Annual Report 2014
INTEGRATED ANNUAL REPORT
JSC ATOMREDMETZOLOTO 2014
APPROVED by the Annual General Meeting of Shareholders of JSC Atomredmetzoloto on June 29, 2015 (Minutes No. 24)
This report has been preliminarily approved by Resolution No. 143 of the Board of Directors of JSC Atomredmetzoloto
dated May 27, 2015 Table of Contents
Address by the Chairman of the Board of Directors 4 3.3.3. Uranium Production by JSC Atomredmerzoloto Russian Address by the Director General 5 Entities 59 Information about the Report 6 3.3.4. Other Entities 61 2014 Key Performance Indicators 8 3.3.5. Rosatom Production System. Complying with Product Quality Requirements 63 2014 Key Achievements 9 3.4. Intellectual Capital Management 65 2014 Main Events 10 3.4.1. Innovative Activities 65 Chapter 1. Information about the company 11 3.5. Human Capital Management 67 1.1. General Information about JSC Atomredmetzoloto 12 3.5.1. Management System 67 1.1.1. General Information 12 3.5.2. Human Capital Features 67 1.1.2. Historical Background 12 3.5.3. Remuneration System 70 1.1.3. Holding Structure 13 3.5.4. Social Policy of the Company 71 1.1.4. The Company’s Role in Rosatom’s Production Cycle 14 3.5.5. Employee Professional Training and Development 72 1.2. Market Presence 14 3.5.6. Work with Youth and Students 73 1.3. Value Chain and Business Model 15 3.5.7. Veteran-Pensioner Support 74 1.3.1. Value Chain 15 3.5.8. Trade Unions and Collective Agreements 74 1.3.2. Business Model 16 3.5.9. Occupational Health and Safety 75 Chapter 2. Strategy and management system 19 3.6. Social Capital Management 77 2.1. Business Strategy 20 3.6.1. Stakeholder Definition 77 2.1.1. Corporate Mission and Values 20 3.6.2. Holding’s Information Openness as the Main Stakeholder 2.1.2. Natural Uranium Market Overview and Outlook 21 Interaction Principle 79 2.1.3. Marketing and Sales Policy 23 3.6.3. Development of the Regions of Operation 80 2.1.4. Long-Term Strategy and Current Status of the Company 24 3.7. Natural Capital Management 84 2.1.5. Plans for 2015 and the Mid-Term 25 3.7.1. Environmental Policy of the Company 84 2.1.6. REM and Scandium Production Development 26 3.7.2. Protection of Land Resources and Biodiversity 84 2.1.7. Cooperation with Foreign Partners 26 3.7.3. Water Resource Protection 85 2.2. Management system 28 3.7.4. Atmospheric Air Protection 85 2.2.1. Corporate Governance 28 3.7.5. Waste Handling 87 2.2.2. Report of the Board of Directors on the Results of 3.7.6. Expenses Related to Environmental Conservation 87 Company’s Development as per Priority Area of Operations 33 2.2.3. Risk Management 33 2.2.4. Internal Monitoring System. Assets Protection 36 Chapter 4. Interaction with stakeholders when drafting 2.2.5. Procurement Management 38 the Report. 88 2.3. Holding’s operating results and uranium chain development 4.1. Dialog with Stakeholders in the Course of Report prospects 39 Preparation 89 2.3.1. Operations of PJSC PIMCU (Trans-Baikal Territory, 4.2. Taking into Account Stakeholder Suggestions 89 Krasnokamensk) 39 4.3. Report’s Statement of Public Assurance 92 2.3.2. Operations of JSC Dalur (Kurgan Region, Uksyanskoye Village) 42 2.3.3. Operations of JSC Khiagda (Republic of Buryatia, Appendices 94 Bagdarin Village) 44 Appendix 1. Matrix of the Company’s Activities and Sustainable Development Data Significance 94 Appendix 2. Table of Standard GRI Disclosures (in accordance Chapter 3. Operating results: capital management with the “Core” level) 95 efficiency 48 Appendix 3. Table of Disclosures as per the Reporting Standard 3.1. The Company’s Capital Assets 49 of Rosatom State Corporation 101 3.2. Financial Capital Management 49 Appendix 4. Opinion of the Internal Control Directorate 102 3.2.1. Financial Performance Management 49 Appendix 5. Auditor’s Opinion on Consolidated Financial 3.2.2. Investment Activities 55 Statements as per IFRS 103 3.3. Production Capital Management 57 Appendix 6. Terms and Abbreviations 105 3.3.1. Raw Material Base Development 57 Feedback Questionnaire 108 3.3.2. Uranium Mining Methods 58 Contact information 109
Annual Report | JSC Atomredmetzoloto | 2014 3 Address by the Chairman of the Board of Directors
A.M. Lokshin
Dear readers!
In 2014, Rosatom State Corporation achieved big successes is growing. JSC Khiagda is completing construction and is in all areas of operations – from record electrical power preparing to reach a capacity of 1,000 uranium tons. generation in the amount of 182 bln kW⋅h to generation of the largest foreign NPP construction order portfolio worth USD For ARMZ Uranium Holding, 2014 was decisive in terms of 101.4 bln. Fulfillment of all obligations by the Corporation, geological exploration works on Novaya Zemlya archipelago. in particular guaranteed nuclear fuel deliveries during the By 2019, investments in the Pavkovskoye project will make it entire lifecycle of NPPs constructed by Rosatom as well as the possible to launch the largest lead-zinc concentrate production reliability and security of Russian nuclear technologies and effort in the arctic zone. commercial efficiency of Russian proposals is an important argument when our partners make decisions about cooperation. JSC Atomredmetzoloto started implementation of the project for associated scandium and rare-earth metal production based on The complexity of the tasks faced by Rosatom State Corporation the existing infrastructure of underground leaching plants. determines high requirements for ARMZ Uranium Holding: assuring natural uranium deliveries at a competitive production On the basis of PJSC PIMCU, supported by the Government of cost. For their successful implementation, the Holding needs Trans-Baikal territory, Krasnokamensk industrial park was to continuously raise process efficiency, optimize investment created. Memoranda of intent were reached with Russian and project portfolio and invest money in development of the mineral Chinese partners with respect to such projects as cement plant resource base, prepare for the gradual development of Russian construction, man-made waste (burnt pyrites) recycling and strategic reserve expected to be in market demand in the future. others.
In this respect, JSC Atomredmetzoloto faced new strategic tasks Participation in these projects will assure revenue growth, in 2014: creation of new jobs for personnel released in uranium production, and efficient use of existing infrastructure. • assuring the efficient refinement of current reserves Generally, by 2019, the diversification program will make it at PJSC PIMCU with simultaneous restructuring of the possible to create over one thousand new jobs in the City of plant, and contributing to the economic diversification of Krasnokamensk and Krasnokamensk Region. Krasnokamensk; creating a base for subsequent development of the Zherlovskoye and Argunskoye deposits [Mine No. 6]; When solving production tasks and restructuring, Rosatom State Corporation and the Mining Division adhere to social • building, in a balanced manner, cost-effective uranium responsibility principles. As part of the consolidated taxpayer production at JSC Dalur and JSC Khiagda, including group, Rosatom State Corporation receives additional funds for subsequent commissioning and development of the Vitimskoye infrastructure-facility development in the company’s operating ore cluster, with long-term preservation of the current stable regions – Kurgan Region, Republic of Buryatia and Trans- production level in Russia. Baikal Territory. JSC Atomredmetzoloto’s contribution to the socio-economic development of its operating territories lies The target for Russian uranium producing assets – to reduce not merely in the generation of an income base for regional by 2019 uranium mining cost by 30% and underground leaching and local budgets, but also in the implementation of its target mining by 10%. range of social and charitable programs. In future this work will continue. JSC Atomredmetzoloto successfully accomplishes the tasks it faces. The most important 2014 result was a reduction in Dear colleagues! The ARMZ Uranium Holding team has deftly specific uranium production cost by 5% for the holding and by handled its assigned tasks. The scope of work done over the 6% for PJSC PIMCU. It should be noted that the share of uranium year is presented in this report in a consolidated form. I’m produced by the cost-effective and environmentally-friendly confident that efficiency-improvement programs will emerge as underground leaching method in the production structure a solid foundation for Holding development in the years to come.
4 Address by the Director General
V.N. Verkhovtsev
Dear colleagues!
In this annual report, we present you with ARMZ Uranium At JSC Khiagda, construction of the stage-one start-up complex Holding’s operating results, discussing its achievements, plans facilities of the main building and integrated equipment tests and prospects, and inviting partners to familiarize themselves were completed. All this will allow the plant to reach the capacity with the daily routine of the Mining Division of Rosatom of 1000 tons of uranium per annum in the near term. It should Corporation. also be noted that for the long-term development JSC Khiagda, substantial resource potential has been discovered as a result of For ARMZ Uranium Holding, 2014 was a milestone year in the prospecting works performed within the Vitimskoye uranium-ore Company’s history. area in the Republic of Buryatia.
The main efforts of the Holding’s team focused on implementation Our engineering and geological exploration companies claimed of the tasks faced by Rosatom State Corporation – to satisfy their first successes on the external markets, as relayed in detail Rosatom demand for Russian uranium at a competitive in our 2013 annual report.In the past year, JSC RUSBURMASH and production cost, emphasizing the Company’s loss-free operation JSC VNIPIpromtekhnologii revenues from the delivery of services and its assets. to new clients grew several times over.
In 2014, despite difficult financial and economic conditions, there Having preserved our traditional competencies in the nuclear were positive trends in the Holding’s achievement of set targets. chain, we embarked on business diversification. The basis for was laid in Trans-Baikal Territory for creating new enterprises An important result of our work in 2014 was a reduction in – a cement plant and a brown-coal processing plant. With uranium production costs by 6% at PJSC PIMCU.We overcame a business diversification we associate not only obtaining additional longstanding trend, stemming the tide of growing losses that had income but also creating new, including high-tech jobs in accumulated at the plant over the course of many years. Having Krasnokamensk. streamlined procurement operations, we managed to reduce costs by RUB 1.9 bln. A substantial economic effect is expected For ARMZ Uranium Holding, it is extremely important that all of due to the implementation of innovative process solutions in our cities of operation are as comfortable and livable as possible. production. In 2014 expenses earmarked for innovative projects, In 2014, our sense of responsibility to local citizens prompted including R&D, rose by almost RUB 60 mln. us to implement a range of measures in Krasnokamensk for the promotion of self-employment and social entrepreneurship. The Under unfavourable market conditions at low uranium prices we contest “Starting Your Own Business” was conducted with the are confidently advancing to profitable production. Herewith, we provision of grants to people intending to grow their own social are focusing on industrial and environmental safety issues. In business. 2014, we reached the best safety indicator for many years – the quantitative incident rate was reduced by 50%, including during All of the initiatives we endeavored to implement over the past underground mining works. year will continue to be pursued moving forward.
Along with efficiency gains at the operating production facilities We recognize that Russian uranium production is of strategic of PJSC PIMCU, the Holding continues to develop strategically- significance to national security and the resource independence reserved projects (Kaldera and Mine No. 6). The implementation of the state. In 2015, we are facing no less complicated tasks, will provide the Combine with a high-quality raw materials base whose solution will require us to maneuver around the and create a reserve for its subsequent development. challenging economic conditions stemming from the difficult market situation and volatile currency market. Our plants operating according to the state-of-the-art underground leaching method – JSC Dalur and JSC Khiagda – are I am convinced that the JSC Atomredmetzoloto workforce is a actively developing. Advanced yellow-cake drying technology strong team of professionals who really know and love their job. was tested at JSC Dalur, allowing for a reduction in end-product These are people which, despite circumstances, can work for humidity level to 1.5%; thus, achieving quality improvements and result! ensuring product compliance with the basic specification of the customer – Fuel Company TVEL – was assured.
Annual Report | JSC Atomredmetzoloto | 2014 5 Information about the Report
Contents of the Report of the Company’s activities in sustainable development in The 2014 public Annual Report particular. The primary difference (hereinafter referred to as the of the Report – special “Report”) is the seventh report For more details see sect. sections by ARMZ Uranium Holding Co. 2.3.1. Operations of PJSC dedicated to the operations GRI Guide application (hereinafter referred to as “JSC PIMCU (Trans-Baikal Territory, of the main uranium G4 option Atomredmetzoloto,” “ARMZ Krasnokamensk City), assets of the Holding – Core level Uranium Holding Co.,” “the 2.3.2. Operations of JSC Dalur PJSC PIMCU, JSC Khiagda Holding,” or the “Company”) (Republic of Buryatia, Bagradin and JSC Dalur. summarizing financial, Village) and 2.3.3. Operations production, and non-financial of JSC Khiagda (Kurgan results that give a general idea Region, Uksyanskoye Village)
Standard and regulatory Federal regulatory acts Sustainability Reporting Guidelines (Global Reporting Initiative, GRI), G4.0 version; requirements when Federal Law dated 26.12.1995 No.208-FZ “On drafting the Report Joint-Stock Companies;” International Integrated Reporting Framework (IIRC, International
Report Scope Working Group composition Stage 2: Selection of priority Priority topic is approved by order of the topics of the Report, including: of the Report: director general of JSC Operations of JSC Atomredmetzoloto. • analysis of the Company’s Atomredmetzoloto activities over 2014 and 01.01.2014 – 31.12.2014. Stage 1: Development of the stakeholder recommendations The Report covers the Report concept, including: receivedduring the 2013 Enhancing main companies within the Report preparation process; the business efficiency Holding’s management analysis of stakeholder list of significant topics; • • of ARMZ Uranium structure. The previous suggestions/comments checking the significance • Holding as a key Report was issued in 2014 provided during the previous of the topics selected by the strategic area based on 2013 reporting- reporting campaign; Report Preparation and Audit year results. • updated methodological Team; framework based on GRI, • discussing priority topics IIRC and Rosatom State with stakeholders (through Report Preparation Corporation requirements and questionnaires); other documents regulating • the Company’s management and Contents the Report; approving the priority topics. • analysis of global best The deputy director general practices related to public acts as the initiator and reporting. organizes the Report preparation process. The regulation on work for report preparation and 6 Stage 3: Development of The Report’s novelty was modified. The performance Report contents, taking into its introduction of direct indicators provided in this Report verification account: answers and comments by the Report belong to the following Company’s managers to the perimeters: Financial audit – • JSC Atomredmetzoloto questions and proposals of CJSC KPMG (Appendix 4) mission; stakeholders, as voiced in the • production performance Audit of the Internal • JSC Atomredmetzoloto dialogues held in the course is based on the assets of Control and Audit strategy; of Report drafting. JSC PIMCU, JSC Dalur, JSC Department(Appendix 5) • JSC Atomredmetzoloto Khiagda, Uranium One Inc., Public assurance current status; For more details see sect. 4.2. JSC EGMK-Project, JSC (AA1000AS), sect. 4.3. • Rosatom priorities and Taking into Account Gornoye UMC, JSC Olovskaya values; Stakeholder Suggestions. MCC (Mining and Chemical • key stakeholders’ interests. Company), JSC Lunnoye, For evaluating the relevance of CJSC RUSBURMASH, JSC and the General Meeting of For more details see sect. 4.1. information about the Company’s VNIPIpromtechnologii, and Shareholders. Dialog with Stakeholders operations and sustainable ARMZ Service LLC; in the Course of Report development, stakeholders Disclaimer Preparation. were questioned when writing • environmental performance the Report. The questionnaire — JSC PIMCU, JSC Dalur, and Regarding Forecast offered stakeholders the JSC Khiagda; In the course of the discussions opportunity to review a full list of The Report includes forecast aspects and highlight those they • HR and occupational statements regarding viewed as particularly deserving safety performance — JSC production, financial, of disclosure in the Report, Atomredmetzoloto, JSC economic, and social including aspects highlighted by PIMCU, JSC Dalur, JSC performance in order to 38 GRI Guideline, Public Reporting Khiagda, CJSC RUSBURMASH, outline the Company’s future suggestions and Standard of State Corporation and JSC VNIPIpromtechnologii, development. Implementation recommendations Rosatom and the Company. ARMZ Service LLC; of our assumptions and Stakeholders were asked to rate intentions directly depends on were received from each topic on a 3-point scale • financial indicators — based the political, economic, social, stakeholders and give their own suggestions on consolidated statements in and regulatory situation. For regarding significant topics. compliance with IAS and RAS. this reason, the Company’s Question results determine the actual performance may be position of each aspect both on For more details see different from the forecast. the horizontal axis (opinion of Appendix 1. Matrix of the external stakeholders) and on Company’s Activities and the vertical axis (opinion of the Sustainable Development Data Company’s management). Significance.
In accordance with GRI G4 Stage 4: Verifying information: information disclosure borders 34 were defined separately by The final revision of the of them were implemented each aspect. In this regard, Report was approved by the in this Report for some indicators, coverage Company’s Director General, 1 was not implemented, 2 will of key stakeholders was the Board of Directors, be reviewed by the Holding’s management in the course of ongoing operations and when drafting the 2015 report.
Ivan Krupyanko, Head of the PR and Regional Authority Department at JSC Atomredmetzoloto responds to a stakeholder proposal* on making a Smart-PDF Report Version:
“We certainly took into account this proposal and when drafting the 2014 report focused on SMART-PDF user- friendliness – after all, the PDF version is always at hand and is a convenient information-retrieval tool. Our Report will feature interactive cross-referencing making * Hereinafter, the comments of it possible to quickly move from one section to the other Company executives are presented in while obtaining the required information.“ response to the stakeholder proposals
Annual Report | JSC Atomredmetzoloto | 2014 7 2014 Key Performance Indicators
Table 1. Key Financial and Economic Performance of JSC Atomredmetzoloto
2014 Operational performance 2012 2013 2014 compared to For more details see 2013,% 3.3.3. Uranium Production Uranium production, tons 2,861.8 3,135.4 2,990.7 95.4 by JSC Atomredmerzoloto Russian Entities Rating of State Corporation Rosatom among the biggest uranium mining III III III - 1.2. Market Presence companies* Rating of JSC Atomredmetzoloto among the biggest uranium mining VIII VII VI - 1.2. Market Presence companies* Uranium raw material base (Russian 3.3.1. Raw Material Base 550.5 541.9 524.7 96.8 assets), thousand tons Development Rating of State Corporation Rosatom and JSC Atomredmetzoloto among the biggest uranium mining II II II - 1.2. Market Presence companies by the volume of raw material base* Personnel 3.5.2. Human Capital Number of employees, people** 11,920 11,719 8,430 71.9 Features 3.5.2. Human Capital Personnel turnover, %** 24.2 24.9 40.0 160.6 Features 3.5.3. Remuneration Average monthly salary, RUB** 48,881 52,187 51,818 99.3 System Personnel engagement (division), 3.5.2. Human Capital 50 55 42 76.4 %** Features Occupational health and safety 3.5.9. Occupational health Fatal injury frequency rate (FIFR) 0.01 0.02 0.01 50 and safety Lost-time injury frequency rates 3.5.9. Occupational health 0.39 0.55 0.9 163.6*** (LTIFR) and safety 3.5.9. Occupational health Number of incidents 7 10 5 50 and safety Environmental protection Environmental protection expenses, 3.7.6. Expenses Related to 263.20 393.38 232.3 59 million RUB Environmental Conservation Social and economic area Taxes paid by ARMZ Uranium Holding 3.6.3. Development of the Co. key entities to regional budgets, 1,095.00 2,050.00***** 2,248.00***** 109.66 Regions of Operation million RUB****
* including Uranium One Holding enterprises (Uranium One Holding N.V.).
** including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
*** LTIFR value in 2014 as compared to 2013 was increased, however, the actual LTIFR value in 2014 was improved, 0.9 indicator was reached with the target value of 0.93 (-10%).
**** 2012 and 2013 indicators may differ from similar indicators presented in 2012 and 2013 Annual Reports of JSC Atomredmetzoloto, due to adjustments made in previous periods.
***** including the income tax paid by the consolidated group of taxpayers (hereinafter referred to as the “CGT”).
8 2014 Key Achievements
The production program and contract obligations were fulfilled by all production plants
By 50% By By quantitative incident 30% 5% indicators were reduced, number of employees of uranium production cost including at underground the managing company was was reduced for the Holding mining works optimized
bln. 10% By 1.2 RUB By 16 fold uranium production growth as reserves were reduced compared to 2013 in natural and working capital was revenues on external indicators for the division optimized (20% improvement markets grew (geological (tons per man) as compared to 2013) exploration and engineering)
All enterprises of the Holding’s uranium chain obtained the certificate of conformity IQNet, Krasnokamensk Quality Austri of the integrated K. r.m. 15 diversification project company management total volume of drilling portfolio was developed and system with requirements of works at Pavlovskoye Krasnokamensk industrial MS ISO 9001, MS ISO 14001 deposit park was created international standards 2014 Main Events
January July residue reserve development of Tulukui quarry in PJSC • Generation together with • Successful integrated PIMCU. State Corporation Rosatom testing of a new main and PJSC PIMCU of the production building of JSC • Start of commissioning tests 2014-2017 Krasnokamensk Khiagda. of the uranium compound socio-economic development (yellow cake) suspension program. drying system in the main building of JSC Dalur. February • Start of sulfuric acid transportation in tank- containers in PJSC PIMCU. May • Start of new crushing facility operation on Urkutskiy coal • Signing an agreement on mine of PJSC PIMCU. socio-economic partnership between the Government of Kurgan Region and JSC Dalur. • Putting in pilot-commercial • Accession of JSC operation of the system Atomredmetzoloto in “Personnel and INsite Self-regulating company equipment positioning” on Non-profit partnership mines of PJSC PIMCU. November SOYUZATOMSTROY. August • Inclusion of the 2013 June annual report of JSC • Start of JSC Khiagda Atomredmetzoloto in TOP-5 • Putting into pilot- preparation for development according to the version of the commercial operation of of Istochnoye and Vershinnoye international rating agency the mining underground natural uranium deposits in “RA Expert.” March communication system of the Bauntovsky District of the PJSC PIMCU. Republic of Buryatia. • Appointment by State • Start of the technical Corporation Rosatom of re-equipment investment • Start of implementation JSC VNIPIpromtekhnologii program of the Repair- by JSC RUSBURMASH of a September as a parent methodological mechanical plant of PJSC large-scale federal geological company of the industry with PIMCU. exploration project in the • ARMZ Uranium Holding Co. respect to engineering surveys Arctic, on Yuzhny Island of the Delegates take part in the 39th when constructing uranium April Novaya Zemlya archipelago, WNA Symposium. producing and processing involving evaluation of the facilities. • Inclusion of JSC commercial significance of the Atomredmetzoloto in Top-10 Bezimyanskoye ore field. December transparency rating of Russian companies held by the Russian • Signing a contract between • Completion of testing of Regional Networks based on PJSC PIMCU and Beijing innovative mining-geological integrated reporting. Triumph International computer 3D-technologies and Engineering Co., Ltd. (BTIEC) software in JSC Dalur. • Signing an agreement on the development of a between State Corporation preliminary feasibility study of • Entering into state contracts Rosatom and OJSC Mining- the cement plant construction for development of associated metallurgical company in Krasnokamensk. REM and scandium extraction Norilskiy Nickel on during uranium production. cooperation in the area of the • Commissioning of a new socio-economic development administrative building of of Trans-Baikal Region. Urtuyskoye surface mine office of PJSC PIMCU.
