general (manager) of, a member
body (Management Board).
of the governing body of, or employee of a legal entity
The Director General of the Company is not a member
competing with the Company.
of the governing body or employee of a legal entity competing with the Company, and has not been found guilty of committing economic crimes, crimes against the state, or other crimes and offenses.
12
Presentation by the executive bodies of a joint stock
Partially-
The Director General submits a report on his work to
company of monthly reports on its work to the board
observed
the Board of Directors at the request of the Board of
of directors. 13
The establishment in agreements concluded
Directors. Observed
The contract signed with the Director General
between a joint stock company, its director general
establishes the liability of the Director General for
(managing organization, manager) and members of
the violation of statutes on the use of confidential and
its management board, of responsibility for violation
privileged information.
of the statute on confidentiality and privileged information. Company Secretary 14
The presence in the Company of a special officer
Observed
(company secretary), whose task is to ensure that the
The Company has elected a corporate secretary, who organizes the work of its managing bodies.
bodies and officials of the joint stock company comply with procedural requirements to guarantee the rights and legitimate interests of shareholders. Significant corporate actions 15
The presence in the Charter or internal documents
Observed
In accordance with Articles 12.1, 13.2 and 14.3 of the
of the Company of a requirement to approve major
Charter, the remit of managing bodies includes making
transactions prior to their conclusion.
decisions on approving transactions in cases stipulated by Chapter 10, Approval of Major Transactions, of RF Federal Law No. 208-FZ “On Joint Stock Companies” dated 26.12.1995.
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16
The mandatory involvement of an independent
Observed
Implemented in practice. An independent appraiser is
appraiser to estimate the market value of property
invited by the Company to determine the value of shares
involved in a major transaction.
and other Company assets earmarked for divestment or acquisition.
Disclosure of information 17
The presence of a company Internet site and regular
Observed
The Company meets its obligation to disclose relevant
disclosure of information about the joint stock
information in accordance with the laws of the Russian
company on this website.
Federation on the site www.armz.ru.
Control over financial activity 18
The presence of a special unit in the joint stock
Observed
The Company has set up an internal control unit and
company, ensuring compliance with internal control
elected an audit commission, which act in accordance
procedures (supervision and audit service).
with their respective governing statutes.
Dividends Payment of dividends.
Observed
Dividends are paid by the Company in line with decisions reached by the General Shareholdersâ&#x20AC;&#x2122; Meeting.
19
Information on dividend payments is posted on the site www.armz.ru in the Companyâ&#x20AC;&#x2122;s annual reports.
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> 12.11 < Details, contact information, feedback Full company name
Short name Location of headquarters (head office) and postal address Telephone / fax Name of registering authority, number, and date of registration Main State Registration Number (OGRN) Individual Tax Number / Code of Reason for Registration (INN / KPP) Main type of activity
Internet site Information on auditor and register holder
Open Joint Stock Company Atomredmetzoloto JSC Atomredmetzoloto 22 Bolshoi Drovyanoi Lane, Moscow, Russia 109004 (495) 508-88-08 / 508-88-10 Moscow Registration Chamber, No. 004.997 dated 22.02.1995 1027700043645 7706016076 / 770901001 Geological exploration and extraction of minerals containing, inter alia, nuclear and radioactive substances, production of natural uranium concentrate http://www.armz.ru Open Joint Stock Company Registrar R.O.S.T. Registrarâ&#x20AC;&#x2122;s details: OGRN 1027739216757, INN 7726030449 Address: 18 Ul. Stromynka Building 13, Moscow Telephone / fax (495) 771-73-36
Victoria Vasilieva Director of Corporate Communications ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) 22 Bolshoi Drovyanoi Lane, Moscow, Russia 109004 Tel.: +7-495-508-8808 ext. 295 Fax: +7-495-508-8810 E-mail: Vasilieva.V.S@armz.ru Artem Gorbachev Press Secretary of PR Group ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) 22 Bolshoi Drovyanoi Lane, Moscow, Russia 109004 Tel.: +7-495-508-8808 ext. 241 Fax: +7-495-508-8810 E-mail: Gorbachev.A.V@armz.ru
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Feedback form Feedback: your opinion is important to us You have now read the JSC Atomredmetzoloto Annual Report for 2010. We are interested in learning your opinion about it. We would be grateful if you could help us improve the quality of the Companyâ&#x20AC;&#x2122;s reporting by responding to a few simple questions.
1.
Did you find relevant information in the Report on issues that concern you? Yes No Just browsed the Report Please tell us which items were particularly important, and which items were missing?
2.
Will the information presented in the JSC Atomredmetzoloto Report facilitate improved interaction with the Company? Yes No Not applicable Please tell us which information was particularly useful, and which was missing?
3.
Which sections of the Report were of most interest to you?
4.
Which sections of the Report interested you least of all?
5.
How do you assess the reliability and objectivity of our Report?
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6. 7.
Did the fact that the Report was certified by an independent audit company influence your assessment of its reliability?
Will you require the next JSC Atomredmetzoloto Annual Report? Yes No
8. 9.
In what form would you like to see the next Report?
What recommendations would you like to make to improve the activities of the Holding Company and its subsidiaries and affiliated companies?
10. Other comments 11. Please indicate to which group you belong (please do not tick more than two).
Shareholder Investor Contractor/supplier Industry company Industrial consumer SME representative Federal government representative Regional government representative Local government representative Environmental NGO representative Representative of business association or other public body Media Employee of ARMZ Uranium Holding Co. Employee of subsidiary or affiliated company of ARMZ Uranium Holding Co. Other (please specify)
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