Information Report: Summarizing The Results of Kazatomprom’s Operation for Six Months of 2009

August 12. Kazatomprom

Information Report: Summarizing The Results of Kazatomprom’s Operation for Six Months of 2009Kazatomprom has summarized the results of its production activity for the first half of the current year. As the data show the number of uranium products consumers is still the same; none of the Company’s partners expressed any intention to decrease uranium products supplies or to review the cooperation programs. 

For the first half of the current year Kazatomprom exceeded uranium production plans by 9%. Total uranium production volume in the Republic of Kazakhstan surpassed 6,000 tU that is 57% more than in the corresponding period of 2008. Drilling activity plan for the first half of the year was also exceeded. About 8,000 tU are planned to be produced in Kazakhstan in next 6 months.

Production plans on other types of products are also realized in spite of crisis and world demand decrease. Thus, in the first half of 2009 tantalum and niobium production made up 102.3 tons (106% of the planned one). For the first quarter beryllium production made up 629 tons despite sharp decrease of demand on the world markets.

MAEK-Kazatomprom, an energy generating enterprise of Kazatomprom produced 2 billion kW of electric power that is approximately the same amount it produced in the corresponding period of 2008.

Production figures for the first half of the year confirm the statements of the company’s senior management that Company’s activity is not going to be cardinally changed. «We keep realizing all our plans and performing our commitments», said Vladimir Shkolnik, Kazatomprom President.

Investment rates of Kazatomprom did not decrease even amidst the crisis. Total capital investments of Kazatomprom’s group of enterprises for the reporting period made up 33.4 billion tenge that is 92% from the level of the first half of 2008.

Uranium-producing enterprises are implementing their plans on putting new deposits into operation. Akbastau JSC and Baiken-U LLP have started pilot production. Mines at Khorassan-1 and Irkol deposits have been put into operation. Mines construction at Khorassan-2 and Semizbai is going on. Works are carried out on production increase at South Inkai deposit. Refinery plants are under construction at Karatau LLP.

Two sulfuric acid plants are under construction now, one – in Zhanakorganskiy region of Kyzylordinskaya oblast (capacity is 500,000 tons per year, project cost is 216 million dollars; operation to be started in 2011, with design capacity to be reached in 2012) and the other one – in Stepnogorsk (capacity is 180,000 tons per year, project cost is 8.8 billion tenge, operation to be started in 2010).  For the first half of 2009, in Zhanakorganskiy region, the design and estimate documentation was worked out, the construction of the plant’s outside infrastructure is nearly finished, including access auto and rail ways; power transmission line has been constructed. Equipment for Stepnogorsk plant ordered in Italy is ready and waits its delivery to Kazakhstan.

The priority task for Kazatomprom is still the establishment of vertically integrated company having all stages of nuclear fuel cycle and producing the final product of high value added.

Thus, at the moment the preliminary technical and economic assessment of the joint Kazakhstan-Canadian project on UF6 production is carried out in the frame of JV Ulba Conversion (Kazatomprom – 51%, Cameco – 49%).

AREVA continues to transfer fuel fabrication technology to Kazatomprom for the reactors of French design. During the forthcoming visit of the President Nickolas Sarkozy to Kazakhstan in October 2009, the joint venture’s foundation documents are supposed to be signed.

Besides, qualification of fuel pellets for the reactors of Japan, USA and China is carried out and this will allow Kazatomprom expand its presence on the world fuel market.

State expert review of the project in the frame of the joint Russian-Kazakhstan enterprise, CJSC Uranium Enrichment Center, in the territory of the Russian Federation in Angarsk, has been finished.

Another strategic direction for Kazatomprom is building foundation for the development of nuclear power in the Republic of Kazakhstan. There has been a big progress reached in the implementation with the Russian partners the joint project on design of nuclear reactor facility, VBER-300, in Aktau. At the moment an intergovernmental agreement is being prepared for signing. The company intends not just to construct the NPP in Kazakhstan based on the power units of VBER-300 type but to start export of such reactor facilities to the other countries.

As for Kazatomprom’s cooperation with Chinese companies, the feasibility study is being carried out for the joint project with the Chinese Guangdong Nuclear Power Corporation (CGNPC) on the construction of NPPs in China. More specific decisions are to be taken based on the results of this feasibility study.

Kazatomprom’s export plans are connected with the intentions of many countries to actively develop the nuclear power in the nearest 20-30 years. China is planning to construct more than 150 nuclear power units by 2030 out of 500 ones planned to be built in the world. Japan, South Korea, India, Russia, EU states keep building NPPs. Leaders of such countries as Germany, the USA and the Great Britain declared their intentions to review in the nearest future the power balance in favor of nuclear power. This is all the potential market for Kazakhstan fuel. Moreover the strategic role of uranium raw materials in the world in the near term will increase with the power moving to be the environmentally sound one.

Despite the crisis the company keeps realizing the declared projects in the social sphere. For the first half of 2009 Kazatomprom-Demeu used 541 million tenge. A number of social projects were put into operation in the South-Kazakhstan and Kyzylordinskaya oblasts.

From 2005 to 2009 Kazatomprom invested nearly 10 billion tenge into the development of social sphere of uranium-producing regions. Last year the company became a winner of the first national competition “Paryz” devoting to the social responsibility of business. Social projects realization is one of the company’s priorities.

 Kazatomprom is the national operator of the Republic of Kazakhstan for export of uranium and its compounds, rare metals, nuclear fuel for nuclear power plants, special purpose equipment, technologies and double-use materials. The main activities of the company are: geological exploration, uranium production, manufacture of nuclear fuel cycle products, reactor construction, nuclear power plants, non-ferrous metallurgy and production of construction materials, the electric energy sector, scientific support of production and social welfare and training of personnel. Today Kazatomprom has more than 25,000 employees and is amongst the leading uranium production companies in the world.