October • Completion by JSC RUSBURMASH of a second field season in the Arctic in the Novaya Zemlya archipelago. • Start of implementation of an integrated project for 10 CHAPTER 1
INFORMATION about the company
Annual Report | JSC Atomredmetzoloto | 2014 11 1.1. General Information about JSC Atomredmetzoloto
1.1.1. General Information External Charters, JSC Atomredmetzoloto is a member Principles and Other Information about the of the World Nuclear Association. Initiatives Company’s position in the industry, priority areas of operations
JSC Atomredmetzoloto Regions of Operation Entrepreneurs dated August The Holding exists in (ARMZ Uranium Holding, 8, 2001; accordance with the Holding, Company, ARMZ) Upon restructuring in 2013, • Federal Law No. 13-FZ On Russian Business is a managing company of JSC Atomredmetzoloto is now Management and Disposal Social Charter. the Mining division of State managing Russian uranium of Property and Shares of Corporation Rosatom.* ARMZ mining assets. The biggest Companies Related to Nuclear Uranium Holding is developing ARMZ Uranium Holding Power and on Amending uranium production assets Co. entity is JSC PIM- CU Certain Statutes of the Russian on the territory of Russia (Priargunsky Industrial Mining Federation dated February 5, at various lifecycle stages: and Chemical Union) located 2007; from geological exploration in the Trans-Baikal Territory. • Federal Law No. 135-FZ to intensive commercial JSC Khiagda is registered On Protection of Competition operation of deposits. in the Republic of Buryatia. dated July 26, 2006; JSC Dalur, the first Russian • Federal Law No. 39-FZ On Russian uranium productions company to mine uranium with Securities Market dated April have strategic significance. in-situ leaching, operates in the 22, 1996; Availability of own natural Kurgan Region. • Russian FFMS Decree No. uranium production in the 11-46/pz-n On Approving the Russian Federation allows Key Laws and Regulations Regulations on Disclosure by solving key tasks of JSC Applicable to the Equity Security Issuers dated Atomredmetzoloto: October 4, 2001 Company’s Activities From 2015, when drafting The Company is regulated this Report the Regulation by its Charter, internal on information disclosure by • Reliability of documents, and the following securities issuers approved by deliveries to partners regulatory acts: the Bank of Russia dated 30, and customers 2014 No. 454-P has been used. • Long-term security • Civil Code of the Russian of raw-materials Federation (first part) dated provision for nuclear- November 30, 1994 No. 51-FZ; power generation • Federal Law No. 208-FZ On Joint Stock Companies dated • Assurance of a December 26, 1995; competitive uranium- • Federal Law No. 129-FZ product production On State Registration of cost. Legal Entities and Individual
* Foreign enterprises from 2013 were consolidated under the control of uranium producing company Uranium One Holding N.V.
1.1.2. Historical an industrial complex of mining engaged in the design of mines, control over the following Background and processing enterprises ore processing facilities, domestic uranium mining located in six counties and machine-engineering assets: JSC PIMCU, JSC State Concern within the Commonwealth plants. In 1995, State Concern Dalur, and JSC Khiagda, which Atomredmetzoloto was of Independent States — Atomredmetzoloto was had been formerly owned by founded in 1991 to succeed the Russia, Ukraine, Uzbekistan, reorganized to become a joint- JSC TVEL, a producer of fuel former First Chief Directorate Kazakhstan, Tajikistan and stock company of the open for nuclear power plants. of the USSR Ministry of Kyrgyzstan. State Concern type. Furthermore, TENEX (JSC Medium Machine-Building Atomredmetzoloto was Techsnabexport), Russia’s and later operated within the involved in the exploring, By mid-2008, within the exporter of enrichment structure of the Ministry for mining, and processing of framework of the nuclear services and enriched uranium, Atomic Energy of the Russian uranium, gold, and rare-earth- industry’s restructuring, JSC transferred to ARMZ its stakes Federation. The Concern was element ores. It was also Atomredmetzoloto gained in uranium exploration and 12 mining joint ventures outside uranium assets namely: In 2013, in accordance made in the Company name of Russia. Along with that, JSC Effective Energy N.V. (which with the decision of State with respect to removal of the Atomredmetzoloto received was later renamed Uranium Corporation Rosatom control word “open”. From December licenses from TENEX for the Holding N.V.), Canadian of foreign uranium assets was 4, 2014 the Company’s name right to use the subsoil of company Uranium One Inc. and transferred to Uranium One – Joint-Stock Company reserve uranium deposits, Mantra Resources Limited. Holding N.V. Atomredmetzoloto.* including those of the world’s largest Elkon uranium ore In 2012, ARMZ Uranium Since December 2013, JSC province. Holding Co. purchased 99.5% Atomredmetzoloto has of The First Ore Mining been controlling all Russian Following the completion of Company’s shares. The project uranium mining assets. all re-organization activities, assumes construction of a JSC Atomredmetzoloto cost effective production In accordance with assumed full authority over facility on the basis of silver- amendments entered into procurement for the domestic containing lead-zinc deposit force from September 2014 and international feedstock Pavlovskoye (Bezymyannoye stipulated by Federal Law requirements of Russia’s ore cluster, Yuzhniy island of dated 05.05.2014 No. 99-FZ *Holding companies’ spelling was nuclear industry and became Novaya Zemlya archipelago, “On introduction of changes accepted in the report in view of one of the global leaders in Arkhangelsk region) having a in chapter 4 of part one of amendments entered into force uranium production. powerful mineral raw material the Civil Code of the Russian from September 2014 in the Civil base. JSC First Mining Federation and on invalidation Code of the Russian Federation – From 2009 to 2011, JSC Company has a license for of individual provisions of JSC Atomredmetzoloto, JSC Dalur, JSC Khiagda, PJSC PIMCU, Atomredmetzoloto purchased the right to use this mineral legislative acts of the Russian JSC VNIPIpromtekhnologii, JSC shares of a number of foreign resources area. Federation, changes were RUSMURMASH etc.
1.1.3. Holding Structure
JSC Atomredmetzoloto
PJSC PIMCU JSC VNIPIprom- LLC Agricultural Mantra Resources tekhologii company Itmanovo Pty Ltd. (Australia) 93.66% 100% 100% 86.09%
JSC Dalur JSC Lunnoye Uranium One Holding N.V. (Netherlands) LLC United 98.89% 50.03% Uranium Enterprises 43% 50%
JSC Khiagda CJSC OMCC CJSC ARMC (Armenia) 100% 100% 50% JSC South Yakutia Development Corporation 25.1% JSC RUSBURMASH JSC Gornoye Vostok Power Resources Uranium Mining Ltd. (Great Britain) 100% Company 100% 100%
JSC Uranium One Group (former JSC Elkon MMP JSC UMOC) 100% 100%
CJSC First Mining Company 99.7%
Fig. 1. Diagram of JSC Atomredmetzoloto S&A as of December 31, 2014
Annual Report | JSC Atomredmetzoloto | 2014 13
Получение прав Геологоразведочные Предпроектный Поисковые работы НИОКР, инновации недропользования работы инжиниринг
Эксплуатация Рекультивация Проектирование Строительство предприятий: добыча и вывод предприятий предприятий и переработка урана из эксплуатации 1.1.4. The Company’s Role in Rosatom’s Production Cycle
ARMZ Uranium Holding uranium assets abroad, it Co. controls and unites all is included in the Rosatom Russian uranium mining Mining Division and ensures assets. Along with Uranium natural uranium supplies One Holding N.V. controlling
Initial stage of the nuclear fuel cycle
Geological Mining Ore Conversion Enrichment Fuel exploration processing production Design and engineering Mining division Fuel division
Power mechanical engineering
Electrical NPP power NPP Service Equipment Equipment Equipment Installation and Service and Construction genaration design manufacturing delivery commissioning upgrading at NPP
Engineering Electrical power devison Mechanical engineering devision devision
Final stage of the nuclear cycle
Innovations SNF Handling Decommis- RAW Handling sioning
Transfer to a closed nuclear fuel cycle (fuel recycling) ESZHC Devision
Рис. 2. Место АО «Атомредметзолото» в производственном цикле Госкорпорации «Росатом» Fig. 2. JSC Atomredmetzoloto Role in State Corporation Rosatom’s production cycle
1.2. Market Presence
ARMZ Uranium Holding base, and the implementation services (RUSBURMASH Co. mainly operates on the of measures for raising and VNIPIpromtekhnologii) natural uranium market. business efficiency. Favorable etc. The above services and In 2014, Rosatom State prospects for the development products are used by JSC Corporation, controlling JSC of nuclear-power engineering Atomredmetzoloto’s production Atomredmetzoloto and Uranium guaranteeing growth in uranium entities, other companies within One Holding N.V., ranked second demand over the long-term Rosatom State Corporation, among the world’s biggest are becoming an additional and other Russian and foreign companies in terms of its sustainability factor. companies. controlled raw materials base and third in terms of uranium Apart from its core production For more details see sect. production. operations, the company is 2.1.2. Natural Uranium developing associated types of Market Overview and Outlook JSC Atomredmetzoloto’s activities – coal mining, thermal and 3.3. Production Capital position on the uranium and electrical power generation, Management. market is secured through sulphuric acid production, guaranteed demand from the building mining equipment Russian nuclear industry, a (PJSC PIMCU), rendering geographically diversified geological exploration, production and raw material design and engineering
14 АО «Атомредметзолото»
ПАО «ППГХО» АО «ВНИПИпром- ООО Агрофирма Mantra Resources технологии»JSC PMC «Итманово» Pty Ltd. (Австралия) ARMZ93.66% Novaya Zemlya100% 100%JSC EMMP 86.09% Sakha Republic VNIPIpromtekhologii
АО «Далур»RUSBURMASH АО «Лунное» Uranium One Holding N.V. (Нидерланды) ООО «Объединен- 98.89% 50.03% ные урановые 43% предприятия» 50% JSC Dalur of the Kurgan Region JSC Khiagda АО «Хиагда» ЗАО «ОГХК» Republic of Buryatia ЗАО «АРГК» (Армения) 100% 100% 50% ОАО «Корпорация развития Южной PJSC PIMCUЯкутии» 25.1% АО «УДК «Горное» АО «РУСБУРМАШ» Krasnokamensk town Vostok Power Resources Ltd. (Великобритания) 100% 100% 100%
Fig. 3. Map of Russian assets of JSC AtomredmetzolotoАО «Ураниум Уан Груп» (бывш. АО «Эльконский ОАО «УГРК») ГМК» 100% 1.3. Value Chain and Business100% Model
АО «Первая горнорудная 1.3.1. Value Chain компания» 99.7%
The value created by the operation and understanding competencies to implement Holding lies not only in the specific nature of the all value chain stages, from end-product output, but impact of mining production geological exploration and also in the totality of the on the environment, the design to reclamation and Company’s economic, social Holding tends to maximize decommissioning. and ecological impact on the positive effects of its its stakeholders and the activities. environment in general. Realizing the significance ARMZ Uranium Holding of its activities in regions of Co. has the whole array of
Obtaining subsoil Geological exploration Pre-design Prospecting works R&D, innovations use rights works engineering
Plants’ operation: Plants’ Plants’ Reclamation and uranium mining design construction decommissioning and processing
Fig. 4. JSC Atomredmetzoloto Value Chain
Annual Report | JSC Atomredmetzoloto | 2014 15 1.3.2. Business efficiency across all areas. • a part of its resources come • intellectual capital (for Model from nature and a big part of more details see sect. The Holding’s business model its results also relate to it (e.g. 3.4. Intellectual Capital The integrated value is based on its mission and social and natural capital); Management); creation process is long-term strategy. • the environment is the • social capital (for more schematically reflected in source of the Holding’s main details see sect. 3.6. Social the business model of JSC The business model includes: opportunities and risks Capital Management); Atomredmetzoloto. The (for more details see sect. • natural capital (for more Company understands that its • available capital (for more 2.2.3. Risk Management and details see sect. 3.7. Natural operations depend on multiple details see Chapter 3. 2.1.1. Corporate Mission and Capital Management). external and internal factors Operating Results: Capital Values). • Effective management of and are carried out in close Management Efficiency); • The business model deals the above types of capital cooperation with stakeholders. • a management system with transforming six types is realized through the employed for the most of capital, with changes management system (for For more details see “Social effective use of available described in the relevant more details see sect. 2.2. Capital Management” section. capital (for more details see parts of the Report: Management System). 2.2. Management System); • financial capital for( more The business model describes • value delivery based on the details see sect. 3.2. Financial the available resource transformation of available Capital Management); management system with a capital - Holding’s main • production capital (for view to reaching set goals. activity; more details see sect. The business model is a • value delivery results - the 3.3. Production Capital short-, medium-, and long- Holding’s main products. Management); term value delivery system • The Holding’s business • human capital (for more that is also used to achieve model is specifically focused details see sect. 3.5. Human strategic goals and boost on the environment since: Capital Management);
PJSC PIMCU 16 БИЗНЕС-МОДЕЛЬBUSINESS MODEL
Corporate values and behaviourial • Efficiency For more details refer Mission – Ambient Strategic goal — Risks principles • One team to section 2.1.1 assistance in the realization of national assure the long-term competitiveness environment • One step ahead • Respect "Company’s mission objectives and the corporate purposes of raw-material supplies for the development Opportunities and values" of Russian technologies in the nuclear- Prospects • Responsibility for results • Safety of the main shareholder: For more details refer Rosatom Corporation power industry to section 2.2.3 For more details refer "Risk Management" to section 2.1.2 "Natural Uranium Market Overview and For more details refer to section Outlook" CORPORATE GOVERNANCE 2.2.1 "Corporate Governance"
RESOURCES MAIN ACTIVITIES MAIN PRODUCTS RESULTS
Financial Financial Social expenses Prospecting works volume capital Natural uranium capital Uranium production 313.9 mln RUB. AFCF of Rosatom concentrate cost reduced by 5% State Corporation Intellectual 202.1 bln RUB Obtaining subsoil Natural capital use rights Costs for implementation R Natural capital R Brown coal Environmental of the Holding’s O capital protection expenses development innovative O Uranium mineral resource (power generating) 233.41 mln RUB. program were S base (Russian assets) Geological exploration works 310.3 mln. RUB. S 524.7 thous. t A Production Integrated investment A T capital performance indicator 120% T Production R&D. innovations Production program O capital Electrical power (2901 uranium tons) Total investment volume O Production capacities was implemented in full 4.3 bln. RUB M and infrastructure M Specific uranium R&D 92.05 mln. RUB. Human capital Pre-design engineering production was increased by 10% Average headcount (as compared to 2013) 10031 people Heat power Human Intellectual capital Design of facilities Intangible assets capital Accident number 10700 mln RUB. reduction by 2 fold Construction of facilities Sulphuric acid Social Range of measures Social capital capital for small business Nuclear power Operation of facilities: Financing of charitable promotion - 16 grants by industry development and social initiatives 50 thous. RUB. support level in RF 66.1%*. uranium mining and processing 4 mln RUB.
*Data from the 2013 “Bank of vacancies” Public Annual Report o of Krasnokamensk f Rosatom State Corporation. Reclamation and Services town makes up decommissioning 120 people
Value Chain
For more details refer to and chapter 4 “Interaction with stakeholders STAKEHOLDER ENGAGEMENT section 3.6 "Social capital management" when drafting the Report"
Fig. 5. JSC Atomredmetzoloto Business Model Рис. 4. Бизнес-модель АО «Атомредметзолото»
23Annual Годовой Report отч | етJSC 201 Atomredmetzoloto4 ОАО АТОМРЕДМЕТЗОЛОТО | 2014 17 24 БИЗНЕС-МОДЕЛЬ
Corporate values and behaviourial • Efficiency For more details refer Mission – Ambient Strategic goal — Risks principles • One team to section 2.1.1 assistance in the realization of national assure the long-term competitiveness environment • One step ahead • Respect "Company’s mission objectives and the corporate purposes of raw-material supplies for the development Opportunities and values" of Russian technologies in the nuclear- Prospects • Responsibility for results • Safety of the main shareholder: For more details refer Rosatom Corporation power industry to section 2.2.3 For more details refer "Risk Management" to section 2.1.2 "Natural Uranium Market Overview and For more details refer to section Outlook" CORPORATE GOVERNANCE 2.2.1 "Corporate Governance"
RESOURCES MAIN ACTIVITIES MAIN PRODUCTS RESULTS
Financial Financial Social expenses Prospecting works volume capital Natural uranium capital Uranium production 313.9 mln RUB. AFCF of Rosatom concentrate cost reduced by 5% State Corporation Intellectual 202.1 bln RUB Obtaining subsoil Natural capital use rights Costs for implementation R Natural capital R Brown coal Environmental of the Holding’s O capital protection expenses development innovative O Uranium mineral resource (power generating) 233.41 mln RUB. program were S base (Russian assets) Geological exploration works 310.3 mln. RUB. S 524.7 thous. t A Production Integrated investment A T capital performance indicator 120% T Production R&D. innovations Production program O capital Electrical power (2901 uranium tons) Total investment volume O Production capacities was implemented in full 4.3 bln. RUB M and infrastructure M Specific uranium R&D 92.05 mln. RUB. Human capital Pre-design engineering production was increased by 10% Average headcount (as compared to 2013) 10031 people Heat power Human Intellectual capital Design of facilities Intangible assets capital Accident number 10700 mln RUB. reduction by 2 fold Construction of facilities Sulphuric acid Social Range of measures Social capital capital for small business Nuclear power Operation of facilities: Financing of charitable promotion - 16 grants by industry development and social initiatives 50 thous. RUB. support level in RF 66.1%*. uranium mining and processing 4 mln RUB.
*Data from the 2013 “Bank of vacancies” Public Annual Report o of Krasnokamensk f Rosatom State Corporation. Reclamation and Services town makes up decommissioning 120 people
Value Chain
For more details refer to and chapter 4 “Interaction with stakeholders STAKEHOLDER ENGAGEMENT section 3.6 "Social capital management" when drafting the Report"
Рис. 4. Бизнес-модель АО «Атомредметзолото»
23 Годовой отчет 2014 ОАО АТОМРЕДМЕТЗОЛОТО 18 24 CHAPTER 2
STRATEGY and management system 2.1. Business Strategy
2.1.1. Corporate ARMZ Uranium Holding Co.’s mission is image as a stable and respon- Mission and Values sible company prepared for to provide competitiveness of long-term mutual favourable customer, ARMZ Uranium Holding Co.’s supplier and contributes to the mission is to provide compet- raw material deliveries for the develop- efficient solution of set tasks. itiveness of long-term raw material deliveries for the ment of Russian technologies, above all development of Russian tech- in nuclear power engineering nologies, above all in nuclear power engineering.
EFFICIENCY The strategic goal of JSC O M N A A E Atomredmetzoloto is to pro- E H S E T T A E E D P mote implementation of state territory of the Russian Fed- Key Corporate values N O tasks and corporate goals of eration. Holding’s advantages the main shareholder – State are availability of cutting-edge ARMZ Uranium Holding Co.
R Corporation Rosatom. scientific potential, high-tech carries out its activities on the E S Y P T E E F production assets and a qual- basis of its unified corporate C A T S As part of the State Corpora- ified team which has compe- values which were formulated RE tion, ARMZ Uranium Holding tences for deposit management and approved by State Corpo- SPONSIBILITY FOR RESULTS is responsible for the develop- and operation in challenging ration Rosatom in 2014*. Their ment of mining division on the natural and climate conditions. adoption strengthens ARMZ’
For more details see sect. 1.3. * Minutes of the Strategic Board Value Chain and Business of State Corporation Rosatom Model. No. 1-СС/3-Пр dated 03.07.2014.
Table 2. Corporate values and principles of conduct
Corporate Values Implementation at JSC Atomredmetzoloto • maximize potential of markets of operation; • develop state-of-the-art Russian and global practices and technologies in geological «One step ahead» exploration, production, corporate governance and social policy; • implementation of business diversification projects assuring its scope and stability growth.
• trouble-free and stable provision of Russian and foreign consumers with products «Responsibility for Results» meeting quality standards; • socially responsible business, attention to the development of areas of operation. • implementation of principles of Rosatom Production System (RPS) at a production facil- ity and daily operations; optimum management system assuring the balance of initiative and control, responsi- «Efficiency» • bility and resources; • transparent procurement system raising expenditure efficiency; • rational and responsible use of production and financial resources; continuous advanced training, motivation and personnel social security enhancement; «One team» • • organization of cultural, sports and charitable activities. • building long-term trust relationships with customers, suppliers and local communi- ties; «Respect» • openness for state authorities, investment and industrial communities, partners, employees and other stakeholders.
• ensure industrial and labour safety guaranteeing preservation of employee health and environmental welfare; «Safety» • observe technical standards during the mining and processing of natural uranium, including standards for nuclear and radiation safety; • comply with regulatory requirements and raise environmental production safety.
20 2.1.2. Natural thous. tons (taking into account Global uranium worldwide, which demon- Uranium Market secondary sources which include production in 2014 strates a 3% year-on-year warehouse stock reserves of drop. Overview and power companies and some In 2014, 57 thousand tons of Outlook states, lean uranium hexaflu- natural uranium were mined On the global scale mining oride additional enrichment, reduction has been observed Overview of the Natural regenerated uranium etc.). As a for the first time since 2006. It result, since producers did not was related to production opti- Uranium Market in 2014 reduce the output (at plants with In 2014, 57 thousand mization (above all in assets a low production cost in Kazakh- tons of natural with a high production cost) Global uranium demand stan, Canada, Australia which and to problems at a number and supply retained efficiency), oversupply uranium were mined of large plants. In 2014, global reactor demands in the amount of up to 8–10 worldwide, which in terms of uranium were 66 thous. tons was formed, which demonstrates a 3% Nine largest countries – nat- thous. tons, never recovering resulted in subsequent deterio- ural uranium producers (with after the accident on Fukusima-1 ration of market conditions: drop year-on-year drop. output of over 1 thous. tons per NPP in Japan. Herewith, global of quotations and player activity annum) in 2014 provided 93% market deliveries reached 74–76 level. of production. thous. U tons
Kazakhstan Canada Australia Niger Namibia Russia Uzbekistan USA China
Fig. 6. Uranium Production by World Countries, 2012–2014, thousand tons
Sources: estimate of JSC Atomredmetzoloto based on press-release and company report data, US Energy Information Administration (U.S. EIA).
