Atomredmetzoloto: Responding to New Challenges Marina Liborakina, Deputy CEO, Strategy MINEX Moscow, Russia – Oct 5, 2011
Overview of Rosatom and Atomredmetzoloto Role Within Rosatom
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Rosatom — a history of most reliable supplier and nuclear technologies development • No disruption in supply since exports began in 1968
Performance data
• 316 M lbs U3O8 equivalent delivered to the USA to date under HEU-LEU contract since 1995 • As of 1995 10% of US electricity is generated using fuel supplied by Rosatom 2030
1959 World’s first nuclear powered icebreaker launched
1973 Start of EUP export sales
1954–55 Soviet Nuclear Power Program established
1945 Russian nuclear industry creation
1954 World’s first NPP put into operation in USSR
1964 First PWR in the world with 210 MWt capacity
1989 Start of EUP supply to the US market
2001 The first postSoviet power unit brought into operation
1973 World’s first NPP with fast neutron reactor
1993 US and Russia signed Megatons to Megawatts Deal
1950
2020
2010
2011 ARMZ: Acquisition of 100% of Mantra Resources
2000
2009-10 ARMZ: Acquisition of 19,9%, and then 51% of Uranium One
1980 1970
• Formation of Russian nuclear industry and its research & technology base
Start of BN-800 project (the largest commercial reactor on fast neutrons)
1990
1960 1940
2007 The Ministry transformed into ROSATOM State Corporation
1992 ARMZ: Formation of ARMZ • ARMZ becomes one of the world leaders in uranium production • Uranium One is viewed as ARMZ’s global growth platform
• Use of nuclear technologies in military and civil purposes • Entering the global markets
• Industry deregulation • Development of reliability, safety, environment management
Towards the global leadership in in technologies and markets 4
Rosatom — a new vision of global leadership
Rosatom Positioning:
• Retaining foreground development of nuclear technologies • Using synergies with nuclear electricity generation • Development of non-electricity generating nuclear technologies Rosatom Development: • Increase the scale in the energy sector • Commercialization of innovative nuclear technologies
Share of nuclear industry in revenue (%)
150
Nuclear technologies
URENCO Westinghouse 100
Rosatom (2010)
Electricity generation
USEC Areva EDF
50
Rosatom (2030)
Exelon
Hitachi EON
Alstom
0
KEPCO GE
Diversified technologies -50 -50
0
50
100
150
Share of electricity sales (%)
10% of world’s uranium mining
Rosatom market positions, 2010
45% of world’s uranium enrichment services’ market
17% of world’s nuclear fuel market (supplies NPPs in Russia and 76 other NPPs across 14 countries )
16% of NPP construction worldwide World’s №2 in installed capacity (23.2GW)
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ARMZ Uranium Holding role within Rosatom
Enrichment
Our mission is resourcing innovation - intensive industries, including provision of raw materials for low carbon energy
Milling Conversion
Fuel Fabrication
For Natural Uranium Fuels
Exploration
MOX Fuel Fabrication Electricity
Recycling Mining
Our strategic goal is to maximize value to shareholders though capturing market growth potential and becoming a supplier of choice to the world's nuclear industry
Reprocessing
Power Plant
HLW Spent Fuel Storage
Spent Fuel Disposal
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ARMZ Uranium Holding global presence
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Key Market Challenges after the Fukushima
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Impact of Fukushima on future demand
New NPPs, GWe
Demand for uranium, M lbs U3O8
NPPs newbuilds and demand for uranium
? Fukushima, 2011
Chernobyl, 1986 Three Mile Island, 1979
Source: BMO Capital Markets, McKinsey, WNA, UxC
The impact of previous accidents Current situation
•
The number of newbuilds decreased significantly in the USA and some European countries. However, the general
trend for nuclear industry development kept steady, though moderate, and supported demand growth for uranium (one additional GWe ≈ 65-70 additional lbs U3O8 annually) •
Supply-demand fundamentals are different today compared to Three Mile Island and Chernobyl
•
The need to address climate change favors nuclear power
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The majority of world population faces the electricity shortage
5 599
12 301* 6 394
8 577
7 515
3 046
2 275 2 460
2 604 513
1 112 2 055 78
Global Average
9 786
4 084
3 107
*electricity consumption, kWh per capita, 2010, Average by region/country, 2010 Energy sufficient countries, more 5000 kWh per capita Countries with average energy sufficiency (2500 -5000 kWh)
Approximately 70% of world population face permanent energy deficit
Countries with inadequate energy supply (less than 2500 kWh)
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The Fukushima has challenged the nuclear renaissance but not the fundamentals of industry development
The need for a reliable supply of affordable electricity is growing
quadrillion Btu
1
CAGR +2% p.a.