Kazakhstan is still the first Australia ranked 3-rd faced a comprised about 80% of the among uranium suppliers sharp decrease of production global output. which increased uranium pro- volumes (by 21% of countries Nine largest countries – duction and share on a global – producers to the minimum Since 2010, the world’s big- market (up to 40% versus 38% level from 1998). As a result, natural uranium gest uranium company has in 2013). In Canada, which its specific weight in global producers (with output been JSC NAC Kazatomprom ranks number two, the pro- production decreased from 11 of over 1 thous. tons per (National Atomic Com- duction volume demonstrated to 9%. annum) in 2014 provided pany Kazatomprom), which a slight decrease as compared 93% of production. extracted 13.2 thousand tons to worldwide in general, as The total amount of uranium of uranium (23% of global pro- a result of which its share produced by nine major duction). Cameco is in second was 16% (in 2013 – 15%). companies (over 2.000 tons) place (market share - 15%), thous. U tons
NAC ARMZ Navoi Kazatomprom MMC
Fig. 7. Uranium Production by Major Companies, 2012-2014, thousand tons
Sources: press releases and corporate reports. Data for Navoi Mining and Metallurgical Combinat (NMMC) assessed by JSC Atomredmetzoloto. Extraction volume calculated as a proportion to the ownership ratio.
Annual Report | JSC Atomredmetzoloto | 2014 21 with about 8.8 thousand tons. Development of existing and in USA (Uranerz Energy) were global electrical power balance Rosatom State Corporation future projects commissioned. Besides, com- with the share of approximately controlling JSC Atomredmet- mercial uranium production 11% – after coal (43%), gas zoloto and Uranium One Inc. Due to unclear prospects in started on the Cigar Lake mine (21%) and hydropower industry (shown separately in Figure 7) the nuclear power industry in (key shareholders – Cameco (16%). ranked third with more than Japan and a number of other and AREVA) – expected to 7.4 thousand uranium tons. countries and subsequent dete- emerge over the long-term Difficulties faced by the nuclear rioration of market conditions, as one of the world’s largest industry after the accident at uranium mining companies in plants, whose commissioning Fukusima-1 NPP changed its 2014 continued to reconsider was delayed for two years due growth trajectory. Uncertainty plans for current plants and to technical reasons. Approx- about the nuclear power indus- future projects. Faced with imately 850 uranium tons in try future occurred in a number serious financial problems the total were produced at new of countries. In Japan itself 3-rd Australian Paladin Energy (the plants in 2014. Besides, the all NPPs were shut down and place only company which remained have not been re-started yet. in uranium production independent from major verti- However, no drastic changes is claimed by Rosatom cally integrated or diversified occurred in the global power State Corporation players) was forced already in industry structure, and the the first six months to preserve nuclear power industry is still Kayelekera mine in Malawi and its important component. Both sell 25% of its second plant 850 in developed and developing In 2014, NAC Kazatomprom (Langer Heinrich, Namibia) to uranium tons countries, NPPs continue to be was the only industry leader Chinese CNNC for financing were produced at new a stable, safe, environmental- to demonstrate a uranium its optimization and reducing plants in 2014 ly-friendly and cost-effective production increase (by 4% a debt burden. Energy Fuels power-generation source. as compared to 2013). The (USA) announced the suspen- Most world countries (including remaining players posted a sion of natural uranium pro- those with no operating NPPs production decline, with the duction at White Mesa factory at this point) not only stayed the sharpest drop posted by Rio in USA due to a low price level. first work stage for Husab course with respect to devel- Tinto – almost by two fold as Canadian Cameco and French mine construction in Namibia opment of the nuclear-power compared to 2013 – due to AREVA terminated operations (owned by Chinese CGN, the industry but continued to implications of accidents which for a number of promising production start is expected in actively pursue new NPP proj- took place at both company projects at early development 2016) was completed. ects expected to be commis- plants in 2013 and production stages. A number of compa- sioned over the long-term. program optimization. The nies (Cameco, Rio Tinto, BHP Junior companies continue to growth of Chinese companies’ Billiton) in 2014 – early 2015 look for opportunities for the (CGN and CGNPC) indicators implemented or planned opti- development of their promis- is mainly connected with the mization of personnel number ing projects in Canada, USA, The most ambitious transaction for acquiring a at their current plants. Australia, countries of Africa nuclear power share in the capital of Langer and South America with a view development Heinrich Namibia. Problems at some major plants to improve the market situation resulted in additional reduc- in the long-term but their work programs are tion of production volumes pace was reduced due to diffi- implemented in in 2014. In particular, Ranger culties with fund-raising. mine (owned by Rio Tinto) in China and India Mergers and Acquisitions Australia as well as Rossing in the Uranium Industry mine (Rio Tinto) and Langer Forecast for 2015 Heinrich (Paladin Energy) mine The total M&A transactions vol- in Namibia faced accidents and During 2015 (and up to nuclear ume in the industry in 2014 was process problems. Regulatory power industry recovery in China, India, South Korea and reduced by more than threefold problems resulted in produc- Japan and overall stabilization Middle East countries (UAE, as compared to 2013 and did tion reduction on mines in of economic and political mar- Iran, Turkey etc.) and RSA will not exceed 500 mln. dollars. Niger operated by AREVA (Arlit ket situation) high volatility will continue to be the key foreign Low activity in M&A was caused and Akouta). At McArthur River, be preserved on the uranium countries pursuing the active by persistent unfavourable the largest uranium mining market. However, uranium construction of new NPPs. market trends. plants of the world, in Canada production will grow next The most ambitious nuclear (operator – Cameco) a short- year – in view of its recovery power development programs The major transaction in the term production suspension at plants which operated with are implemented in China and production area in 2014 was occurred due to a strike. reduced capacity in 2014 and India which plan to substan- acquisition by the Chinese planned productivity increase tially increase a NPP share in CNNC of a 25% share in Langer Despite a difficult market situ- of plants which have been the power balance. In its turn, Heinrich in Namibia (owned ation, active work continued in recently commissioned. gradual nuclear generation by Paladin Energy) in the 2014 on a number of promising capacity reduction is expected amount of 190 mln dollars. The projects supported by low in Western Europe in the long transaction was closed in the production costs or favorable Uranium Market Outlook term (as a result of refusal mid-2014. Like in the past year, long-term contracts. Two new from nuclear power engi- Global Nuclear Power Indus- junior companies, which solved plants producing by the state- neering in Germany, possible try Development Outlook tasks of promising project con- of-the-art in-situ leaching – limitation of its share in France solidation and fund-raising. Four Mile in Australia (General As of today, the nuclear power and transition to broad use of Atomics) and Nichols Ranch industry is ranked fourth in the renewable power sources).
22 Global Natural Uranium • assurance of efficient sales Market Outlook organization and sales infra- Nikolai Krailin, advisor to the Director General structure development; of JSC Atomredmetzoloto, responds to a In the mid-term, the global • long-term contracting stakeholder’s proposal to broaden disclosure uranium market conditions will of manufactured products of the competitiveness topic and pay more remain unstable due to slower in order to secure a guar- attention to product quality enhancement and nuclear power engineering anteed source of financing customer requirements: development growth pace and for programs targeting the oversupply, which was formed operational development and in 2011–2014 after the accident diversification of uranium-pro- “ARMZ has always paid close attention to its product quality at Fukusima-1 NPP. The market duction plants. as the basis of its competitiveness. For this very reason, recovery pace will be defined quality management systems were established and certified by fundamental factors (real In 2014, pursuant to the natu- in accordance with international standards in the Holding, Japanese NPP re-start pace; ral-uranium sales arrangement while at its subsidiaries, ARMZ is taking the necessary implementation of plans for new approved by State Corporation steps to ensure finished-product quality conformity with NPP construction in key world Rosatom, natural uranium international standards.” countries; scope and dynamics produced in Russia was sold of deliveries from secondary by the Holding through United sources, etc.). Under these Uranium Companies LLC, the conditions, key producers will joint venture with Uranium One The certification testifies to the continue to maintain current Holding N.V. Holding’s reaching a new quali- capacities, however, their pos- tative level and contributes to its sibilities for major new project That said, all contractual obliga- All contractual product customer satisfaction implementation will be limited. tions to supply customers were increase. It will allow expanding obligations to supply discharged in full. possibilities for delivery of nat- In the long term, as nucle- products to customers ural uranium of Russian origin ar-power engineering recovers The existing system of long-term have been executed and its enrichment products to in Japan and new NPPs are contractual relationships with in full international markets. commissioned on a large scale, Russian customers, production uranium demand will grow. plants and processors as well as The Holding labels its products For their coverage, amidst the availability of operational mate- according to Federal Law No. gradual depletion of the “cheap- rial stock assure the required 170-FZ on Nuclear Energy Use est” reserves in Kazakhstan, reliability level and trouble-free products, the entire finished dated November 21, 1995. JSC Canada, Australia and other material deliveries. product delivery chain must Atomredmetzoloto entities are countries at deposits whose be certified in accordance with licensed for the safe handling of intensive operation supports the international quality and envi- nuclear materials by Ros- business stability of major mar- Customer satisfaction ronmental standards. tekhnadzor. ket players, new, major projects assessment with higher production costs will In 2014, JSC Atomredmet- have to be implemented. This, JSC Atomredmetzoloto zoloto and its subsidiaries of Product quality combined with accumulated cost pays particular attention to For the purposes of product quality inflation at current plants, will customer satisfaction. The Cooperation with customers assurance in accordance with a result (starting from 2022–2024) Holding maintains continuous request of JSC TVEL, work for For the purposes of raising the over- product quality enhancement was in sustainable fundamental all level of customer satisfaction, performed in JSC Dalur. In 2014, market price growth. By 2030, and in accordance with a request by installation was completed and uranium demand may reach 86 JSC Tekhsnabexport, JSC Atomred- commissioning works for drying thous. tons. Uranium production metzoloto and its subsidiaries equipment start-up was started, conducted certification in 2014 for will be built up in accordance which is expected to result in fin- compliance with international quali- with its demand dynamics. Full By 2030 uranium ished-product quality enhancement ty and environmental standards. production increase potential demand may reach by 2015. In future, it is planned to within the specified period is up use the experience gained also for to 97 thous. tons, and no market 86 thous. tons PJSC PIMCU and JSC Khiagda* finished product quality enhance- uranium deficit is forecasted, were certified for compliance ment of another holding’s plant – despite possible reduction of with international standards JSC Khiagda. its deliveries from secondary ISO 9001:2008 of the quality sources. management system and ISO 2015 and future plans: 14001:2004 of the environmen- 2.1.3. Marketing and cooperation with customers tal management system. An inspection audit for com- and promptly responds to their pliance with ISO 9001 (quality Sales Policy requests and expectations. As a result, all enterprises of management system) and ISO the Holding’s uranium chain 14001 (environmental man- In 2014, JSC Atomredmetzoloto obtained the certificate of con- agement system) standards continued to carry out operations Quality management formity IQNet, Quality Austria of is planned in 2015. Besides, as part of the key areas of its the integrated company man- in-situ leaching plants will be marketing and sales policy: Product quality assurance agement system with require- converted to finished prod- is one of the key priorities at ments of MS ISO 9001, MS ISO uct output meeting the “base • satisfaction of the demands ARMZ. In accordance with 14001 international standards. specification”. Works in JSC of Russian nuclear-power requirements of a number of Dalur will be completed in engineering and industry for existing and potential for- For more details see section 2015, in JSC Khiagda - in the uranium over the long-term; eign consumers of Holding 2.2.3. Risk management. mid-term.
* JSC Dalur passed certification in 2013. Annual Report | JSC Atomredmetzoloto | 2014 23 2.1.4. Long-Term Company’s Strategic This determined the key tasks of JSC Strategy and Current Tasks Atomredmetzoloto – boosting perfor- Status of the Company The business strategy of JSC Atomredmetzoloto was formed mance and assuring loss-free operation Having passed a number of based on a realistic evaluation stages in its development, of advantages and specifics of while ensuring the satisfaction of cus- uranium business of State Russian uranium producing Corporation Rosatom became plant development. tomer demands. one of global uranium indus- try leaders. Availability of own natural uranium production facility (JSC Dalur and JSC Khiagda) • balanced build-up of cost In 2014, the uranium produc- on the territory of the Russian preserved development effi- effective uranium production tion cost was first reduced at Federation allows to guaran- ciency and potential even under in JSC Dalur and JSC Khiagda PJSC PIMCU, which enabled tee reliability of deliveries to these conditions. “At the same with long-term preservation to overcome a negative trend foreign partners and custom- time, PJSC PIMCU – the largest of a stable current production of the last decade. Costs ers and long-term security of plant in Russia and one of the level in the Russian Federa- were reduced on production raw-materials provision for largest in the world – turned tion. assets of JSC Atomredmet- Russian nuclear-power gener- out to be “beyond the market.”. zoloto, and uranium pro- ation. Assurance of a compet- For long-term in-situ leach- duction per capita (in kind) itive production cost is a key This determined the key tasks ing, there is substantial was increased. Geological condition for Russian uranium of JSC Atomredmetzoloto – resource potential deter- exploration and engineering demand. boosting performance and mined as a result of pros- subsidiaries dramatically assuring loss-free operation pecting works by means of increased revenues from After the accident at Fukisima-1 while ensuring the satisfaction federal budget funds within external orders. Such results NPP in Japan the situation on of customer demands. Their the Vitimskoye uranium min- achieved in unfavourable the global uranium market resolution will be assured not ing region in the Republic of market conditions confirm became more difficult, its neg- only by means of cost optimi- Buryatia. corporate strategy correct- ative impact was reflected in zation but also by means of ness and balance. 2014 on Russian asset develop- system changes in produc- Solution of these tasks will ment. Plants mining uranium tion capacity management – be supplemented by the by the in-situ leaching method uranium production share development of non-uranium increase by a more efficient projects, which, in turn, guar- in-situ leaching method. antees the Holding’s ability to withstand market risks and Marina Liborakina, deputy general director The Holding plans to address address the tasks associated for business strategy and development of JSC its strategic tasks by: with operating region devel- Atomredmetzoloto,responds to a stakehold- opment. er’s proposal to expand the section dedicated • reducing the level of to the strategy and digitize the information it non-profitable uranium By 2030, natural uranium contains, if possible: production in PJSC PIMCU (on production and process- poor reserves) with simul- ing will still be the main taneous plant restructuring type of operations of JSC “The Holding is facing a strategic task to assure operat- and significant production and Atomredmetzoloto. However, ing performance, including due to specific natural urani- infrastructure cost reduction; the Holding itself will be um underground mining cost by underground method by in the mid-term a transfer to transformed into a “develop- 30% and by in situ leaching method (ILM) – by 10% during the development of Zherlovoye ment company” – dynamic, 2014–2019”. and Argunskoye deposits is proficient in strategic metal planned (Mine No. 6); production and processing.
KEY DEVELOPMENT AREAS
More developed than advanced uranium mining projects
New non-uranium businesses
Industrial park on PIMCU site
Efficient in-situ leaching asset development (Khiagda and Dalur)
PIMCU restructuring
Note: Square of the box characterizes business level
Fig. 8. Key tasks and development areas of ARMZ Uranium Holding in the long-term for up to 2030
24 2.1.5. Plans for 2015 and Product quality assurance the mid-term is one of the key priorities at Evgeniy Palchikov, director for development ARMZ. An inspection audit of JSC Atomredmetzoloto responds to the stakeholder’s proposal to reflect diversifi- Plans for uranium for compliance with ISO 9001 (quality management system) cation in the Report structure and consider production development and ISO 14001 (environmental possible introduction of a separate section management system) standards dedicated to this topic: is planned in 2015. Besides, in-situ leaching plants will be converted to finished product In 2014, JSC Atomredmetzoloto generated the new business output meeting the “base spec- area development program. As part of the program, priority In 2014, JSC ification”. Works in JSC Dalur projects were defined. The program “core” - development Atomredmetzoloto will be completed in 2015, in JSC of diversification projects based on existing competences of PJSC PIMCU in mining and related industries (“Pyrite Cinder implemented the Khiagda - in the mid-term. Processing», “Rare-earth Metal Refining and Separation uranium production Centre”). Projects will presumably be implemented on the plan in full volume Development of a competitive uranium-production facility territory of Krasnokamensk Industrial Park in the form of and the launch of a diversi- public-private partnership with foreign investors. Other fication program remain the projects aimed at diversifying the Holding’s revenue source critical mid-term tasks of and solving the socio-economic tasks associated with JSC Atomredmetzoloto. Deep the development of Southeastern Trans-Baikal Territory. In 2015 and subsequent years uranium chain restructuring (“Cement Plant”, “Biochemical Facility Construction», its production volume will with a transition to new deposit “Coal-Diesel” project etc.) are developed around the be maintained at the level development will be carried out core. Pavlovskoye project on Novaya Zemlya archipelago of around 3 thous. tons per in PJSC PIMCU. In the mean- will be implemented in accordance with approved plans. annum (with adjustment time, balanced build-up of cost According to the diversification program roadmap, project based on tasks of State Cor- effective uranium production commissioning is planned for 2017-2019.” poration Rosatom). will continue in JSC Dalur and JSC Khiagda.
Table 3. Main Business Diversification Initiatives
Pavlovskoye project (Novaya Zemlya)
Target products: Refined zinc, refined lead Target job creation /people: 400
Pyrite cinder processing (man-made waste)
Target products: Gold, iron-oxide pigments, iron-containing concentrate Target job creation /people: 75
Cement Plant Construction
Target products: Cement Target job creation /people: 230
Coal conversion into synthetic diesel fuel
Target products: Synthetic diesel fuel. Associated chemical products (naphtha, liquefied petroleum gas, sulphur) Target job creation /people: 1000
Associated rare-earth metal (REM) and scandium oxide mining (РЗМ) from uranium solutions
Main Business Diversification Initiatives Diversification Main Business Target products: Total REM oxide concentrate, scandium oxide
”Green chemistry”
Target products: Inulin, fructooligosaccharides, other products (fructose syrup, combined feed) Target job creation /people: 390
Annual Report | JSC Atomredmetzoloto | 2014 25 Along with existing production Business Diversification nership with foreign investors over one thousand new jobs in facility efficiency enhance- Plans support both expansion of the Krasnokamensk and Kras- ment, JSC Atomredmetzo- park’s core industries (cement, nokamensk Region. loto will continue to develop The project is implemented as metallurgy, etc.) and the devel- promising projects (Kaldera part of solving state tasks for opment of high-tech production and Mine No. 6). Implementa- Russian Arctic Zone develop- facilities for the manufacture tion will provide PJSC PIMCU ment. Production start on the of high-added-value products with a higher-quality raw-ma- field is planned in 2019. (including through import terials base and create a substitution). JSC PIMCU’s reserve for its subsequent Formation of Krasnokamensk participation in these projects development. Plans envision Industrial Park, boasting will make it possible diversify Development of the gradual commissioning of well-developed industrial and the plant’s revenue sources, Pavlovskoye lead-zinc major new projects, including power infrastructure, work- create new jobs for personnel field became one of the Elkon project, by roughly force potential and production previously engaged in uranium 2030, as uranium demand capacity in Southeastern production, and assure the the priority diversifi- recovers and prices begin to Trans-Baikal Territory, remains efficient utilization of existing cation areas in 2014 climb sufficiently to ensure an important development area. infrastructure. Overall, by 2019, the required cost-effective- Projects whose implementation the diversification program ness indicators. is planned at the park in part- will make it possible to create
2.1.6. REM and 2014 results: • the concept of monazite upstream operations’ product scandium production concentrate relocation to its manufacturing in JSC CMW; • Under the “Rare and processing and UralMonazit • an agreement of intent was development Rare-Earth Metal Industry base area rehabilitation place entered into with JSC ICC Development” Subprogram of was developed in JSC VNIP- Uralchem for industrial devel- “Industry development and its Ipromtekhnologii; opment of REM concentrate competitiveness enhancement” • an agreement on cooperation decontamination and concen- ARMZ Uranium Holding is program, the industrial institute in the area of rare and rare- trate separation into group/ implementing a significant JSC VNIPIpromtekhnologii earth metal processing was individual REM technology. associated REM production entered into state contracts for entered into with LLC TriArk project. The project is aimed the associated REM and scan- Mining*; 2015 Plans: at creating a REM production dium extraction technology and • agreements of intent were facility on the basis of existing total REM concentrate separa- entered into with Energiya Group • Develop the scandium con- production infrastructure, tion technology; of Companies and JSC TVEL on centrate production and refin- formed human resources • the range of laboratory works the development of associated ing technology in a test mode; and process competences of for the scandium and REM con- scandium and REM production • start design documentation mining division plants of State centrate production technology development in JSC Dalur and drafting for scandium oxide Corporation Rosatom. was implemented; JSC Khiagda with subsequent pilot production.
2.1.7. Cooperation with foreign partners
Vladislav Matus, deputy general director of JSC Atomredmetzoloto, responds to the stakeholder’s proposal to disclose Company’s reaction to the complication of a foreign political situation and imposition of anti-Russian sanctions:
“Foreign challenges and circumstances capable of affecting the company’s operations are regularly monitored in JSC Atomredmetzoloto, response measures are worked out – both prompt and strategic ones. In order to respond to arising challenges, the Holding fully takes advantages of integration in State Corporation Rosatom structure – one of the leading players of the global nuclear industry. Efficient cooperation with contract parties, timely introduction of advanced standards and technologies, efficient investment attraction * LLC TriArk Mining – joint venture of ICT Group and RT-Global resources and stable product sales are assured due to integration. Active cooperation with regional, company of State Corporation Rostekh federal and local authorities, Russian and foreign investors, allows the Company to solve established with a view to devleop business tasks comprehensively along with the socio-economic development of its areas of rare-earth metal and niobium mining operation.” and refining in Russia, provision of the Russian industry with high-tech REM materials.
26 Table 4. Main areas of cooperation with international partners of ARMZ Uranium Holding in 2014
Country Company Project Project goal Results
Beijing Triumph Cement production localization People’s International in Southeastern Trans-Baikal • a preliminary feasibility study Republic of Engineering Co. “Cement Plant” Territory. Major cement was developed and a project data China Ltd. (BTIEC), producers on the PRC market sheet was generated. GR Application are project partners. Technology Co. Ltd.
Development of a high-tech industrial coal refining facility potential construction site visit China National with production of synthetic • was arranged and input data for Machinery Import diesel fuel and associated People’s design were collected; & Export Corp, “Coal-diesel” chemical products. The project Republic of Urtuyskiy open-pit coal mine SYNFUELS contemplates synthetic fuel • China visit as one of potential raw mate- CHINA, GR Project plant construction. Consortium rial source (at the first stage) for Management Co. Ltd. of Chinese companies is the future production was arranged. project partner.
• in accordance with the contract works on the following subject were performed: “Conducting a Monitoring of underground geological environment assess- Republic of Nuclear Physics “Geological nuclear explosion facilities ment containing underground Kazakhstan Institute Environmental for peaceful purposes on vessels generated by nuclear Assessment” Karachaganak oil and gas explosions, according to the condensate field. underground vessel stability fore- cast and overview of methods for rendering similar facilities safe.”
• equipment was accepted for pilot production; finished product output in “Yellow cake drying in • accordance with ASTM “Base JSC Dalur for finished Process upgrading in JSC Specification” standard; product output in Dalur for finished product improved product quality Czech Republic Susharny Praha accordance with ASTM output in accordance with • assured all nuclear-cycle chain “Base specification” ASTM “Base Specification” efficiency enhancement; international international standard a pilot project in the form of the standard” • EPCM project was implemented by the Engineering Centre of JSC VNIPIpromtekhnologii.
• the report was drawn up and Implementation of defended based on the results of geotechnological studies radiological ore property study of for uranium fields with NYOTA field; “Geotechnological complicated radiological • the possibility and efficiency of United Republic Mantra Tanzania Ltd. studies for the field” conditions to justify the application of the Russian method of Tanzania possibility for application of for radiological ore property the in-situ leaching method study and gamma log data inter- during their development. pretation for reserve quantifica- tion in complicated radiological conditions of NYOTA field were confirmed.
Annual Report | JSC Atomredmetzoloto | 2014 27 2.2. Management system
2.2.1. Corporate The Company ensures strict compliance governance with the law. The corporate governance
Approach to corporate system is improved with the use of best 4.69 governance Russian and global practices billion Maintenance of a high corporate The total funds raised governance level and opera- through the 2014 additional tional transparency is regarded issue as one of the most important The Company ensures strict ARMZ Uranium Holding areas of the Company’s strategy compliance with the law. The Co. Authorised Capital implementation, the overar- corporate governance system and Shareholders ching purpose of which is to is improved with the use of Changes to Equity Capital maximize mining business value best Russian and global prac- As of December 31, 2014: Structure in 2014 for shareholders. tices and OECD corporate governance principles. • JSC Atomredmetzoloto’s In 2014, the Company privately JSC Atomredmetzoloto has the authorized capital was RUB 25 traded an additional issue of following priority corporate On the website 055 248 440; shares to raise funds for the governance objectives: (http://www.disclosure.ru/ • the Company placed 25 055 investment program; 1 547 issuer/7706016076/) 248 440 registered ordinary 293 730 ordinary shares were • to comply with Russian and you can find the Charter and shares with the nominal placed for the benefit of JSC international corporate gover- internal documents regulat- value per share being RUB Atomenergoprom. The total nance standards; ing activities of management 1.00 (issue registration funds raised through the 2014 • to enhance the efficiency of and supervising bodies, and numbers: 1-01-03912-А and additional issue were RUB 4.69 governing bodies; disclosure of significant facts 1-01-03912-А-006D); billion. • to increase transparency and events related to ARMZ • three shareholders are for investors, companies from Uranium Holding Co. registered in the Register of Changes to the Company’s the same industry, business Shareholders (Rosatom State Management in 2014 partners, employees, and Corporation, JSC Atomener- other stakeholders. goprom, and JSC TVEL). • In September 2014, JSC Atomredmetzoloto closed a deal to divest 50% of the authorized capital of Runex Uranium (Pty.) Ltd. Rosatom State Corporation • In November 2014, JSC Atomredmetzoloto concluded a transaction to divest 100% 100% of the authorized capital of ARMZ NAMIBIA (Pty.) Ltd. 1,293% JSC Atomenergoprom 100%
85.520%
JSC Atomredmetzoloto 16.187% JSC TVEL
Fig. 9. Shareholders’ structure as of December 31, 2014
Table 5. Shareholder Structure Dynamics in 2012-2014, %
Stake in JSC Atomredmetzoloto’s authorized capital Shareholder as of 31.12.2012 as of 31.12.2013 as of 31.12.2014
JSC Atomenergoprom 80,475 81,370 82,520
JSC TVEL 18,081 17,252 16,187
State Corporation Rosatom 1,444 1,378 1,293
28 Shareholders meeting
Board of Directors Audit Commission Auditor
Director General
Fig. 10. Structure of ARMZ Uranium Holding Co. Managing and Supervising Bodies
Management system • increase of the Company’s Federal Law “On joint-stock 1. Vadim Lvovitch Zhirov – authorized capital by means of companies”. chairman of the Board of The corporate management additional shares placement; Directors; system serves as the basis for • amendments to the Compa- Meeting of the Board of Direc- 2. Kirill Borisovitch Komarov; the Holding’s activities and has ny’s Charter; tors are convened as neces- 3. Vladislav Igorevitch Koro- several layers. • establishment of the Compa- sary. Meeting is convened by godin; ny’s management and supervi- the Chairman of the Board of 4. Yekaterina Victorovna sory bodies; Directors at his own initiative, Lyakhova; Management and • approval of the annual report, upon a request of a member of 5. Yury Alexandrovich Olenin. Supervisory Bodies annual financial statements for the Board of Directors, General 2013 and profit distribution; Director and auditor. From June 30, 2014 to Decem- General Shareholders • approval of the Company’s ber 09, 2014 the Board of Meeting Charter in a new wording. For more details see section Directors included: The General Shareholders Meet- Board of Directors 2.2.2. The Report of the Board ing of JSC Atomredmetzoloto is of Directors on the results of 1. Aleksandr Markovitch its supreme management body. It Competence of the Board of Company’s development as per Lokshin – chairman of the authorities, procedure for convo- Directors is defined by provi- priority area of operations. Board of Directors; cation and conduction are defined sions of the Charter and internal 2. Vladimir Nikolaevitch Verk- by provisions of the Company’s documents of the Company as The Chairman of the Board of hovtsev; Charter as well as regulatory acts well as regulatory acts of the Directors is not concurrently 3. Vadim Lvovich Zhivov; of the Russian Federation. The Russian Federation. the Company’s sole execu- 4. Vladislav Igorevitch Koro- Regulation “On General Share- tive body. The Chairman at godin; holders Meeting” has not been Members of the Board of the same time. The Board 5. Yekaterina Victorovna approved in the Company. Directors do not own Company’s of Directors consists of five Lyakhova. shares. people. In 2014 five General Share- holders Meeting were held, at Candidates for membership As of December 31, 2014, the which resolutions regarding on the Board of Directors are From June 28, 2013 to June Company’s Board of Directors Company’s management were nominated in accordance with 29, 2014 the Board of Direc- was comprised of: adopted, including: requirements of art. 53 of the tors included:
04.2006—06.2008 first Deputy Command of Armed Forces, Director General, Acting Direc- PhD in Technical Sciences tor General of FSUE RosEner- goAtom Concern. 1999—2011 ran the 12th Central Administration of the 06.2008—present. Deputy Russian Ministry of Defence. Director General, Deputy Director General – Head of 09.2011—present. Deputy NPC Directorate, First Deputy Director General, Director Gen- Director General for Opera- eral of JSC Atomredmetzoloto. tional Management of State Corporation Rosatom.
Aleksandr Markovitch Vladimir Nikolaevitch Lokshin Verkhovtsev
Member of the Board of Direc- Member of the Board of Direc- tors from 30.06.2014, chairman tors since 30.06.2014 since 01.07.2014 Was born in 1955, place of Was born in 1957, place of birth – Lyal Mikar settlement birth – Chita, graduated from of the Jarkurgan district of the the Leningrad Kalinin Institute Surkhandarya region, gradu- of Polytechnics. Honoured ated from the Felix Dzerzhinsky power engineer of the Russian Military Academy, Military Federation. Academy of the Russian Central.
Annual Report | JSC Atomredmetzoloto | 2014 29 General Director
Daily operations of the Com- pany are managed by the sole executive body, the Director General.
In accordance with require- ments of art. 69 of the Federal Law “On Joint-Stock Compa- nies”, art. 9 of the Company’s Charter the Director General arranges for implementation Vladislav Igorevitch Yekaterina Victorovna Vladimir Sergeevitch of resolutions of the General Korogodin Lyakhova Vysotskiy Shareholders Meeting and the Company’s Board of Direc- Member of the Board of Direc- Member of the Board of Direc- Member of the Board of Direc- tors. tors since 07.09.2007 tors since 30.06.2011 tors since 30.06.2014 The Company’s Director Gen- Born in Moscow in 1969. Gradu- Born in 1975, place of birth – Born in 1954, place of birth – eral – Vladimir Nikolaevitch ated from the Moscow Institute Yekaterinburg, graduated from Komarino village of the Goro- Verkhovtsev, was elected to of Physics and Technology. the Urals. State Law Academy dokskiy district of Lvov region, the post by the resolution of and the Universiteit Antwerpen Ukrainian SSR, graduated the Extraordinary General 06.2004—10.2007 Deputy Chief, Management School from the Military Academy of Shareholders’ Meeting (min- Directorate of Nuclear Materi- the General Staff of the Armed utes dated 27.05.2013 No. 15). als Industry, Rosatom, Deputy 07.2008—02.2010 Director Forces of the Russian Feder- Chief, Directorate of Nuclear General of JSC Koltsovo-Invest. ation. V.N. Verkhovtsev does not own Power and Nuclear Fuel Cycle, any shares of JSC Atomred- Rosatom. 02.2010—03.2011 Vice-Presi- 2007—2012 Commander in metzoloto. dent of JSC TVEL. Chief of the Russian Federation 10.2007—03.2010 Director, Navy, admiral. The Director General partic- Department of Marketing and 04.2011—present. Deputy ipates directly in formulation Markets; Deputy Director, JSC Director of JSC Atomenergo- 2013—present. Deputy Director of the Company’s develop- Atomenergoprom. prom. General, Deputy Director Gen- ment strategy – both at the eral for Special Projects of JSC mission-and-values level 03.2010—present. Deputy 07.2011—present. Deputy Atomredmetzoloto. and at the level of functional Director of the NPC Director- Director of the NPC Director- strategies. Corresponding ate, Director for NFC and NPP ate, Director for Investment documents are approved by Life Cycle Management at Management and Operating the Director General who Rosatom. Efficiency of Rosatom State subsequently assures their Corporation. approval at the level of State Corporation Rosatom.
Results of the Director Gener- mechanisms for boosting labor mance and implementation of and KPIs. These indicators are al’s KPI system application* productivity. key performance indicators. then broken down and relayed to KPI of the Holding’s director is subordinate levels and applied The personnel performance Its utilization has made it possi- generated with a focus on the to structural divisions and indi- management system based ble to measure the productivity achievement of strategic goals vidual employees. on KPIs (key performance and form the performance indicators) operates at plants criteria for each plant, struc- of ARMZ Uranium Holding. tural division and individual The implementation of KPIs employee. Employee’s remuner- Anatoly Ostroukh, deputy director general for has become one of the main ation depends on his perfor- personnel – head of the remuneration, benefit and HR record management department responds to the stakeholder’s proposal to disclose additional information about the KPI system:
”The KPI system provides assessment of achievements and performance of the Company, its structural divisions as well as managers and individual specialists and is an instrument of strategic and operational management enabling to plan operational results at all organizational levels and direct employee efforts, above all from among managers to their * KPI of the Director General is achievement”. approved by a resolution of the board of directors. 30 Table 6. Target key performance indicators JSC Atomredmetzoloto (KPI) for 2014
KPI name of the Director General of JSC Atomredmetzoloto, Target value Actual value* measurement unit
Corrected free cash flow (CFCF) of State Corporation Rosatom, bln. 186,300 202,100 RUB.*
Engagement rate, % 49,000 42,000
Labour productivity, mln. RUB./people 1,460 1,476
Working capital, bln. RUB. 5,000 4,240
Integrated investment performance indicator, % 100,000 120,000
Lost-time injury frequency rates LTIFR,% 10% improvement from the base 0,900 period level
Natural uranium production cost (for RF), bln. RUB 9,588 9,184
* CFCF (corrected free cash flow) – in view of substantial working capital growth in 2011-2012, buoyed by simultaneous growth in investment applications, the EBITDA indicator was replaced with a monetary indicator characterizing the dynamics of cash flows suitable for development investment. Adjusted free cash flow (FCF) was deemed the most expedient indicator for CFCF purposes. CFCF is distinct for its ease and clarity of dividend calculation, direct link to sources of extra-budgetary financing, and incorporation of more instruments for the achievements of set targets. Considering the tremendous significance of CFCF for State Corporation Rosatom as a whole, this indicator is singled out in the KPI maps of managers at all of the Corporation’s divisions.
Basic provisions of the Com- bers of the Board of Directors Management pany’s remuneration and/ compensated by the Company or cost compensation policy, was 9.3 mln RUB. (as of December 31, 2014) information about remuner- ation and/or cost compensa- Information about Company’s tion compliance with principles and recommendations of the Corporate Governance Code For participation in the recommended by the Bank of operation of the board of Russia directors members of the Board of Directors may receive The Corporate Governance a remuneration based on Code recommended for financial-economic results of application by letter of the Company’s operations. The RF CB dated 10.04.2014 No. amount of remuneration is 06-52/2463 was not approved fixed by the General Share- by the Company. holders Meeting. In the meantime, JSC Vladimir Nikolaevitch Vladimir Sergeevitch Members of the Board of Atomredmetzoloto adheres Verkhovtsev Vysotskiy Directors being full-time to principles and recommen- Director General Deputy Director General for employees of the Company dations of the Corporate Gov- Special Projects receive salary in accordance ernance Code and provides with the Unified Industrial shareholders with all pos- Payroll System established by sibilities for participation in State Corporation Rosatom for company’s management and joint-stock companies of the familiarization with informa- Corporation and subsidiar- tion about company’s opera- ies of JSC Atomenergoprom. tions in accordance with the Remunerations and compen- Federal Law “On joint-stock sations to members of the companies”, Federal Law Board of Directors are paid in “On securities market” and accordance with labour con- regulatory acts of the Bank of tracts and valid local regula- Russia. tory payroll documents of the Company.
In the reporting period the Victor Stanislavovitch Marina Ivanovna amount of remunerations Svyatetskiy Liborakina as well as the amount of First Deputy Director General – Deputy General Director for expenses connected with executive director Business Strategy and Devel- execution of functions of mem- opment
Annual Report | JSC Atomredmetzoloto | 2014 31 Atmazhitova – advisor of the nuclear material account- ing, monitoring and control department of Rosatom State Corporation; • Yelena Vladimirovna Vlasova, Advisor at the Inter- nal Audit Unit of Rosatom State Corporation.
Members of the Audit Commis- sion do not own any Company shares. Vladislav Isaakovitch Ilya Ilyitch Victor Mikhailovotch Matus Korolev Zakharov The members of the Audit Deputy General Director Deputy Director General for Deputy Director General Commission did not receive Administrative Issues for Economics and Finance remuneration in 2014. (appointed in March 2015) By the Resolution of the General Shareholders Meeting (Minutes dated 21.01.2015 No. 22) change to “changes were made to the Charter dealing with disbanding of the Company’s internal audit commission of the Company (in accordance with provisions of art. 66.3 of the Civil Code of the Russian Federation (part one)).
Committees Activities of the Investment Committee
Sergey Aleksandrovitch Vera Borisovna Vladimir Dmitrievitch 2014 results: Migalin Sorokina Morgun Financial Director Chief Accountant Deputy Director General for • Total eight meetings of the Safety (appointed in March Investment Committee of JSC 2015) Atomredmetzoloto were held (hereinafter – Committee), including for the approval of project investment program limits for 2014 and 2015 of Mining division, approval of project data sheets of PJSC PIMCU, Berezovoye, “Fixed assets and intangible assets of ARMZ, JSC Khiagda and JSC Dalur. In total, 55 investment resolutions were adopted. • amendments were made in the Regulation on Commit- Stanislav Mikhailovitch Ilya Aleksandrovich Vsevolod Yurievitch tee with respect to Authority Anikeev Yaroshevitch Galinov Delegation Principles of the HR Director Director for Corporate and Chief Security Inspector Investment Committee of Legal Relations Rosatom State Corporation for adjustment of project financing limits and compo- sition of the Project Portfo- lio of investment planning subjects to the second level investment decision-making Internal Audit Commission • auditing financial documents, The Annual General Share- bodies. results of inventory checks, reg- holders Meeting of JSC • the composition of Commit- The Internal Audit Commission ulatory compliance, legal validity Atomredmetzoloto (Minutes tee members was updated. acts as a corporate manage- of executed documents; dated June 2014, No. 180) The Committee comprises ment body to improve the • analyzing the Company’s elected the following persons to representatives of ARMZ, efficiency and transparency financial standing, liquidity and the audit commission: Rosatom State Corporation of managerial processes. The financial solvency; and subsidiary companies Audit Commission is responsi- • analyzing the Company’s • Victoria Alexandrovna (PJSC PIMCU, JSC Khiagda, ble for control of the Company’s management bodies decisions Andriyenko – chief accountant JSC Dalur). Chairman – Direc- financial and business opera- for their relevance and confor- of State Corporation Rosatom; tor General of JSC Atomred- tions, including: mity with the Charter. • Marina Vladimirovna metzoloto V.N. Verkhovtsev.
32 For more details see sect. 3.2.2. Activities of the Charity Information about the 2.2.3. Risk Investment activities. Committee Company’s Registrar management
2014 results: Company’s Registrar is the Risk Management System Activities of the Risk Open Joint Stock Company Committee • The Charity Committee of Registrar R.O.S.T. Key results in risk manage- JSC Atomredmetzoloto was ment at JSC Atomredmetzo- 2014 results: established, the Regulation Registrar’s details: loto in 2014 were as follows: • In total, nine meetings of on charitable activities of JSC the Risk Committee of JSC Atomredmetzoloto, Work Reg- OGRN (Primary State Registra- • the Corporate Risk Man- Atomredmetzoloto were held ulation and Regulation on the tion Number) 1027739216757, agement System (hereinafter (2 meetings in presentia, 7 – in Committee were approved. INN (Taxpayer Identification referred to as “CRMS”) was absentia); Chairman of the Committee – Number) 7726030449. integrated, including key • draft regulating document deputy director general for planning and managerial for percentage risk man- business strategy and devel- Registered address: 18 Stro- decision processes (“budget- agement of JSC Atomred- opment – M.I. Liborakina. mynka Ul., Bldg. 13, Moscow, ing”, “mid-term planning”, metzoloto and its subsidiary • one constituent meeting Russia “strategic management”, and and supervised companies of the Committee was held, “investment activities man- in view of new requirements at which the experience Telephone/fax: agement”); for transfer pricing were of Russian companies in +7 (495) 771-73-36. • implementation of the approved; charitable project imple- approved interest-rate risk • monthly subsidiary credit- mentation, including for local management strategy of ing limits were approved; employment/self-employment ARMZ and subsidiaries aimed • measures for optimization promotion, was reviewed. 2.2.2. The Report at interest-rate risk focus on of the hedging transactions • priority areas of charita- the managing company, sub- concluded in view of business ble activities for 2015 were of the Board of stantially reducing the burden division into Russian and selected – support for the Directors on the on subsidiaries;” international and currency Company’s regions of opera- • definition of the “Holding’s exchange rate change were tion and measures associated results of Company’s risk preparedness level”, crit- approved; with celebration of the 70th development as ical risk list and risk manage- • key risk owners* of JSC Anniversary of Victory in the ment measures; Atomredmetzoloto were in the Great Patriotic War. per priority area of • work on optimizing hedging appointed; operations transactions in accordance • the composition of Commit- Report on payment of with the planned natural-ura- tee members was updated. announced (accrued) In 2014 23 meetings of the nium sales schedule, in The Committee comprises Board of Directors were due consideration of State representatives of ARMZ and dividends for Company’s held during which decisions Corporation Rosatom’s asset Rosatom State Corporation. shares regarding the key Company restructuring in the urani- Chairman – first deputy direc- management issues were um-mining segment in 2013 tor general of JSC Atomred- Dividends were not paid in adopted, including: and the resulting shift of some metzoloto for economics and the reporting period in JSC hedging transactions to 2015; finance A.V. Kovalevskiy (in Atomredmetzoloto as the res- • approval of ARMZ Uranium • for the purposes of minimiz- April 2015 V.S. Svyatetskiy, olution on dividend declaration Holding Co.’s target perfor- ing product non-sales risks at first deputy director gen- was not adopted. JSC Atomred- mance (KPI); main production plants of the eral - executive director was metzoloto’s dividend policy is • Company organizational Holding the integrated man- appointed chairman of the set by its management bodies structure approved; agement system was intro- Committee). with account of the required • appointment to the position duced in 2014, which passed investment in accordance with of deputy director general for certification for compliance For more details see sect. 2.2.3. the Company’s strategy. economics and finance, deputy with ISO 9001:2008 and ISO Risk management. directors general of the Com- 14001:2004 international qual- There are no declared or pany approved; ity standards. unpaid dividends. • the amount of remuneration • key compliance risk owners paid to the sole executive body of JSC Atomredmetzoloto No dividend payment is of the Company was defined; were appointed. planned for 2014. • the decision on additional issue of Company’s shares was approved; Major Transactions • decisions were made on the and Interested Party divestment of Company-owned Transactions shares in Runex Uranium (Pty.) * Risk Owner — role performed by Ltd. and ARMZ NAMIBIA (Pty.) employees (managers at the level of In 2014 the Company did not Ltd. structural division head or higher) enter into any major trans- decisions were made on the For more details see sect. within whose scope of work a risk • may arise, responsible for the draft- actions and interested party acquisition of shares in PJSC 2.1.3. Marketing and sales ing and implementation of measures transactions which require PIMCU, JSC Khiagda, JSC First policy for risk management and subsequent approval pursuant to the Mining Company placed as monitoring. Federal Law On Joint-Stock part of additional securities Companies. issues.
Annual Report | JSC Atomredmetzoloto | 2014 33 Table 7. Key Risks and Risk Management Methods in 2014
Risk without major increase decrease dynamics: changes
Risk Risk types Risk minimization methods dynamics Operational risks
The Holding employs a special system for regular production parameter checks, updated with the requirements of the integrated quality management system and assuring continuous monitoring of Holding plant’s operations. Based on monitoring operational decisions are made which takes into Property risks, account the current situation with the production program implementation, preventive measures to asset loss/damage reduce unforeseen expenses, prevent emergency and hazardous situations at Holding’s plants are risks taken, property insurance at its market value is carried out as well as insurance of companies’ civil liability insurance to third parties in leading insurance companies of Russia.
For more details see section 3.3. Production Capital Management.
Due to the fact that Holding’s operations are performed in the Russian Federation, sanctions imposed by International foreign countries has not substantially affected the production process of plants; political and JSC Atomredmetzoloto and its S&A continuously monitor changes in applicable law related to subsoil use, regulatory risk nuclear power use, environmental requirements and tax regulation, and the peculiarities of the Russian corporate law and the jurisdiction of its presence.
Risk increase is predicated on persistently-negative global uranium-price dynamics and the pessimistic forecast of the RF Ministry of Economic Development, which reduces nuclear industry attractiveness Reputation risk in general. For risk minimization in PJSC PIMCU the production efficiency enhancement program was implemented, number of personnel was optimized and a number of measures for social protection of population was conducted. Social risks Risk management measures being implemented: • program for engagement of experienced mining employees from other regions and highly quali- fied workers from related sectors; • remuneration incentives, benefits and a welfare system are used to retain qualified personnel; • an integrated training program for all levels of personnel is implemented, including managers talent pool program; Personnel-related • The Holding engages in infrastructure development in regions of operation; risks • due to personnel number optimization performed in 2014 PJSC PIMCU implemented a pool of measures for social protection of population (severance benefit, issue of grants for business opera- tions, search of jobs within the city).
Thanks to the active human resources management policy implemented by the Holding, these risks were substantially mitigated.
For more details see section 3.5. Human Capital Management.
Amidst ongoing, heightened attention to the state of the nuclear-power industry, the Holding implemented measures aimed at raising the occupational health and safety level at plants and on territories of Occupational operation, inter alia, a range of measures was implemented for raising employee security level and Health and Safety dwellers of territories of operation as well as for maintaining the local ecosystem balance, technological Risks natural uranium production and processing rates are strictly observed.