Nuclear power is the only affordable baseload electricity solution for the low carbon economy
CAGR +1,5% p.a.
800
739 687 639 590
600
2
543 495
100%
400
Base load
CO2 costs ($/MWh)
Nuclear
59
-
Gas: CCGT
86
11
Coal: SC/USC
65
24
Coal: w/90%CC(S)
62
13
Renewables
>100
partly
-
80% 70%
60%
406
Costs ($/MWh)
90%
50%
40% 30%
200
20% 10%
0
0% 2000 2007 2015 2020 2025 2030 2035 Share of nuclear energy in total world energy supply
Source: U.S. EIA/International Energy Outlook 2010 Source: U.S. EIA/International Energy Outlook 2010
The impact of Fukushima
Source: Projected costs of generating electricity 2010 by IEA, NEA, OECD
Source: Projected costs of generating electricity 2010 by IEA, NEA, In the short to medium term: change in nuclear politics, refocusing on safety and reduction of the OECD economic risks of accidents; new regulations will lead to higher costs of newbuilds and NPP modernization, etc. In the longer-term: minimal impact on industry development. Nuclear remains to be the solution both for developing and developed countries, which provides energy security 11
Fukushima accident led to significant decrease in prices
U3O8 price, USD/pound $75,0
Fukushima accident
$70,0
$65,0 $60,0
-30%
$55,0 $50,0 $45,0 $40,0
Fukushima accident led to significant decrease in prices. U3O8 spot price fell by 30% from 70 USD/pound to 49 USD/pound and currently is still quite low – just near 53 USD/pound of U3O8
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Uranium Supply-Demand Balance
Source: WNA
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Atomredmetzoloto: Diversification Challenges
REE as ―Critical Metals‖
Генераторы • неодим, празеодим, диспрозий, тербий
Электроприводы управления оперением ракет • самарий
Сенсорные датчики • иттрий
Гидролокаторы • тербий, ниобий
Электроприводы • неодим
Оптика • неодим, лантан, церий
Контроль гравитации в стабилизаторах «умных» бомб • неодим
Люминофоры • европий, иттрий, церий
The REE Market Challenges
World Rare earth production 1990-2010 160
• China– is almost a monopoly controlling close to 97 % of the worlds production
140
• China has introduced a strict
Production volume, ths tonns
120
quota system and steadily reduces amount of rare earths available for export
100 80
• China said in July 2010 that it
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China
40
would begin cutting exports and consolidating the industry, ostensibly for environmental reasons.
• Prices for REO has spiked
20
Others
0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010Е
Currently a non Chinese production is being formed and will alternate the balance substantially. Up to 40% REE to be produced outside China in 2020
Sources: Metal Pages, Asian Metals, Lynas Corporation, TMR, Rosatom
tremendously in 2010-2011, but set to fall on lower short term demand forecast
• Current trend for increasing internal consumption and by as early as 2015 China may become a net importer of REO
Diversification has both economical and political reasons
Economical
Political
•
•
• •
Uranium market is relatively small and consolidated Diversification allows to overcome these limitations Gains from diversification: single product risk reduction and therefore value increase Additional revenue and margin growth
• •
Insure availability and readiness for innovation economic growth
Develop mineral resource base Geopolitical aspects
• Russian strategic deposits + • Quality assets and high margin production in countries with better mining conditions
Growth rate surpressing Producer with least growth rate of possible production costs and NPP lifetime the market supply guarantee
Being among top 3 players in the key markets
Mining business value maximization
Sustainable leadership
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Atomredmetzoloto: Next MINEX Conference