For more details see section 3.5.9. Occupational health and safety. Environmental risks. Nuclear and radiation safety risks
Technological Technological natural uranium process risk management, including nuclear-radiation risks, is ensured by risks, including implementing a number of special measures, including implementation of process equipment upgrading radiation safety program at plants of the Holding, strict compliance with current standards in the production process as well as insurance of companies’ civil liability to third-parties and companies’ employees.
The Holding entities involved at different stages of uranium production comply with all statutory Environmental environmental standards of countries of operations. Active policy for mitigating such an impact and risks raising environmental safety of a production cycle.
For more details see section 3.7. Natural Capital Management.
34 Risk Risk types Risk minimization methods dynamics Financial risks
Exchange risks are traditionally managed through the centralization of risks at JSC Atomredmetzoloto, which allows Holding operators to focus on core production areas. Exchange risks are mitigated through Exchange risks the Holding’s open currency position management. Based on the results of this management the credit portfolio structure is adjusted with a view to balance exchange assets and liabilities of the parent company, through adjustment of financial derivatives.
Tax risk management in the Uranium Holding is ensured through the following measures: Tax risks • preliminary tax due diligence of contracts entered into; • control over pricing within monitored transactions in accordance with requirements of tax legislation; • tax risk monitoring, including transfer pricing risks.
This type of risk when entering into credit agreements is minimized by means of establishing a balance Interest risks between a floating and fixed tax rate as well as by means of interest risk focus on the managing company.
In 2014 liquidity risks did not have a major impact on operations of JSC Atomredmetzoloto due to implementation of a targeted policy for this risk type management during the year, including: Insolvency (liquidity) risks • setting up limits for Holding companies in several banks; • implementation of a cash-redistribution system inside the Holding through the use of advanced banking products for the purpose of efficient use of group companies’ bank account balances; • credit portfolio restructuring and regular monitoring of group companies’ liquidity.
The main purchasers of the products produced at Holding facilities are Rosatom State Corporation companies, which significantly decreases the credit risk of JSC Atomredmetzoloto. Credit risks Credit risks related to procuring raw and other materials for the Holding entities are minimized (risk of default by through reduction of advance payments under contracts with counterparties by means of including counterparties) such a restriction in tender documentation (all procurement is carried out using competitive procedures). For more details see section 3.2.1. Financial performance management.
Risk growth is predicated on persistently-negative global uranium price dynamics in 2014. The negative Commodity risks impact of this risk type was minimized through implementation of a balanced price policy and available raw material source management with due account of the existing global practice.
Specific risks: mining production risks
JSC Atomredmetzoloto takes the following measures to obtain the most comprehensive and high-quality Risk of incorrect information about existing fields and to minimize the risk of geological exploration data differing from assessment of actual capacity: deposit quality and • employment of latest reserve balance recording and resource estimation methods, used as part capacity of a best practice in Russia and globally; • employment of state-of-the-art geological exploration methods using geological-mathematical models at operating plants.
Holding’s operations are connected with acquisition of uranium-containing fields and development of uranium product plants on their basis as well as with business diversification projects. Given a specific Investment project nature of investment decisions in the mining industry (significant capital intensity and long project return on risk investment periods) project risks are assessed when making investment decisions. When making decisions on implementation of a specific project, not only project efficiency calculation, net present value (NPV) indicators, internal rate of return (IRR) but also general strategic goals of Rosatom State Corporation, social impact of a specific decision, territory and country risks are taken into consideration.
Permanent updating of local regulatory framework in accordance with amending requirements of federal Compliance risks legislation for mitigating risks arising in the course of external communications with state regulatory bodies as a result of non-compliance with legislation, which may result in application of penalties.
Annual Report | JSC Atomredmetzoloto | 2014 35 ARMZ level ized Internal Inspection and Audit Bodies of Rosatom State Director General Corporation. Safety Management
approval ARMZ register and System corporate risk map generation 2014 results: • Commercial operation summary Information about risk of the integrated physical Risk ARMZ ARMZ risk owner Committee risk-officer security system (IPSS) was monitoring launched on the main produc- tion site of Khiagda uranium S&A level summary monitoring field under the Rosatom analytical programme called S&A S&A “Enhancement of Physical Risk Owner Risk-officer Protection of Nuclear Mate- rials, Nuclear Plants and Nuclear Storages up to 2015; Information about risk • Compliance was ensured with the Regulations for Physical Protection of Nuclear Materials, Nuclear Fig. 11. Risk Management Structure at ARMZ Uranium Holding Co. Plants and Nuclear Stor- ages as approved by Russian Government Decree No. 456 dated July 19, 2007. No faults 2015 and future plans Internal monitoring covers internal monitoring bodies were found in the course JSC Atomredmetzoloto and of JSC Atomredmetzoloto of verifying the validity of In the future, the risk man- its S&A. and S&A carried out 24 licenses for nuclear equip- agement system develop- unscheduled inspections ment operation on the part of ment will be focused on Main monitoring activities: and internal audits; physical protection carried practical application of —corrective action plans were out by the Federal Service for accumulated risk manage- • monitoring of procurement drafted and their implemen- Environmental, Technologi- ment experience. The task operations of ARMZ; tation monitoring is carried cal, and Nuclear Supervision aimed primarily at proactive • inspections of construction, out. (Rostekhnadzor); risk identification and work production, financial, and 2015 plans: • all of the Holding’s nucle- with owners of risks for business activities and appro- ar-hazardous facilities were implementation of measures priate funds application; Priority activities are: transferred for safekeeping minimizing risks with due • internal audits to identify • planning and performance to divisions of the federal account of a close interrela- business process risks and of inspections and internal state unitary enterprise tion of these business-pro- their impact on Company’s audits under the Integrated “Departmental Security Ser- cesses with planning and objectives achievement, with Monitoring Plan of Special- vice of Rosatom”; managerial decision mak- their levelling method devel- ing processes (“budget- opment. ing”, “mid-term planning”, “strategic management”, 2014 results: and “investment activities Under the Integrated • Victor Zakharov, deputy director general for management”). Monitoring Plan of Special- economics and finance of JSC Atomredmet- ised Internal Inspection and zoloto responds to the stakeholder’s proposal 2.2.4. Internal Audit Bodies of Rosatom State to show the risk growth or decline dynamics Corporation, 11 scheduled in 2014 : Monitoring System. inspections were conducted in Assets Protection 2014, including: —inspections of the Compa- ny’s financial and business “The risk management system in the Holding is integrated Internal monitoring activities, investment pro- with key planning and managerial decision-making system gram implementation, and processes, which enables to forecast the key identified risk construction organization at impact level on operations of our company and implement The internal monitoring sys- S&A; relevant measures for mitigating the possible adverse tem of JSC Atomredmetzoloto —five audits; impact. At the same time, external factors associated with is aimed at raising efficiency —five inspections of financial the unstable Russian economy in the second half of 2014 of Company’s operations and and business activities of dramatically heightened financial risks as compared to 2013: enables to obtain sufficient JSC Atomredmetzoloto, currency risks prompted by growing ruble exchange-rate confidence in Company’s its subsidiaries and other volatility coupled by the interest risks predicated on the achievement of main objec- companies; appreciation of financial resources on the heels of the RF tives as well as detect devia- —one centralized inspection; Central Bank’s key rate hike. tions from set objectives. —employees of specialized
36 • required safety measures Russia (FSS of Russia) and 2015 plans: risks to the Company and its were assured amidst a FSTEC of Russia) and Rosa- S&A was enhanced; terrorist threat at Holding’s tom State Corporation are • To upgrade the physical facilities during the XXII win- fulfilled; protection system at certain • Contracts were checked for ter Olympic Games in Sochi; • the commercial secret facilities of JSC PIMCU; signs of corruption and JSC • a supervisory audit was regime was set with due • To raise awareness of ARMZ Atomredmetzoloto coun- successfully carried out for account of requirements of employees in the field of infor- terparties’ good faith was compliance with require- the Unified Nuclear Industry mation security; verified; ments of the international Commercial Secret Protec- • To certify informational information security stan- tion Policy; JSC Atomred- support objects of S&A of JSC • Methods for checking dard ISO/IEC 27001:2005, metzoloto was entered in the Atomredmetzoloto for compli- messages coming through which certified compliance of database of Rosatom State ance with information security the Rosatom hotline were the Company’s information Corporation companies which requirements of FSTEC of improved. security management system set the commercial secret Russia. with requirements of the regime; 2015 plans: Standard; • licenses of FSS of Russia Anti-Larceny Program • the ruggerized informa- were reissued for works • To assure implementation tion system was certified for using information consti- JSC Atomredmetzoloto contin- of measures in JSC Atomred- compliance with requirements tuting a state secret and for ued to ensure economic safety metzoloto of the Anti-cor- of information security require- implementing measures and and asset protection and to ruption Plan of Rosatom ments of the Federal Service for (or) rendering commercial combat corruption and other State Nuclear Power Corpo- Process and Export Monitoring secret protection services. violations. ration for 2014–2015; of Russia (FSTEC of Russia) for JSC RUSBURMASH and JSC “1G” protection class; First Mining Company reis- 2014 results: • To promote anti-corruption • information security sued licenses of FSS of Rus- enlightenment of Holding’s requirements of regulators sia for for works using data • Procurement monitoring to personnel. (Federal Security Service of constituting a state secret. diminish economic damage
JSC PIMCU
Annual Report | JSC Atomredmetzoloto | 2014 37 2.2.5. Procurement Procurement monitoring and promote such participa- of the government of the Management tion, fair competition devel- Trans-Baikal Territory ATO- Information about the Hold- opment; MEX REGION-2014 regional ing’s procurement activities is To ensure the openness, forum was conducted in the Procurement • published at official websites: transparency and clarity of city of Chita (Trans-Baikal www.zakupki.rosatom.ru, the procurement process; Territory). • JSC Atomredmetzoloto www.zakupki.gov.ru. • To prevent corruption and 2015 plans: and its S&A use the following other abuses in procurement; documents regulating their Key procurement principles: • To use procurement proce- 1.3 thousand competitive procurement policies, pro- dures for implementing the procurement procedures are curement parties’ functions • procurement information nuclear industry development planned. and authorities, procurement transparency; strategy (both in general and methods and types, additional • equality, non-discrimination in individual aspects). elements of procurement pro- and no unjustified competi- 2014 results: cedures, the general procure- tion restrictions with respect ment procedure, etc.: to procurement procedure • According to 2014 results, participants; over one thousand competitive • Federal Law No. 223-FZ • assurance of targeted procedures were carried out on Goods, Work and Service and cost effective money for Holding plants’ needs. The Procurement by Certain Types expenditure on acquisition of economic effect (difference 1.2 of Legal Entities dated July 18, goods, works, services and between the initial procure- bln. RUB. 2011 (as amended by Fed- implementation of measures ment price and successful eral Laws No. 401-FZ dated aimed at reducing customer’s tenderer’s bid value) based The economic effect December 6, 2011, No. 324-FZ expenses; on the results of competitive based on the results of dated December 30, 2012, No. • timely and full provision of procedures carried out con- competitive procedures 115-FZ dated June 7, 2013, No. customers with equipment, stituted 1.2 bln RUB. 98.94% of 160-FZ dated July 2, 2013, and feedstock, materials, works procedures were carried out in No. 396-FZ dated December and services for assuring a electronic form, which contrib- 28, 2013); continuous production pro- utes to maximum procurement • The Integrated Indus- cess; transparency. try Procurement Standard • free admission to participa- • LLC ARMZ Service, the (hereinafter referred to as the tion in procurement proce- authorized procurement body, “Procurement Regulations”) dures due to elimination of established in 2014 for the developed by Rosatom State unmeasured requirements for purposes of raising efficiency Corporation and approved by procurement participants. of product, work and service the JSC Atomredmetzoloto Main procurement objectives: procurement for S&A compris- 98.94% Board of Directors. You can ing the management structure find the above documents at • To generate market prices of JSC Atomredmetzoloto is of procedures the official website www.zak- for products purchased by successfully operating. were carried in the upki.rosatom.ru designed for customers and reduction of • From 30.09.2014 to electronic form the purposes of the placement customer expenses; 01.10.2014 the Procurement of orders for goods, work and • To expand possibilities for Directorate of JSC Atomred- services for Rosatom. participation in procurement metozoloto with the support
For more details on the Holding’s key procure- ment principles and objectives, see the 2012 JSC Atomredmet- zoloto Annual Report, p. 89.
JSC PIMCU
38 2.3. Holding’s operating results and uranium chain development prospects
2014 was one of the most dif- ficult years for all enterprises constituting the Holding’s uranium chain. Reduction Victor Svyatetskiy, first deputy director general of JSC Atomredmetzoloto, responds of global market uranium to the stakeholder’s proposal to include brief sections dedicated to the Holding’s prices and, at the same time, uranium assets in the Report: reduction of metal contents in ore on fields developed by PJSC PIMCU had a negative impact on the main product “Indeed, the past year was a difficult one but we managed to solve all tasks set for ourselves and cost. Competitiveness turned subsidiaries. A vast amount of work was completed by our enterprises constituting the “uranium out to be virtually “beyond chain.” And this work deserves to be highlighted in a special, unified section. We provided equal the market” and losses grew opportunities for each enterprise to relay their operations over the past year in our report.” swiftly. A program for bringing enterprises to the loss-free operating level was developed to correct the situation.
2.3.1. Operations of PJSC PIMCU (Trans-Baikal Territory, Krasnokamensk)
Interview with Sergey trend was stopped! Meanwhile, — What main measures were Similar projects were elabo- Vyacheslavovich semi-fixed costs for the union’s implemented? rated by almost all divisions. Shurygin, Director infrastructure and activities Hydrometallurgists are General maintenance have just begun — The whole range of measures developing a new pattern of to reduce, and a full-fledged included both difficult and pain- ore preparation for process- effect from optimization and ful measures for cost optimiza- ing, the Mining-Recovery cost saving may be estimated tion, labour productivity growth Production Directorate only in 2015–2016. If uranium and development programs and started to apply cement-free market price parameters will process innovations. backfilling and miners are support efforts for raising the using advanced breakage plant’s performance, then we A prime example is the methods. Our subsidiaries may hope for reaching a loss- non-commercial dump-ore sep- are also involved in imple- free operating level already aration project developed by the mentation of the efficiency within one-two years. Central Research Laboratory. enhancement program. For 45 years around 7 mln. tons Thus, the re-equipment pro- For me as Director General, of ore mass with extremely low gram is being implemented it is very important that all metal contents have been accu- at LLC Repair-Mechanical personnel understand their mulated on our industrial site. Plant to increase production assigned task and utilize all The ore separation plant helps volumes and the product available resources towards its to separate marketable ore range. New equipment fulfillment. One may say that with a very low production cost enabled the plant to develop — Sergey Vyacheslavovich, the uranium market situation from these raw materials, from new product types and make which indicators are the most pushed PIMCU specialists which we produce additional its price affordable. important for you? to develop unique technol- finished products by the heap ogies which enable not only leaching method. Except for the I will emphasize once again: — The main task was to to achieve a major economic production task – production of the efficiency enhancement overcome the growth of effect but also to solve mul- additional metal volumes, we program was supported losses accumulated at the tiple old problems. Technical are also solving the environ- at all levels. For 2014 we plant in recent years. And improvements formed an inte- mental task – reclamation of introduced 381 improvement we succeeded. For the first grated mining-chemical tech- production off-spec ore dumps. proposals submitted by the time since PJSC PIMCU was nology which assured optimum We also plan to use barren ore plant’s employees. Their transferred under the control combination of heap and in-situ left from dumps. For example, implementation enabled to of JSC Atomredmetzoloto, we leaching and X-ray radiometric by means of recrushing ballast reduce time costs and costs have reduced specific uranium enrichment. This assured a for process road filling may be for consumables, improve job mining cost at the plant by reduction of the produced natu- produced, or it may be used organization, safety indica- 6.45%. The product cost growth ral uranium concentrate cost. during backfilling. tors etc.
Annual Report | JSC Atomredmetzoloto | 2014 39 Construction plan projects – implementation of Kaldera also helped a lot. For exam- project aimed at discovering Dmitry Teplinskiy, first director general of ple, “Tophole vertical drilling and commercial estimation process optimization by 2KB of new uranium deposits in PJSC PIMCU,responds to a stakeholder’s combine” project enabled to Streltsovskiy ore field. The proposal to provide comments on production increase tophole vertical drill- project financing amount is performance results: ing performance from 36 to 57 approximately 1 bln RUB. running meters per month per one combine due to reduced As a result of these works, time for preparatory works geologists plan to discover “This year when drafting the Holding’s annual report, we during combine movement. objects with high uranium faced exactly this task. In particular, we tried to show the Due to implementation of contents. Discovery of depos- dynamics of the loss-free operation assurance program “Rock Mass Shipment Process its will enable to provide implementation of the largest uranium mining plant of Time Reduction” project, we reproduction of the mineral Russia not only in terms of barren figures. Quite a detailed reduced transportation time by resources base of PJSC interview of the director general of the Plant is published, a 40% from loading in rail-cars PIMCU with cost effective specific list of implemented and future measures is given”. to ore pass. reserves for many decades to come. It is important to note But we’re not going to rest on that the project became possi- our laurels: we’ve developed ble due to application of state- exactly by funds of the most cost Under the program, Argun projects that will make it of-the-art domestic technol- effective of Rosatom State Cor- gym reconstructions was possible to reduce production ogies and unique “hidden” poration enterprises as of today. completed in 2014, two new costs in 2015 and over the and surface weakly developed By the principle: today we were kindergartens were com- mid-term. uranium deposit forecast and helped, and tomorrow when missioned, construction of a search methods. we solve our problems, we will living house for public sector — What are the prospects for be able to help others. Under- workers and employees resource base growth at PJSC — Won’t the need to reduce standing the difficult situation of of PIMCU was completed. PIMCU over the short- and costs affect implementation PIMCU, Sergey Kirienko, direc- Three times a week a new mid-term? of Krasnokamensk social tor general of Rosatom State airplane began to fly on infrastructure development Corporation signed an Agree- Chita–Krasnokamensk–Chita — Through its own efforts, program, which is financed ment on cooperation with the route, construction of Kras- PIMCU is currently exploring by funds of Rosatom Consoli- Government of the Trans-Baikal nokamensk–Matsievskaya uranium fields from under- dated Taxpayer Group? Territory, which helped to raise asphalt road construction is ground mining, ensuring additional funds in the budget for under way. The town contin- average operating-reserve — The question contains the the development of the town’s ues to develop and is becom- growth of roughly 300 tons answer. The program is imple- social infrastructure develop- ing all the more comfortable per annum. In the mid-term mented not by PIMCU funds but ment. for life.
Historical background Full Company Name from for the purpose of production of sulphuric acid, mining and and other information 13.01.2015: Public Joint-Stock natural uranium salts, molyb- chemical mechanical engi- about the joint-stock Company Priargunsky Industrial denum compounds and various neering products. company Mining and Chemical Union. product types on their basis, non-ferrous and precious-metal PJSC PIMCU is Trans-Baikal Priargunsky Industrial Mining Abbreviated Company Name: concentrates with base gold and Territory’s largest multi-industry and Chemical Union was PJSC PIMCU. highly-pure element production. mining and city-forming plant – established by Decree of the the flagship of the Russian USSR Council of Ministers Company’s location – Russia, As of today, PJSC PIMCU has a uranium-mining industry and dated 20.02.1968 No. 108-31 Trans-Baikal Territory, Kras- developed infrastructure and one of the world’s largest urani- for development of the ura- nokamensk town. provides itself with almost all um-mining plants. nium ore production and pro- required for uranium prod- cessing plant in the south-east Main type of PJSC PIMCU oper- uct output: materials, water. Since August 2008 PJSC PIMCU of Chita region on the basis of ations is mining, enrichment compressed air, heat, electri- has been a subsidiary of JSC the deposit of Streltsovskiy ore and processing of mineral and cal power, mineral uranium Atomredmetzoloto as part of field. other types of raw materials raw materials, coal, limestone, Rosatom State Corporation.
40 2014 Key Events July 2014 Key Performance • investments were reduced Indicators by 1.8 for annual maintenance the pilot-commercial operation of PJSC PIMCU - will be kept of the system “Personnel and Development of the program at the level of 2 bln. RUB per January INsite equipment positioning” for reaching the loss-free annum for the next years. was put in operation on mines operation: cost-intensive investment a Collective Agreement for of PJSC PIMCU. reduction of the division by 2014 – 2015 was signed. • optimization of costs by 10% to the last year level was August 1.9 bln. RUB. in the course assured. February of implementing the pro- start of the non-commercial gram for reaching loss-free 2014 main operating a new crushing complex was dump ore separation project operation; results commissioned on Urtuyskiy implementation. A youth park • for the first time since 2010 open-pit coal mine. was opened in the centre of it was able to overcome the Krasnokamensk. uranium production growth March trend and reduce it by 3%; September • optimization of PJSC start of the technical re-equip- PIMCU structure and number ment investment program of the a new administrative building of personnel by 34% (3064 Uranium Repair-mechanical plant. The of Urtuyskoye surface mine people); production Mine Frame modified computer office was commissioned. • repair and supporting volume – engineering maintenance and investment costs were 1,970 tons mining design system was October reduced by 0.3 bln RUB; implemented on mines. • the procurement program drilling of the 7-th level of was reduced by 5.6 bln RUB April mine No. 8 started. Start of (the production need was implementation of an inte- optimized with due account of new buses were purchased for grated project for residue long-term contracts), based carrying the union’s employ- reserve development of Tulu- on bid results procurement ees. kui quarry. prices were reduced by the total amount of 1.7 bln RUB May November from the initial contract price, which affected 2015 start of cooperation with Beijing construction of the concen- scheduled cost reduction by Triumph International Engi- trate recrushing building of 300 mln. RUB; neering Co., Ltd. (BTIEC) for the X-ray-ore-concentration • the level of warehouse implementing the project of the plant started on the site of the stocks was reduced by 1.0 bln cement production plant con- Hydrometallurgical Factory. RUB from 4.1 to 3.1 bln. RUB; struction in Krasnokamensk. The local emergency alert • optimization decisions were system was introduced. implemented on Mines No. 1 June and Mine No. 8 December • solid stowing volume was equipment of PIMCU mines reduced by 16%, with mining-underground employees of PJSC PIMCU • mining operations’ produc- communication was com- received keys from flats in a new tivity was increased by 10%, pleted. house. A 3D-cinema was opened • the first mining volume was in Dauria cultural centre. reduced by 5%;
Operations — 90 measures Efficiency Enhancement Programs Investment activities — 1 -4 measures Total effect around 2 bln RUB
RPS Reduced losses in all areas
Main areas Main division restructuring As part of Union’s survival strategy
Implementation of at least 100 tasks “Change Leaders” Program by economic effect
Implemented and with at least 70% Improvement proposals of the submitted number
Fig. 12. Main efficiency improvement programs of PJSC PIMCY in 2014
Annual Report | JSC Atomredmetzoloto | 2014 41 Implementation of the Table 8. Effect of the efficiency improvement program 2014 effectiveness of PJSC PIMCU in 2014 improvement program
Efficiency improvement Effect from program For more details Division achieved implementation see section Uranium production Reduction of blasting work of PJSC PIMCU volume by 20% for development Urtuyskoye surface mine office and treatment operations, 30 mln. RUB. adjustment of explosives’ consumption rates
Underground uranium mine No. 1 Reduction of main rated (UUM No. 1) material (forest material) 16 mln. RUB. 1,197 consumption standards bln. RUB. the result of the Underground mining-auxiliary Cement specific consumption 20 mln. RUB. implementation production Directorate (UMAPD) reduction. of efficiency programs of PJSC PIMCU Hydrometallurgical plant (HMP) Material cost optimization 73 mln. RUB. All divisions Cost optimization 1.197 bln. RUB.
One of the flagship 2.3.2.Operations of enterprises of JSC Dalur (Kurgan Kurgan Region’s region, Uksyanskoye industry – JSC Dalur – celebrated its 13th village) anniversary in 2014
Interview with in complicated economic stable operation of JSC Dalur. structure of ARMZ Uranium Nikolay Anatolievitch conditions of global market At present, we are continuing Holding Co. Once advanced Poponin, uranium prices, we are able to commercial development of drying technology is intro- Director General operate at a profit. The low, as Daltamovskoye deposit as well duced, humidity will drop to compared to other producers, as pilot-industrial works on 2%. Thus, we will reduce not final product cost – is not only Khokhkovskoye deposit. For only logistics costs but will the result of implementation 2016, the start of pilot works also assure its convenient of the most environmentally on Dobrovolnoye deposit is subsequent processing. friendly, cost effective and planned, we plan to start its safe in-situ leaching tech- commercial development from — In 2014, the Agreement on nology, advanced machinery 2023. social-economic partnership and equipment, innovative of JSC Dalur and Govern- software but also the merit Despite the specific features ment of the Kurgan region of all personnel permanently of the mining division of was signed. How is the plant working over performance Rosatom State Nuclear Power involved in the life of the and resource usage efficiency Corporation, one may say that constituent entity of the Fed- enhancement. It is precisely we, like any other plant, are eration? What real assistance the creation of excellent, focused on the customer. The does the regional government united, hard-working team final product is delivered to provide? that constitutes another our plants of Rosatom State Cor- — Nikolay Anatolievitch, achievement. By the way, staff poration fuel company – JSC — Under the agreement, JSC what, in your opinion, is the turnover in JSC Dalur is the TVEL. The uranium compound Dalur confirmed a trend to main achievement of the plant lowest in the Kurgan region. suspension humidity, which subsequent production poten- for past years? we could have assured earlier, tial growth. The text states — What future JSC Dalur was up to 30%. In 2014, the that the volume of investments — Creation of a high-tech development prospects do uranium compound suspen- in the plant’s upgrading and and environmentally friendly you see? sion (yellow cake) drying development in 2014 will make natural gas production facility system was installed at our up 608.5 mln. RUB. The major- to assure raw materials’ — The mineral resource base plant. The process line was ity of funds is allocated for the demands of the Russian of the plant are hydrogenous purchased from the Czech development of Khokhlovskoye nuclear industry. Besides, at uranium deposits of the Trans- Susharny Praha, the project and Dalmatovskoye deposits. present JSC Dalur is the most Urals uranium-ore region – was developed and imple- We also assured all 447 jobs cost effective uranium mining Dalmatovskoye, Khokhlovskoye mented on a “turnkey” basis in 2014 and provision of the plant from all three plants and Dobrovolnoye. Available by JSC VNIPIpromtekhnologii average salary in the amount located in Russia. Even today, reserves assure long-term comprising the management of 36.9 thousand rubles. 42 The Government of the when we are at the invest- support in rural settlements, program for support of the Kurgan region, in its turn, ment phase, developing the organization and conduction social-economic and infra- provides possible assistance production facility, it is very of cultural-mass measures. structural development of the to us for production potential important. On an annual basis we areas of Dalmatovskoye and preservation and build-up. provide material assistance Shumikhinskoye districts of In particular, by order of the Annual social expenses of to schools, orphanages and the Kurgan region, 15 mln. Governor of the region No. our plant are allocated for cultural-leisure centres. In RUB were allocated for the 109-R dated April 04, 2014 the construction of housing particular, based on 2014 construction of a new school JSC Dalur was included in for employees, land improve- results, JSC Dalur spent 22.6 in Uksyanskoye village in the consolidated register of ment and commissioning mln. RUB on social program 2014, 500 thousand rubles investment sites on the ter- of infrastructural objects implementation (VMI and were allocated for the devel- ritory of the Kurgan region. (motor roads, electrical non-state pension provision, opment of orphanages and Due to this, we obtained and gas supply networks), mortgage loan interest com- support of cultural-leisure certain tax benefits. Today, education, fitness and sports pensation etc.). Under the centres.
Historical background resources base of the Trans- Uksyanskoye local sorption commissioned. Pilot works and other information Urals of the uranium-ore unit (LSU) was completed for examining the possibility about the joint-stock district and raw material with a view to prevent haz- of associated REM and scan- company production for providing the ardous cargo transportation dium recovery in the form nuclear power industry with through populated areas. of collective concentrate Dalmatovskoye uranium nuclear fuel. Besides, works for sulphuric from product solutions were deposit was discovered by the acid warehouse reconstruc- started. Zelenogorsk expedition in 1979 In 2004, a license for geo- tion on a railroad base were as part of systematical study logical exploration of Khok- completed. Full Company Name from of uranium mineralization of hkovskoye deposit was 10.12.2014: Joint-Stock Com- platform formations of the obtained. In 2006, the main Activities associated with pany Dalur. Trans-Urals. For a period from process building for process- development and implementa- 1984 to 1994 pilot-industrial ing product solutions with the tion of the quality and environ- Abbreviated Company Name: works were performed in the capacity of up to 700 uranium mental management system JSC Dalur. Central deposit, the annual tons per annum was com- were completed in 2012. uranium mining level was up to missioned on Dalvatovskoye Following the results of exter- Company’s location – Russia, 45 tons. In 1995, due to lack of deposit. nal (certification) audit, the Kurgan region. financing, all works on Dalva- ISO 9001 and ISO 14001:2004 tovskoye deposit were stopped, In 2010, a method of intensi- compliance certificates were The main type of operations is the process unit and produc- fying In-Situ Leaching (ISL) granted. natural uranium mining. tion ground were preserved. was introduced with indus- trial-scale use of an oxi- In 2013, facilities of the pilot Since August 2008, JSC Dalur, JSC Dalur was registered on dizer (sodium nitrite) in JSC area were commissioned part of State Corporation June 13, 2001. JSC TVEL and Dalur. In 2011, construction on Khokhlovskoye deposit: Rosatom, has been a subsidi- FSUGE Urangeo were found- of a road and bridge via the product and return solution ary of JSC Atomredmetzoloto ers. The main company objec- Barneva river from a central settlement tanks, wellhouse (ARMZ Uranium Holding Co.). tive is to develop the mineral production site (CPS) to Ust- and a switchboard room were
Leonid Ivanchikov, head of the human resources department of JSC Dalur responds to the stakeholder’s proposal to support a balance in the disclosure of information about uranium assets, disclosing not only production indicators but also data on the environment, personnel and safety:
“This year we made special sections in the annual report dedicated to our main production plants, their 2014 performance indicators and prospects for development. However, given the public’s heightened interest in data on our environmental policy, including with respect to our environmental-safety provisions and HR policy, information on these issues is presented in other sections of the Report.” JSC Dalur
Annual Report | JSC Atomredmetzoloto | 2014 43 2014 Key Events • The yellow cake drying unit increase was elaborated – the works on process boreholes was put in pilot-industrial associated scandium produc- of the geotechnological field February operation – product compli- tion technology was developed. section. ance with the requirements of State contracts for associated the plant’s car fleet updating customer’s base specification REM production technologies 2015 and future plans: program was implemented; (JSC TVEL) was assured. were entered into with the RF • No accidents based on level Ministry of Industry and Trade. it is planned that implementa- May 2 and higher INES scale. Raw material resources will tion of the efficiency enhance- make it possible to organize to ment program for 2015 will an agreement on social-eco- organize scandium production continue under the following nomic partnership of the Gov- in the amount of up to 10 tons optimization areas: ernment of the Kurgan Region and REM of up to 450 tons by and JSC Dalur was signed; 2019. • production program, pro- Uranium duction process management October production For more details see and process initiatives: section ——comparative multi-factor commissioning tests of the volume — Uranium production of block development analysis; uranium compound suspension 578.06 tons JSC Dalur (Kurgan region, ——variation of the operating drying system started; Uksyanskoye village). unit acidification technology (transfer from air lift to November pump solution elevation); Implementation of the ——production process testing of innovative min- 2014 effectiveness control when constructing ing-geological computer improvement program operating units (personal 3D-technologies and soft- 2014 main operating draft construction plan, ware for three-dimensional results In-situ leaching technology director general of JSC simulation of ore deposit optimization was the main Dalur); structure and uranium in-situ • Uranium production volume activity in JSC Dalur in 2014 ——in-situ leaching technol- leaching process was com- – 578.06 tons. aimed at production process ogy optimization to reduce pleted; • the main volume of geo- efficiency enhancement. chemicals consumption at logical exploration works This project implementation all unit development stages; December was completed for Khokh- result was chemicals cost • operating cost reduction; kovskoye uranium deposit in reduction by 19.6 mln RUB./ • building the permanently construction of two residen- the Shumikhinskiy district. In year. Besides, the work operating geotechnological tial buildings for JSC Dalur total, 95 boreholes with the for implementation of the field (GTF) model; employees was completed. total volume of 56 thous.m. following measures was • elimination of the filtration were drilled. Based on work performed successfully: operation from the process implementation of the local results one may forecast (factory draft construction sorption section upgrading uranium reserve increase on • building the permanently plan). project of the Central deposit the deposit from previously operating geotechnological of Khokhlovskoye field was known 4.7 thous. tons to 5.5 mining facility model; completed. thous. tons. • comparative multi-factor • pilot-industrial develop- block development analysis; ment of the Central deposit of • standardization of the work 2014 Key Performance Khokhlovskoye field contin- process for anionite exchange Indicators ued; between the main process For more details also see • the local sorption section building and local sorption section • Stably profitable even was upgraded; units; Uranium production amidst low prices – forecasted • the possibility for raw • standardization of the work of JSC Dalur. net profit212 mln. RUB. materials processing depth process for repair-restoration
2.3.3. Operations of the Vitimskiy uranium-ore ing production volumes on an ments in development made up of JSC Khiagda district is estimated at over 350 annual basis. over 19 bln. RUB. (Republic of Buryatia, thousand uranium tons, where workers of JSC Khiagda have Creation of the efficient ura- 2014 was one of the most Bagdarin Village) been mining the metal required nium-producing plant in the important years for JSC for the country for already 17 Bauntovskiy Evenki district of Khiagda. The main industrial Buryatia is one of the Russian years. Under the most difficult Buryatia is one of the most seri- site facilities, radioactive waste Federation’s richest constituent natural conditions workers of ous projects being implemented disposal point site and solid entities in terms of natural-re- the plant develop deposits of today by ARMZ Uranium Holding household waste dump were source wealth. The potential the Khiagda ore field increas- Co. The total volume of invest- commissioned.
44 Interview with oped, despite the complicated — How will the Khiagda ore the Republic of Buryatia. For Aleksey Andreevitch uranium market situation, field be developed in future? what purposes have they been Dementiev, enabled us to keep the team earmarked? Director General – in 2014, we did not cut the — We are prepared to develop number of personnel. and even accelerate in devel- — Indeed, in December 2012 opment. Already now the plant the Government of the Repub- In future, the situation must is facing the task to reach the lic of Buryatia and Rosatom only be improved. In 2015, design capacity that is 1000 entered into a cooperation commissioning of the in-house tons of uranium per annum in agreement. Under the agree- sulphuric acid production 2018. Previously reaching the ment, JSC Khiagda was facility will help. In particular, design capacity was planned included in the Consolidated we will save a lot on logistics, for 2024. Taxpayer Group of Rosatom, reduce the cargo transporta- which enabled to increase tion volume by three fold. To fulfill the set task, we start allocations to the budget of the to develop two new deposits – Republic of Buryatia. — How is new equipment Istochnoye and Vershinnoye. being developed? Authorities of the Republic In essence, today we have a of Buryatia understand that — In 2014, we did our best solid foundation for devel- we need good infrastructure not only to fulfill the produc- opment for at least 40–50 for development, thus, funds tion plan but also to assure years. Future prospects are are primarily invested in the — Aleksey Andreevitch, the progressive development connected with integrated construction of roads, repair of uranium market situation is in the long-term. The main development of deposits of bridge facilities on the section known to be extremely dif- milestone is completion of Vitimskiy uranium-ore district, from the production site of ficult. The more difficult it is construction and assembly the potential which is estimated JSC Khiagda to the border of for the plant at the investment works and launching of the at over 350 thousand tons of the Trans-Baikal Territory and development stage. Is JSC main production building in uranium. Based on the order reconstruction of power grids Khiagda able to retain loss- the integrated testing mode. of the Federal Subsurface in the region. JSC Khiagda is free efficient production? With its commissioning we can Management Agency of Russia prepared to transfer a bridge via build up uranium production prospecting works on Amalats- the Vitim river in Romanovka vil- — It is very important that even confidently. kaya and Antaseyskaya areas lage in the Republic of Buryatia, today, amidst global market are planned and performed which was constructed by funds uranium price reduction, we Deserving of special mention as well as on the North-Bai- of Rosatom State Corporation. are able to show good financial is our personnel, who demon- sykhanskiy, Barkasunskiy and For the short-term we are hold- results. This happens because strated stable, accident-free Kulariktinskiy sections. In the ing negotiations on funding of we have neither expected nor work. I hope that this will event that potential estimates 110 kV back-up line from Sosno- expect construction completion continue in future as well. are confirmed, the production vo-Ozersk to the industrial site for solving the main task of any Of course, we will have to do site of JSC Khiagda will turn out of JSC Khiagda, on fiber optical plant – continuous efficiency much more. And I want to to be in the very centre of the communication. enhancement. Yet when emphasize that we need not richest region, and, of course, generating the 2014 budget we breakthroughs, not records but the plant expects further pro- It should also be noted that planned to improve our per- continuation of daily meticulous duction capacity growth. we reasonably hope to receive formance. And we managed to work of each member of our state support of the investment reduce production cost by 12% labour team. The core of in-situ — Aleksey Andreevich, funds project for the development of as compared to the actual 2013. leaching – process monitoring from Rosatom’s Consolidated deposits of Vitimskiy urani- I consider it very important to and correct process control as Taxpayer Group have been um-ore district at the republi- note that the measures devel- this happens today. allocated for the budget of can level.
Bella Mikhailovskaya, head of the human resources department responds to the stakeholder’s proposal to elaborate a template of reporting information disclosure on uranium assets of the Holding in special brief sections:
“I hope that the information disclosure form, which we reviewed in the 2014 annual report, became as convenient for all Report’s readers as possible. The first part of the Reports presents brief information, our main performance indicators. Subsequently, in corresponding sections, information was expanded to the maximum to present a complete picture of operations for each area”. JSC Khiagda
Annual Report | JSC Atomredmetzoloto | 2014 45 Historical background Works for additional explora- international standard were • reduction of sulphuric acid and other information tion of Khiagda deposit were obtained. prices due to entry into a direct about the joint-stock completed. supply contract with JSC OC Rosneft; company Key Performance Full Company Name from • creation of the in-house Since 1947 Sosnovskaya 12.12.2014: Joint-Stock Com- Indicators repair and recovery work (RRW) expedition of the First Main pany Khiagda; service and, as a consequence, Geological Exploration Direc- • The production cost was refusal from costly services of torate has been engaged in Abbreviated Company Name: reduced by 12% as compared third-party organizations; prospecting and exploration JSC Khiagda. with the actual 2013; • reduction of the volume of radioactive ore deposits on • certification for compliance of of third-party organization the territory of the Irkutsk and Company’s location – Russia, the quality management system services for sulphuric acid Chita regions as well as the Chita. with ISO 9001:2008 international transportation due to cargo Buryatia ASSR. In 1959, based standards and the environmen- transportation increase by own on research materials Imskoye The main type of operations is tal management system with efforts. uranium deposit as a large uranium ore mining, including ISO 14001:2004. ore object with lean ores was in-situ and heap leaching. Besides, power efficiency discovered on the territory of measures are implemented Vitimskiy uranium-ore district. at the plant. For example, at 2014 Key Events the end of 2014, works were In 1980–1987 the expedition undertaken on the reconstruc- explored the group of depos- April Uranium tion of lighting at the Central its constituting Khiagda ore production Logistics Base and section 6 of field. Due to various financial, the plant’s car fleet updating volume — the in-situ leaching workshop climate and geotechnical con- program was implemented; deposit, which will make it ditions, it was only in 1997 that 442.62 tons possible to significantly reduce the decision was made to start June power-consumption rates. pilot works at the location of Works for current load unbal- the current main industrial site construction of a fire station and ance rectification in 0.4 kV in Bauntovskiy Evenki district. fire-extinguishing pumping sta- networks, are implemented on JSC Khiagda was established tion was completed at the main a permanent basis, and vari- as a result of the pilot in-situ production site of JSC Khiagda; 2014 main operating able frequency drive control leaching section spin-off from results devices are implemented. JSC ZabGOK. July • Uranium production volume – In the 1990s, were obtained operation of the main produc- 442.62 tons; 2015 and future plans for subsurface use on tion building started on the • start-up facilities construction Khiagda deposit, first pro- main production site of JSC was completed; Commissioning of the process- cess boreholes were drilled Khiagda in the integrated test • integrated equipment load ing facility and the sulphuric and uranium mining works mode; tests were completed, and a acid production workshop with started by the in-situ leaching certificate of compliance of the infrastructure on the central site method, the most environmen- October constructed facility with design of Khiagda deposit will enable tally friendly and safe mining documentation and requirements JSC Khiagda to increase product method. the information system of of technical regulations (herein- outputs gradually from 2015. The the production facility was after – CoC) was obtained for the planned finished product output In the 2000s, construction of a launched in the test mode in main building and other facilities in 2015 must make up 508 t. The power substation and a 40 km JSC Khiagda; of the 1-st construction stage; target value for 2018 – 1000 tons long OL-110 was completed, • main construction-installa- of uranium per annum. the project for expansion JSC Khiagda became winner tion works of the sulphuric acid and reconstruction of exist- of the regional stage of the production workshop were com- At present, JSC Khiagda is ing pilot-industrial ground All-Russian contest “Russian pleted; the end of commissioning preparing for industrial facility and processing unit with the High Social Efficiency Organi- works is planned in October-No- construction at the Istochnoye capacity of 150 uranium tons zation”; vember, 2015; and Vershinnoye deposits. per annum was prepared. • back-up power supply was Geological exploration works November increased from 2.2 to 5.8 MW, were performed on Istochnoye In 2008 as part of nuclear full redundancy of the pro- deposit, engineering surveys industry restructuring JSC a back-up diesel-power station cessing facility and production were implemented and the Khiagda was included in ARMZ was put into operation on the ground power supply was development project was pre- Uranium Holding Co. main industrial site; assured. pared. Engineering surveys are being performed on Vershin- In 2013, units of mine No. 7 the program of equipment Results of the noye deposit for design. In 2016, were put in operation, uncov- upgrading and main building 2014 effectiveness the start of process borehole ering and binding of mine reconstruction of the Central improvement program drilling as well as road, power No. 3 of Khiagda deposit was Logistics Base was imple- line, local control network completed, construction of mented; In 2014, a number of measures and remaining infrastructural the 1-st phase of the process aimed at efficiency improve- object construction is planned. facility and infrastructural December ment and production process objects of the main produc- optimization was imple- The sulphuric acid work- tion site was completed, certificates of compliance mented: shop (first stage) planned geological exploration works with the plant’s quality for commissioning in 2015 were completed and reserves management system with • reduction of sulphuric acid is designed for the annual on Dybrynskoye, Kretkon- ISO 9001:2008 international and sodium nitrite specific capacity of up to 110 thousand dinskoye, Namaruskoye, standard and the plant’s consumption rates for leach- tons per annum. In-house Kolichikanskoye and Vershin- environmental management ing due to production process workshop start-up will allow noye deposits were approved. system with ISO 14001:2004 optimization; for a three-fold reduction in 46 specific cargo-transportation environmentally friendly nat- For more details also see Results of the efficiency- volume. The strategic objective ural gas production facility to section 3.3.3.3. improvement program at of JSC Khiagda is to create a assure raw materials’ demands Uranium production of JSC JSC Khiagda high-tech, cost effective and of the Russian nuclear industry. Khiagda.
• process optimization • reduction of external services
Urtuysky coal mine, PJSC PIMCU
Annual Report | JSC Atomredmetzoloto | 2014 47 CHAPTER 3
OPERATING RESULTS capital management efficiency
Annual Report | JSC Atomredmetzoloto | 2014 48 3.1. The Company’s capital assets
Company’s capital
Financial
ARMZ fixed assets: Production
Сertain resources (stocks) of tangible Intellectual and intangible assets which the Company used in its operations. Human resources
The part of assets is jointly owned with other stakeholders. Social-reputation
Natural
Fig. 13. Capitals of JSC Atomredmetzoloto 3.2. Financial capital management
3.2.1. Financial implemented, which enables to implement measures of performance preventive monitoring of Sergey Migalin, financial director of management debt burden exceedance JSC Atomredmetzoloto, responds to the beyond financial parameters stakeholder’s proposal to disclose information Financial capital management for each subsidiary in about the Company’s history in the Report: of JSC Atomredmetzoloto JSC Atomredmetzoloto is based on consecutive management structure; implementation of the general • additional subsidiary current financial policy of Rosatom payment financial monitoring ”In the reporting period the Company had no cases of State Corporation. mechanisms were implemented delay or default to credit institutions and other contract as a countermeasure to crisis parties, which made it possible to retain the Company’s phenomena being developed high reliability-and-solvency rating with Partner-Banks and 2014 results: and appearance of debts to sustain the positive credit history of JSC Atomredmetzoloto. customers in a number of • the Holding’s financial subsidiaries. recovery strategy was Expansion of the financial implemented, which implies monitoring structure interest load reduction by from the Company was means of raising relevant implemented, inter alia, • completion of the action Uranium One Holding N.V. was funds from the shareholder due to implementation of plan implementation for terminated with repayment of (JSC Atomredmetzoloto); new functionalities of the ARMZ Uranium Holding Co. over 25 mln USD to ARMZ. • financial assistance automated corporate system bank loan restructuring Apart from consecutive measures of PJSC PIMCU of Rosatom State Corporation, with their replacement with implementation of financial with respect to preferential “Financial Settlements single intragroup financing policy principles of Rosatom interest rate imposition Treasury Centre” allowing with a single centre in JSC State Corporation which enable for financial loans from for the prompt, preventive Atomenergoprom, under which JSC Atomredmetzoloto to the managing company of monitoring of a wide range a range of transactions was retain financial stability, ARMZ JSC Atomredmetzoloto in of financial transactions as entered into with banks for debt in 2014 focused on production accordance with the approved well as for the obtainment refinancing, in particular, of cost management processes interest risk management of managerial financial JSC Khiagda in the volume of for the purposes of profitability strategy in the Holding for information. 3.6 bln. RUB; improvement and liquidity 2014; • completion of a number maintenance amidst limited • the regulatory- In terms of debt and invested of measures for spin-off of working capital of the Holding. methodological framework capital management, it the international business of consolidated credit limit we were able to improve segment, under which a Amidst persistently-low distribution between Holding’s JSC Atomredmetzoloto’s loan agreement between commodity quotations on companies was developed and performance, inter alia, due to: JSC Atomredmetzoloto and the global uranium market
49 in 2014, a cost optimization At the same time, in 2014, the The average annual ARMZ program was implemented at Company actively pursued external loan value for 2014 is all of the Holding’s mining and optimization of the Holding’s estimated by 26% lower than service plants, which allowed consolidated working capital relevant indicators published it to achieve a 5% reduction in optimization, inter alia, due by the RF Central Bank as The Holding’s specific specific uranium-production to implementation of the indicative for the financial uranium-production cost as compared to 2013 and warehouse stock reduction market. The combination of cost fell by 5% save over RUB 3 bln in the total program, including non-liquid the aforementioned efforts costs of group enterprises in inventories, implementation enabled the Company 2014. The greatest effect in cost of active budget monitoring to confidently assert its optimization was reached in when fixing maximum prices fulfillment of State Corporation PJSC PIMCU due to structure and of procurement carried out Rosatom’s general corporate personnel number optimization, on a competitive basis on financial policy in 2014 as process solutions and reduction electronic trading platforms an integral part of building of the production need in basic under the unified procurement an efficient and competitive and auxiliary materials, which standard of Rosatom State vertically-integrated company. enabled to retain the maximum Corporation, which made 2013 on the spin-off of credit portfolio level of PJSC it possible to achieve an the international uranium PIMCU in 2014 at the planned optimization effect and reap Financial performance of mining asset segment in the budget level. Another cost working-capital savings in the ARMZ Uranium Holding individual holding Uranium reduction area in 2014 was JSC amount of over RUB 2 bln. Co. One Holding N.V., since 2013, Atomredmetzoloto personnel the management structure of structure optimization by over An important element of All Holding’s enterprises JSC Atomredmetzoloto has 30% as well as management cost the Holding’s financial generate individual financial included only Russian mining reduction by 28%. policy for financial capital statements in accordance with and service companies. optimization was elimination Russian accounting standards The results of implemented of all types of losses on (RAS). Apart from this, JSC The process of legal foreign measures had a positive impact financial transactions, Atomredmetzoloto annually asset transfer in Uranium on consolidated performance of receipt of maximum profit generated consolidated financial One Holding N.V. ownership ARMZ Uranium Holding Co. for from temporary disposable statements in accordance with structure as of the end of 2014. monetary funds. The level international financial reporting 2014 was not completed; thus, of 2014 average daily standards (IFRS). financial reporting indicators For more details see consolidated balances for as per IFRS given below the section “Financial the Holding was reduced Due to the fact that Rosatom include performance of both performance of ARMZ by 21.5% as compared to State Corporation made Russian and foreign S&A of JSC Uranium Holding Co”. a similar figure for 2013. a strategic decision in Atomredmetzoloto.
Indicators of consolidated financial reporting of JSC Atomredmetzoloto as per IFRS for 2012–2014.
Table 9. Consolidated loss and profit and other aggregate income report of JSC Atomredmetzoloto
2013* mln. RUB. 2012 2014 (recounted) Continued operations
Sales revenue 33,810 32,914 15,607
Sold product cost** (27,705) (28,017) (16,200)
Gross profit/(loss) 6,105 4,897 (593)
Administrative expenses and product sales expenses*** (4,781) (5,195) (4,401)
* Indicators for 2013 may differ from similar indicators specified in the 2013 Annual Report of JSC Atomredmetzoloto.
**Including depreciation.
*** Including depreciation.
Annual Report | JSC Atomredmetzoloto | 2014 50 mln. RUB. 2012 2013*(recounted) 2014 Other income/(expenses) (188) (82) 974
Operating profit /(loss) 6,105 (380) (4,020)
Loss from fixed asset devaluation (49) (4,820) (1,019)
Loss from intangible asset devaluation - (3,403) (11,704)
Loss from goodwill devaluation (10,630) (10,713) -
Loss from exploration and appraisal asset devaluation (260) (3,938) (2,554)
Financial income 378 167 1,537
Financial expenses (715) (2,096) (1,326)
Share in the loss of financial investments calculated by the equity method (4) (3) (4,880) Loss before income tax (10,144) (25,186) (23,966) Income tax (938) 913 4,649
Annual loss from continued operations (11,082) (24,273) (19,317)
Terminated operations
Profit from terminated operations, net of income tax 2,047 10,331 -
Loss for the period (9,035) (13,942) (19,317)
Profit / (loss) for the period payable to:
Shareholders of JSC Atomredmetzoloto (9,071) (11,417) (17,798)
Minority interest 36 (2,525) (1,519)
Total profit for the period (9,035) (13,942) (19,317)
Annual loss from continued operations (11,082) (24,273) (19,317)
Profit from terminated operations 2,047 10,331
Annual profit (9,035) (13,942) (19,317)
Items which won’t be subsequently reclassified to profit or loss
Revaluation of pension plans with fixed payments (211) (55) -
Total (211) (55) -
Items which were or may be subsequently reclassified to profit or loss Exchange rate differences when calculating foreign company performance (1,818) 1,093 22,088 from other currencies Hedging reserve 185 (601) (7,226)
Total (1,633) 492 10,636
Other aggregate profit / (loss) from continued operations (1,844) 437 10,636
Other aggregate profit / (loss) from terminated operations (7,027) 1,393 -
Total other aggregate profit / (loss) (8,871) 1,830 10,636
Total aggregate loss from continued operations (12,926) (23,836) (8,681)
Total aggregate profit / (loss) from terminated operations (4,980) 11,724
Total aggregate loss per annum (17,906) (12,112) (8,681)
Total aggregate loss per annum payable to:
Shareholders of JSC Atomredmetzoloto (15,647) (10,884) (7,397)
Minority interest (2,259) (1,228) (1,284)
Total aggregate loss per annum (17,906) (12,112) (8,681)
* Indicators for 2013 may differ from similar indicators specified in the 2013 Annual Report of JSC Atomredmetzoloto.
**Including depreciation.
*** Including depreciation
51 Table 10. Consolidated report on JSC Atomredmetzoloto financial position
2013* mln. RUB. 2012 2014 (recounted) ASSETS
Fixed assets 39,373 35,833 33,614
Intangible assets 26,014 14,869 10,700
Goodwill 28,052 – –
Exploration and appraisal assets 8,068 4,931 4,811
Financial investments in affiliates 1,207 28,760 37,008
Financial investments in joint ventures 49,758 – –
Other non-current assets 3,171 7,677 1,717
TOTAL Non-current assets 155,643 92,070 87,850
Reserves 10,189 6,720 5,911
Income tax prepayment 605 196 104
Receivables and advances issued 7,641 4,907 2,312
Monetary funds and their equivalents 16,713 1,166 1,233
Other working assets 1,851 3,364 10,764
TOTAL Working Assets 36,999 16,353 20,324
TOTAL ASSETS 192,642 108,174 108,423
CAPITAL
Shareholder capital 22,430 22,430 23,508
Share premium 56,962 61,962 65,572
Reserve connected with affiliation 7,201 7,201 7,235
Exchange rate difference reserve (502) 687 17,775
Other reserves – (656) (7,288)
Undistributed profits / (accumulated loss) 7,950 (19,614) (37,670)
JSC Atomredmetzoloto shareholder capital 94,041 72,010 69,132
Minority interest 37,686 (2,086) (3,488)
TOTAL CAPITAL 131,727 69,924 65,644
LIABILITIES
Credits and loans 30,581 18,583 21,319
Reserves 8,700 6,218 4,456
Delayed tax liability 5,520 3,684 565
Other debt 1 427 -
TOTAL Long-term liabilities 44,802 28,912 26,340
Short-term credits and loans and current part of long-term credits and loans 8,170 1,595 2,584
Payables and accruals 7,114 7,175 12,903
Current income tax liabilities 14 34 136
Payables for other taxes 815 783 567
TOTAL Short-term liabilities 16,113 9,587 16,190
TOTAL LIABILITIES 60,915 38,499 42,530
TOTAL CAPITAL AND LIABILITIES 192,642 108,423 108,174
* Indicators for 2013 may differ from similar indicators specified in the 2013 Annual Report of JSC Atomredmetzoloto.
Annual Report | JSC Atomredmetzoloto | 2014 52 Foreign assets, in particular, in the total amount of 15 in the amount of 4 876 mln. loss from non-current asset 277 mln. RUB as well as a RUB had a major negative devaluation (fixed assets, share in the loss of financial impact on consolidated intangible assets, exploration investments calculated by financial performance of the and appraisal assets) of the equity method due to Holding for 2014 (as per IFRS Mantra Resources Limited Uranium One Holding N.V. reporting).
Consolidated financial performance of JSC Atomredmetzoloto and Russian companies in its management structure for 2013-2014. (based on RAS data)
Table 11. Consolidated financial performance of JSC Atomredmetzoloto and companies in its management structure for 2013 – 2014
mln. RUB. 2013 2014
Revenues 31,528 14,815
Production cost (28,851) (16,039)
Gross profit / (loss) 2,677 (1,225)
Commercial expenses (416) (351)
Management expenses (1,729) (1,251)
Sales profit / (loss) 532 (2,827)
Profits from participation in other companies 18 1
Interest receivable 217 305
Interest payable (662) (548)
Other income 10,518 1,675
Other expenses (60,535) (1,739)
Profit (loss) before tax (49,913) (3,132)
Income tax (including deferred tax asset/deferred tax liabilities variation) 3,381 (219)
Net profit / (loss) (46,532) (3,351)
EBITDA (18,586) (1,390)
53 Table 12. Consolidated balance sheet of JSC Atomredmetzoloto and companies in its management structure
As of mln. RUB. on 31.12.2012 on 31.12.2013 on 31.12.2014
Asset 165,446 126,725 127,069
Non-current assets 141,911 102,290 106,157 Intangible assets 4,711 1,659 2,353
Fixed assets 22,321 32,524 33,118
Long-term financial investments 112,943 65,763 66,082
Other non-current assets 1,936 2,344 4,604
Current assets 23,535 24,435 20,912
Reserves 9,127 6,259 5,188
Value added tax for purchased values 731 314 132
Receivables 7,802 12,992 11,119
Short-term financial investments 1,462 2,098 1,764
Monetary funds 4,382 2,747 2,675
Other working assets 30 24 34
Liability 165,446 126,725 127,069
Capital and reserves 145 314 98 841 93 346
including authorized capital 28,718 28,724 29,801
Long-term liabilities 7,112 14,613 14,047
Long-term loan funds 6,697 13,516 13,239
Other long-term liabilities 415 1,098 809
Short-term liabilities 13,020 13,271 19,675
Loan funds 7,346 2,409 2,581
Payables 3,922 4,075 11,032
Deferred revenue 291 153 210
Provisions for future expenses 1,461 1,634 1,164
Other liabilities 0 5,000 4,688
Table 13. Key financial indicators of JSC Atomredmetzoloto
2014/2013 Name 2012 2013 2014 % 2014/2013 variation Financial stability indicators
Equity 0.63 0.64 0.73 -0.05 -6%
Liquidity indicators, unit share
Current liquidity ratio 2.5 1.7 1.8 0.0 2%
Quick assets ratio 1.6 1.0 1.3 0.3 28%
Sales profitability indicators, %
Sales profitability 25.1% -8.3% -16.8% -197%
Annual Report | JSC Atomredmetzoloto | 2014 54 Performance dynamics was strategic objectives of mining in the RF accounted for • performance of design mainly affected by: Rosatom State Corporation, the bulk of investment structure works, R&D; in particular: in 2014. • safety assurance; • drop in market quotations • The investment program • acquisition of production for natural uranium, resulting • satisfy demand for Russian was 98% financed by means and drilling equipment. in a 15% decrease in the uranium at a competitive of shareholder funds and average weighted uranium production cost; Company equity. sales price as compared to • assure operating efficiency, 2013. including due to reduction Including investments in of specific natural uranium development and maintenance production cost in 2014-2019 by: of operating uranium-mining • decision of Rosatom State — 30% for underground plants made up 3.1 bln. RUB. Corporation, in accordance mining and were allocated for: with which starting from — 10% for in-situ leaching 2014 JSC Atomredmetzoloto mining; • performance of terminates uranium deliveries construction-installation of non-Russian origin • reach in the short-term works at production facilities, 4.3 (approximately half of uranium loss-free operation (by 2016) infrastructural objects and bln. RUB. volume sold in 2013). and in future – Holding’s stable power facilities; profitability, including by means • production facility design; Holding’s total of business diversification. • performance of mining- investment volume 3.2.2. Investment capital and mining and 2014 results: development operations; in 2014 activities • implementation of • Investments in the upgrading and re-equipment Investment activities of the development of raw materials of a production facility; Holding are aimed at reaching base and natural uranium • IT support;
In accordance with the gateway project management Main investment principle in place at the Holding, В2 “Decision on objects construction/implementation start” decision-making point was passed in 2014 for three projects of PJSC Development projects PIMCU: of PJSC PIMCU, JSC Khiagda, JSC Dalur, JSC • R&D project (Minutes of the Investment Committee First Mining Company and of JSC Atomredmetzoloto dated 16.01.2015 No. 003- investments in operating 10/10-5-Пр), production facility • project “Construction of Urtuyskiy water removal maintenance channel” (Minutes of the Investment Committee of JSC Atomredmetzoloto dated 19.12.2014 No. 003- 10/10-171-Пр), •project “Reconstruction of hydraulic structures” (Minutes of the Investment Committee of JSC Atomredmetozloto dated 19.12.2014 No. 003-10/10- 171-Пр).
13
4
12 2 9 5 10 3
11 2 1 2 4 5 3 10 5 20 87 74 90 84 71 1
2011 2012 2013 2014 2015
operating facilities non-uranium projects Other Russian projects new facilities being constructed
Fig. 14. Investment dynamics by project groups in 2011-2015
55 • Investment reduction is 2014 investment by individual projects but by predicated on: management results: whole interrelated project • 2012-2013 marked the peak programs; of large-scale investments • control over financing • the scenario analysis of 71% in the development of source flow and compliance individual project/program production facilities of JSC with investment limits of implementation impact on PIMCU and JSC Khiagda investment project operators consolidated performance (construction of the sulphuric was enhanced; in terms of the holding. In acid production workshop • control over the key accordance with methodology 26% (SAPW) and the main building milestones of investment- of Rosatom State Corporation etc.). program implementation Division’s activities planning 3% • investments in PJSC PIMCU was improved – pilot was implemented for the first maintenance were reduced operation of the automated time for a mid-term period in 2014. project management using a financial and economic Operating facilities (uranium) system (Primavera PPIMS, model assuring scenarios of Facilities being constructed (uranium) The share of investments in Monitoring PPIMS) started. main consolidated financial Diversification projects uranium operating assets Now, management reports by indicators. as compared to the previous milestone and the financing of Fig. 15. Investment project period fell from 90% to 71%, divisional investment projects 2015 plans: groups in 2014 reflecting the ramping-up are automatically generated of the Holding’s business in the PPIMS; In accordance with the diversification efforts. • it was able to overcome mid-term operating the annual PJSC PIMCU plan the volume of the 44% In particular, in 2014, the maintenance investment investment program of 29% volume of investments in growth dynamics: maintenance JSC Atomredmetzoloto for 11% 10% Pavlovskoye project (JSC measures were optimized by 2015–2019 according to a 6% First Mining Company) almost 2.5 fold and will be retained at preliminary estimate may be doubled due to the start of the level of maximum 1.2–1.8 over 40 bln. RUB.* A key trend field exploration works on bln. RUB. per annum during the will be build-up of efforts for PJSC PIMCU Pavlovskoye Novaya Zemlya archipelago next 5 years; implementing diversification JSC Khiagda Other projects as part of implementation of • a program approach to the projects and implementing JSC Dalur subsoil license conditions. management of investment new optimization solutions activities was implemented, for reducing uranium product enabling management not cost.
Fig. 16. Key investments of ARMZ Uranium Holding Co. in 2014
The investment committee of Rosatom State Corporation approved data sheets of the following Holding’s projects: Pavlovskoye (minutes dated 23.05.2014 No. 1-ИК/15-Пр), Khiagda (minutes dated 19.12.2014 No.1-ИК/42- 57% Пр-кт). 41%
2%
Performance assurance
Business Diversification
Provision of demand and Rosatom SC in
Fig. 17. Investment structure in the mid-term period for 2015–2019
Drilling tower, JSC RUSBURMASH
* In accordance with the strategic scenario of 2015–2019 MTSP due to all financing sources.
Annual Report | JSC Atomredmetzoloto | 2014 56 3.3. Production capital management
3.3.1. Raw Material 01.01.2015 makes up 524.7 Holding’s MRB in 2014 was thous. tons of uranium as Base Development thous. tons. By its volume the reduced by 13.5 thous. uranium reserves of Lunnoye Company is ranked second tons of uranium due to deposit based on geological The uranium mineral among the largest uranium- the surrender of a subsoil exploration work results were resources base (MRB) of mining companies of the license for Olovskoye deposit transferred to off-balance JSC Atomredmetzoloto as of world. (CJSC UMCC) and by 0.4 ones (JSC Lunnoye).
Table 14. Reserves and resources of Russian enterprises of ARMZ Uranium Holding Co. as of 31.12.2014, thous. tons
Enterprise Reserves Resources Р1** Total MRB
PJSC PIMCU 106.6 - 106.6
JSC Dalur 9.2 6.5 15.7
JSC Khiagda 39.3 1.4 40.7
JSC Elkon MMP 357.1 - 357.1 **Forecast resources for partially explored and for discovered but JSC UMC Gornoye 4.6 - 4.6 not yet explored ore bodies in the deposit’s area. Total: 516.8 7.9 524.7
Geological exploration 2014 main measures and • prospecting-appraisal on Lunnoye deposit were works in Russia results: works were completed on the approved. mineral resources section in In 2014, geological • Exploration works the area of the Bezymyannaya 2015 plans: exploration works were continued on Khokhkovskoye river of Novaya Zemlya performed on Khokhlovskoye deposit and pilot works archipelago; • Pilot development on deposit (Kurgan region) for uranium mining by the • a license for exploration Khokhlovskoye deposit and Pavlovskoye deposit in-situ leaching method are and mining on Pavlovskoye continued; (Novaya Zemlya archipelago). underway; polimetallic deposit based on • implementation of Kaldera Besides, implementation • under Kaldera project for actual deposit’s discovery was project for prospecting of Kaldera project aimed at performing prospecting- obtained; new deposits within the uranium deposit prospecting appraisal works within the • exploratory works on Streltsovskiy uranium-ore with rich ores within the Streltsovskiy ore field in Pavlovskoye deposit started, field continued; Streltsovskiy ore field 2013–2020 the third “Forecast 15.0 thous. r.m. were drilled; • design documentation continued. The total volume works” stage was completed • The Feasibility Study of drafting for Pavlovskoye of investments in geological and promising areas for permanent exploration deposit to prepare it for exploration works was 621.5 prospecting work organization conditions and a report commercial development mln. RUB. were highlighted; with calculated reserves started.
57 3.3.2. Uranium mining methods In PJSC PIMCU mining is performed by underground mining method and operations for implementing a new mining method – block in-situ leaching are carried out.
Ore mining Above-ground mine ore acceptance facility
1. Mining operations 1. Rock mass sorting 2. Drilling blasting operations (barren rock, ore) 3. Treatment mining 2. Transportation 4. Ore delivery to the surface
Barren rock, Rich Lean off-balance ore ore ore
Tailings dump
Ore concentration plant
Uranium oxide Hydrometallurgy Dump concentrate
Rich Lean Barren ore ore rock
Heap leaching
Extraction Processing in from furnaces product solutions
Fig. 18. Uranium mining pattern in PJSC PIMCU*
* A video about these mining methods is available on the website of JSC Atomredmetzoloto http://www.armz.ru/ore-main.php.
Annual Report | JSC Atomredmetzoloto | 2014 58 In JSC Khiagda and JSC Dalur mining is performed by drill- hole in-situ leaching method – the most environmentally- friendly and safe uranium mining method with a closed waste-free production cycle.
Drilling, construction and hook-up of Ore body acidification, process boreholes leaching
Well drilling 1. Chemical solution delivery via diagram injection wells injection 2. Solution saturation with uranium due to chemical reactions extraction
Return Extraction and delivery of product solutions solutions for sorption, sorption
Uranium is sedimented in resin in sorption columns
Solution processing, Sedimentation, filtation, drying desorption
1. Condensation 2. Treatment from impurities 3. Moisture removal Uranium extraction from resin 4. Uranium production in the form of yellow powder(yellow cake)
Fig. 19. Uranium mining pattern in JSC Khiagda and JSC Dalur *
*A video about these mining methods is available on the website of JSC Atomredmetzoloto http://www.armz.ru/ore-main.php.
3.3.3. Uranium Table 15. Uranium production volume and reserves in 2012 – 2014 Production by JSC Atomredmerzoloto 2012 2013 2014 Russian Entities Production volume, tons 2,001 2,133 1970 Uranium reserves, thous. tons 111.06 108.7 106.6 Uranium production of PJSC PIMCU ore separation technology compared to 2014 results); 2014 results: was developed, a decision • construction of the pilot on project launch on a block in-situ leaching • 1 970 tons of uranium commercial scale was made; operation area; were produced (-163 tons as • 2 962.8 thous. tons of coal • technical upgrading of the compared to 2013 results); were produced (517.2 thous. ore preparation pattern via the • INsite personnel and mining tons less than 2013 volume); ore-concentration plant (OCP) equipment positioning system • the validity term of a subsoil for processing by heap leaching was put into commercial license for Urtuyskoye brown (HL) and hydrometallurgy (HM) 106.6 operation on underground coal deposit was extended till methods; thous. tons mine No. 1; the end of 2026. • mine No. 6 construction • Mine Frame engineering design (development of support and mining design 2015 plans: a financial and economic Uranium reserves system was put into operation model, project data sheet and PJSC PIMCU on mine No. 8; • Production of 1 914.13 tons correction of design-estimate • the non-commercial dump of uranium (-55,87 tons as documentation);
59 Mid-Term Plans: method by block in-situ • pyrite cinder processing operation – December 2017). leaching; (products – gold, silver, • Reach a loss-free operating • transfer to mining non-ferrous metals, iron; For more details see section level; scheduling on the basis of scheduled putting into pilot 2.3.1. Operations of PJSC • implementation of the mine 3D-models; operation – January 2016, PIMCU (Trans-Baikal Territory, innovative uranium mining • cement plant construction; putting into commercial Krasnokamensk).
Table 16. Uranium production volume and reserves in 2012–2014 8.6 2012 2013 2014 thous. tons Production volume, tons 529 562 578.06 Uranium reserves Uranium reserves, thous. tons 10.7 9.9 8.6 JSC Dalur • reconstruction of the pilot to 2014 results); of uranium/year by 2017, in plant at the Khokhlovskoye • preparation of reserves accordance with the “Mid-term deposit was completed. on Khokhlovkskoye deposit Development Program” of JSC Uranium production in Capacity of the processing (reserves uncovering, process Dalur for 2013-2020; JSC Dalur facility was increased from 70 unit hook-up, acidification, • development of associated to 200 t/year of uranium; drillhole construction, start of rare-earth metal (REM) and 2014 results: • the three-dimensional scoping FS development works); scandium concentrate mining; deposit structure and uranium • finished product output in • start of geological- • 578.1 tons of uranium in-situ leaching process accordance with ASTM C967- exploration and pilot operations were produced (+16.1 tons as simulation software was 08 interim standard “base for Dobrovolnoye deposit. compared to 2013 results); implemented. specification”. • construction and 2015 plans: Mid-Term Plans: For more details see section installation works for Ust- 2.3.2. Operations of JSC Dalur Uksyanskaya LCN were • Production of 590 tons of • Smooth production volume (Kurgan region, Ukyanskoye completed; uranium (+11.9 tons as compared build-up reaching 615 tons village)
Table 17. Uranium production volume and reserves in 2012-2014 39.3 2012 2013 2014 thous. tons Production volume, tons 332 440 442.62 Uranium reserves Uranium reserves, thous. tons 31.9 39.8 39.3 JSC Khiagda reaching 1000 tons of uranium • launch of the SAPW in production level; /year production level in 2018, integrated testing with • commissioning of phase- with subsequent capacity finished sulphuric acid two facilities at the main increase up to 1200-1300 production; production site; Uranium production in tons/year; • start of Istochnoye • start of uranium JSC Khiagda • physical start-up of the deposit development commercial mining on main production building. (process borehole drilling Istochnoye deposit; 2014 results: 2015 plans: and construction of • development and start infrastructural objects on the of commercial mining in • 442.62 tons of uranium • Production of 508.66 tons deposit). Vershinnoye deposit. were produced (+2.62 tons as of uranium (+66 tons as Mid-Term Plans: compared to 2013 results); compared to 2014 results); For more details see section • the road map of Khiagda • commissioning of phase- • Uranium production volume 2.3.3. Operations of JSC ore field development was one facilities at the main build-up by 2018 reaching Khiagda (Republic of Buryatia, approved, which assures production site; 1 000 tons of uranium /year Bagdarin village)
Annual Report | JSC Atomredmetzoloto | 2014 60 3.3.4. Other deposits in Russia, Asian and “Performance of forecast works • a contract for prospecting Entities African countries. for uranium within Streltsovskiy and structural-prospecting ore field in 2013– 2014”; borehole drilling operations The volume of drilling • an electronic database on at Pravoberezhniy-2 facility of Geological exploration operations for mining plants boreholes drilled from 1977 OJSC DC Alrosa in 2015 – 2017 works of Atomredmetzoloto uranium to 1991 on Zarechnoye deposit was entered into; holding – 403 thous. run. m. (South-Kazakhstan region) • economic effect due to JSC RUSBURMASH was generated; implementation of efficiency 2014 results: • an electronic database for enhancement measures in deposits of the Khiagda ore 2014 made up 56.3 mln RUB. • The second geological field (Republic of Buryatia) was operation stage was generated; 2015 plans: 403 implemented on Pavlovskoye • a final geological report lead-zinc deposit (Novaya with calculated reserves for • development of thous. run. m. Zemlya archipelago); Koretkodinskoye deposit was exploratory scoping FS and volume of drilling • the second stage of ore prepared and delivered for a report with calculated operations for Holding’s gold prospecting operations storage in state funds; reserves, including GDM for mining plants was held within Verkhne- • radiological ore peculiarities Pavlovskoye deposit (Novaya Bryantinskoye ore cluster were examined, and gamma- Zemlya archipelago); (Amursk region); log data interpretation for • implementation of the third • engineering-geological verification of reserves on stage of ore gold prospecting surveys were successfully NYOTA deposit (Tansania) was works within Verkhne- Comprehensive geological implemented for the subject: carried out; Bryantinskoye ore cluster exploration company with “Hydroelectric pumped • works for constructing (Amursk region); a powerful drilling service storage power plant study degassing holes at facilities • continuation of the Efficiency implementing geological and justification” (Voronezh of OJSC SUEK-Kuzbass. Enhancement Program exploration projects and works region); Implementation of drilling implementation; for borehole construction • an electronic database was operations is estimated till the • business diversification on solid mineral resources generated as part of the target end of 2015; continuation.
JSC FIRST MINING COMPANY holes were drilled with a range of accompanying The Company performs geophysical and geological geological exploration works operations; 5607 m3 worth of Pavlovskoye project implies in the area of subsoil study bulldozer ditches were dug; and mineral resources base hydrogeological, geophysical, construction of the cost effective reproduction on the territory topographic-geodetic and production facility based on Pavlovskoye of the Russian Federation environmental work was and abroad with due account performed; silver-containing lead-zinc deposit of the global and domestic • prospecting-appraisal (Bezymyanniy ore cluster, Yuzhniy mineral raw materials market operations in Bezymyannoye island of Novaya Zemlya archipelago, conditions. ore cluster were completed. С2 category reserve growth Arkhangelsk region) having a powerful The company is the user of amounted to 647 thous. tons mineral resource base in the amount subsoil sections in the basin of nominal zinc. Predicted P1 of the Bezymyannaya river of category resources with the of over 37 mln. tons of ore Novaya Zemlya archipelago of total volume of 3.8 mln. tons (C1+C2 category reserves). the Arkhangelsk region. of nominal zinc were tested by FSUE CNIGRI. 2014 results: • administrative expenses were reduced by 16% from the • a license for lead-zinc ore approved level, and the total process studies, compilation component reserves by В, С1 exploration and mining on investment project program of the database of geological- and С2 categories); Pavlovskoye deposit in the reached 97%. geophysical materials and • drafting Prefeasibility Arkhangelsk region was 2015 plans: geological-mathematical Study (PFS) report on the obtained; model of the deposit, development of Pavlovskoye • a range of field exploration • Completion of geological development of exploratory silver-containing lead-zinc ore work was performed exploration works on scoping FS, implementation deposit. on Pavlovskoye deposit. Pavlovskoye deposit of calculations of main 15 000 run. m of core (laboratory-analytical and and associated mineral
CJSC OLOVSKAYA MINING 2014 results: CHEMICAL COMPANY (CJSC OMCC) • due to a refusal from subsequent project Uranium-mining plant for the implementation, the development of Olovskoye Olovskoye deposit subsoil deposit in the Trans-Baikal license was surrendered. Territory. 61 JSC ELKON MINING- 2014 results: on field operation area in Elkon MMP and JSC EGMK- METALLURGICAL PLANT Zarechniy village of Aldanskiy Projekt with a view to preserve (JSC ELKON MMP) • Implementation of the range district of Sakha republic competences and previously of measures for preservation (Yakutia); developed project materials. The company is engaged of the previously developed If macroeconomic conditions in geophysical operations, materials for Elkon project; 2015 plans: deteriorate, it is planned to exploration, mining and • storage of drill core, consider the issue on pre- processing of uranium ores. analytical sample duplicate • Maintain operations of design work active phase and other rock material companies-operators of JSC resumption.
LLC UNITED URANIUM 2014 results: of transferring rights and PLANTS obligations to the Company • Preparatory works for the for executing corresponding The company carries start of material delivery for material sales contracts were In 2014 out natural uranium industry’s needs as per the agreed; was awarded as the trade activities both on agent-based system. • material delivery activities Best Taxpayer by the the Russian and foreign • the material sales structure for industry’s needs was Entrepreneurship markets; mediatory, was agreed in 2014; carried out. Development advisory and marketing • negotiations for Promotion Fund activities; organization assuring deliveries and 2015 plans: and implementation of their parameters were • Works for obtaining a license international and domestic held with customers (JSC for handling nuclear materials; cargo shipments. Tekhsnabexport and JSC • works for inclusion of legal TVEL); entities in the List which may • terms and conditions own nuclear materials.
Engineering companies 2014 results: drying unit designed by JSC for radioactive waste from VNIPIpromtekhnologii is 330 RUB/m3 to 71 RUB/m3 JSC VNIPIPROMTEKHNOLOGII • Work under fewer than 102 unique by its features; (preservation). contracts was performed, • the two following projects the total volume of company’s passed the Main State Expert 2015 plans: JSC VNIPIpromtekhnologii revenue made up 920 mln. Review and obtained a positive carries out works for RUB; decision: “Reconstruction • CAD system engineering surveys and (protective dam reinforcement implementation; design of mineral-raw and additional impervious • development of the general materials production facilities screen laying) of Srednee contractor service provision and social infrastructure in radioactive waste storage area; Russia, performs research The first “pilot” project in and “Optimization of design • work on the implementation works for radiation safety the area of engineering – solutions for Urtuyskiy open- of promising 2015-2019 problems, handling RAW, reconstruction of the cut water removal channel projects: decommissioning of finished product drying construction” (PJSC PIMCU); — for PJSC PIMCU – radiation-hazardous facilities, department of JSC Dalur • The project “CHP plant ash reconstruction of Srednee production efficiency was implemented dump construction” (PJSC tailing dump, ash dump enhancement and their safety PIMCU) passed the Main of cogeneration plant provision as well as works Environmental Expert Review; (CHP) and construction of for rehabilitation of former • the Argunskoye and Urtuyskiy open-cut water uranium-mining plantsboth in Zherlovoe deposit removal channel, Russia and abroad according • the whole range of works development concept was — for JSC Khiagda – to the international standard for the project “UKS-120 developed for PJSC PIMCU, works for settlement tank “Reclamation of territories Drying Unit with a gas which will become the basis arrangement on Istochnoye of EurAsEC member-states treatment station” was for Mine No. 6 project; deposit, Drying “turnkey” which were subjected to performed from R&D and • the drafted design project implementation. the exposure of uranium- design to procurement, documentation for Srednee mining production facilities” customs procedures tailing dump preservation will (Tajikistan and Kyrgyzstan). and construction and make it possible to justify a installation works. The reduction in payment tariffs
Annual Report | JSC Atomredmetzoloto | 2014 62 Service companies procedures for needs of the economic efficiency of of the economic efficiency of Mining division’s plants were procurements and fostering procurements. LLC ARMZ SERVICE organized for the total amount a competitive environment of 3 617 mln. RUB. Reduction when holding procurement Authorized body for from the initial maximum procedures, transport services, organization of procurement purchase price 260 mln. RUB personnel provision service, procedures of ARM Uranium (for procedures, in which agency coal sales services; Holding enterprises, transport minimum one participant was • implementation of design services and personnel admitted) was achieved. activities as part of ARMZ 412 provision services. 2015 and future plans: Uranium Holding new business area development program; competitive procurements 2014 results: • Improvement of competitive • implementation of were organized for the procurement procedure procurement expediency needs of the Mining • 1.58 mln tons of coal process organization and and rationality of mining produced on PJSC PIMCU implementation; division’s plants, creation division’s enterprises open-cut; • Provision of advisory of a competitive bidding • 412 competitive procurement services aimed improving environment and enhancement
3.3.5. Rosatom 2014 results: • based on the results of the Production System. year the total actual effect on • Due to labour organization, implemented measures made Complying with cost reduction, schedule up over 125 mln. RUB. 125 Product Quality development and approval mln. RUB. of works between the silo Requirements launcher and mode control effect on implemented panel No. 1, the time of combine Key RPS implementation measures Implementing RPS movement from point to point results at Holding’s plants: Projects was cut in half (from 189 to 94 hours) when implementing the • work processes of project for “Tophole vertical chemicals acceptance on a The introduction of the drilling process optimization by railroad base and anionite Rosatom Production System 2KB combine” on PJSC PIMCU; exchange between MWD PED at the Holding entities • due to machine operator and LSU were standardized in 2015 Plans: started in October 2011. work standardization electric JSC Dalur; In 2014 the work focused locomotive when carrying rock • process operations were In 2015, the Holding plans to on the scaling of the RPS mass, rail-car loading and optimized in JSC Khiagda continue RPS work in three key culture and philosophy at unloading scheme change, during pumping unit areas: the Holding entities and installation and use of pulling assembly-disassembly; • production operations; identification and promotion winches, the process flow time • projects aimed at • business process efficiency; of production system leaders. was reduced by 32 minutes performance enhancement • administrative efficiency; Based on 2014 results, 418 (from 75 to 43 minutes) when and cost reduction with the • establishment of an employees were involved in implementing the project for total effect of 45.8 mln. RUB exemplary RPS plant on JSC the implementation of various “Rock Mass Shipment Process (the amount is included in 125 Khiagda; parts of RPS programs. 33 Reduction for the 5-th horizon mln. RUB) were implemented • Process Factory training people were recognized RPS of Underground Mine No. 8 of in JSC RUSBURMASH. software development on PJSC leaders. PJSC PIMCU; PIMCU.
Table 18. Power resources consumption in JSC Atomredmetzoloto
Electrical power Electrical power Diesel fuel Enterprise TDL thous. RUB. TDL thous. RUB. TDL thous. RUB. JSC Atomredmetzoloto 10 3,675 4 3,046 0 0
63 Comprehensive energy Company rents its office 2014 results: and measurement electrical saving and efficiency premises. Under the office rent power fiscal metering system improvement program agreement, consumed power is PJSC PIMCU: (AIMEPFMS) and automated included in the common list of information and measurement The energy saving and municipal services and is paid • Commissioning of the electrical power technical efficiency program in JSC for on a monthly basis under automated power efficiency metering system (AIMEPTMS); Atomredmetzoloto has a separate bill among other management system (APEMS); • replacement of been implemented in JSC services. Within the reporting • installation of a variable transformers with power Atomredmetzoloto since 2010 period, the Company used about frequency electrical efficient ones; in accordance with orders of 816 545 kWh of electric power drive (VFD) on MMP, CHP • compressor operating mode Rosatom State Corporation. in the total amount of RUB 3.7 equipment; adjustment. million. • implementation of 2014 results: installation works for the JSC Dalur: Savings due to reduced power automated power resource Other power resources consumption for 2014 was information and measurement • Commissioning of the types (coal, fuel oil, natural 135 million RUB (in monetary system (APRIMS); automated power efficiency gas) are not used in JSC terms) as compared to 2009 • implementation management system (APEMS); Atomredmetzoloto. The under comparable conditions. of installation and • 12 submerged pump control commissioning works for stations with VFDs were the automated information purchased and installed.
20,1 20,4 19,0 30,7 17,5 16,1 16,6 13,0 13,6 17,3 17,5 14,5
Dalur PIMCU Khiagda TOTAL Dalur PIMCU Khiagda TOTAL Dalur PIMCU Khiagda TOTAL ARMZ ARMZ ARMZ
Actual for ARMZ S&A in % Actual for ARMZ S&A in % Actual for ARMZ S&A in %
Actual for 2012 – 14.5% Plan for 2013 - 20% Plan for 2014 - 20%
Fig. 20. Power saving and efficiency figures for 2012 – 2014, %
JSC Khiagda: • automatic voltage control the power metering system JSC Khiagda: points (AVCP) were installed (AIMEPFMS, AIMEPTMS); • The lighting system – on OHL-10 kW deposit No. 3, • continue works for the • Conduct a repeated power upgrading was carried out with OHL-10 kW deposit No. 7. second stage of relay audit; the replacement of lighting • the 2015 power saving and protection and automatic • reconstruction of the central fixtures with LED ones (power efficiency program of JSC protective devices upgrading motor road lighting system of saving) on Central Logistics Khiagda was updated with project on 110 and 220 kV OHL; the in-situ leaching workshop Base of JSC Khiagda; introduction of new measures. • continue works for variable with the replacement with • works for 6 deposit lighting 2015 plans: frequency drive installation on power saving lighting fixtures; area upgrading of the in-situ electric drives of MMP electric • expansion of the automated leaching workshop of JSC PJSC PIMCU: motors. information-measurement Khiagda started, with the technical metering system replacement of lighting fixtures • Conduct a repeated power JSC Dalur: (AIMTMS); with LED ones (power saving); audit; • 75 submerged pump control • application of electrically • continue commissioning • Conduct a repeated power stations with VFDs were conductive lubricant was works and put into operation of audit; purchased. expanded in accordance APRIMS; • 38 submerged pump control • generation of the electrical with its type (vertical break • finish commissioning works stations with VFDs were power quality control system. contacts, bolting etc.); and put into operation of purchased.
Complying with Product (Technical Specifications) 95 Quality Requirements 1981–2009 for Uranium Oxide Concentrate and TU (Technical ARMZ Uranium Holding Co. Specifications) 95–2002 for 135 (PJSC PIMCU , JSC Khiagda, JSC Ammonium Polyuranate mln. RUB. Dalur) products are consumed (Yellow cake). In 2014, all by JSC Chepetsky Mechanical products manufactured were Savings Plant and JSC Siberian Group in compliance with technical due to reduced of Chemical Enterprises. specifications and there were no Products must comply with TU claims from the consumers. power consumption
Annual Report | JSC Atomredmetzoloto | 2014 64 13
4
12 2 9 5 10 3
11 2 1 2 4 5 3 10 5 20 87 74 90 84 71 1
2011 2012 2013 2014 2015
Действующие предприятия Неурановые проекты Прочие российские проекты Новые строящиеся предприятия
Рис. 12. Динамика инвестиций по группам проектов в 2012-2014 годах, %
71% 57% 41% 44% 29% 26% 11% 10% 2% 6% 3% Обеспечение операционной эффективности ПАО «ППГХО» Павловское Действующие предприятия (уран) Диверсификация бизнеса АО «Хиагда» Прочие проекты Строящиеся предприятия (уран) Обеспечение потребности ГК Росатом АО «Далур» в российском уране по конкурентной Проекты диверсификации себестоимости
20,1 20,4 19,0 30,7 17,5 16,1 16,6 13,0 13,6 17,3 17,5 14,5
АО ПАО АО Итого АО ПАО АО Итого АО ПАО АО Итого "Далур" "ППГХО" "Хиагда" АРМЗ "Далур" "ППГХО" "Хиагда" АРМЗ "Далур" "ППГХО" "Хиагда" АРМЗ Факт по ДО АРМЗ, % Факт по ДО АРМЗ, % Факт по ДО АРМЗ, % План на 2012 год - 14,5% План на 2013 год - 20% План на 2014 год - 20%
Рис. 18. Показатели в области энергоснабжения и энергоэффективности 3.4. Intellectualза пер Capitalиод 2012-2014 го Managementды, %
3.4.1. Innovative 350 310.3 activities 300 253.5 In 2014, total expenses for 250 226.0 investment projects, including 200 R&D, made up 310.3 mln. RUB, from which 92.05 mln. 150 RUB were allocated for R&D. 100 Innovative projects of JSC 50 Atomredmetozoloto were financed from the Holding’s 0 own funds as well as based on 2012 2013 2014 the subsidy of the Ministry of Education and Science of the Fig. 21. Expenses for the Holding’s development investment program, mln. RUB. Russian Federation.
Innovative Key objectives of the Holding’s • diversification for product development program Innovative Development line expansion. Programs till 2020 are: 310.3 The innovative development Plans for the development of program of JSC • uranium production groundbreaking, obligatory mln. RUB. Atomredmetzoloto is a efficiency enhancement at (environmental protection and component of the Innovative operating uranium-mining assuring industrial safety) total expenses for and Process Modernization plants; and support technologies investment projects, Program of Rosatom State • loss-free operation of are grouped in six innovative including R&D Corporation till 2020. current uranium-mining projects. plants;
Project No. 1. Creation of computer technologies and final product humidity process regulation developed a new process uranium software continued in JSC from 30% to less than in the course of research will mining platform by Dalur. Unique software was 2.0% and significantly make it possible to reduce developed by Severskiy reduce transport expenses operating costs during the geotechnological methods technological institute of for finished product development of the Khiagda The project is focused on MIFI National Research transportation to the uranium deposit group. the creation of innovative University. Application of Consumer. The project • Implementation of the highly economical and the software will make it was implemented by JSC computer software designed environmentally friendly possible to enhance reserve VNIPIpromtekhnologii using by Severskiy technological geotechnologies for uranium calculation accuracy, state-of-the-art equipment institute of MIFI National deposit development at operational block design manufactured by the Czech Research Nuclear University all project stages (from quality and Dalmatovskoye Susharny Praha. is underway at JSC Khiagda exploration and mining to and Khokhlovskoye uranium • Scientific research was for selecting optimum ore mineral resources and surface deposit development completed in JSC Khiagda deposit uncovering schemes reclamation). efficiency. by specialists of JSC and production schedule • Construction of uranium VNIPIpromtekhnologii for development aimed at 2014 results: concentrate drying unit selecting decolmatation significant uranium mining was completed in JSC solutions for in-situ leaching increase and operating cost • Implementation of Dalur. Drying technology boreholes. Implementation of reduction. innovative mining-geological makes it possible to reduce the borehole decolmatation
Project No. 2. in Russia are represented advanced high-performance of which a two-fold oxidant Development of refractory by refractory ores of Elkon technologies and integrated consumption reduction was and Streltsovskiy uranium- mineral resources achieved during uranium uranium ore enrichment ore district deposits. Amidst development. leaching as well as material, and processing of Elkon high capital-intensity and chemicals and electrical and Streltsovskoye low uranium extraction level 2014 results: power consumption uranium-ore district during the development of reduction on ore preparation deposits this ore type, this project • Pilot tests of the improved operations,which made it objective is to reduce agitation uranium uncovering possible to reduce aggregate • Approximately 80% of final product cost based technology were performed costs for hydrometallurgical commercial uranium reserves on implementation of in PJSC PIMCU, as a result ore raw material processing.
65 Project No. 3. 2014 results: Implementation of mine geological simulation • Based on the results of systems and mining multiple-option geomechanical planning. Generation simulation pilot works for 92.05 mln. RUB. of a unified geological reducing the volume of filled mined-out area from 80 % to database 67%, which gives significant were allocated saving on filling works. for R&D in 2014
Project No. 4 2014 results: held. Apparatus according Development of a next- • Metrological tests of two to ING-12-50-100BT neutron generation hardware- prototypes of AMK KND-M- generator operating life meets methodical logging 48 borehole device for direct foreign counterparts and by the complex for direct uranium uranium estimation in ores borehole probe small outside in-situ by the instantaneous diameter size – 48 mm – is estimations in boreholes neutron method and pilot unique. Measurement method by the instantaneous operations for measurement certification works will be fission neutron method method certification were completed in 2015.
Project No. 5 2015, ore separation complex stockpile areas based on uranium raw material Improvement of in- expansion and a two-fold the results of electrical development technology by situ and heap uranium capacity increase – to 300 tomography and frequency geotechnological methods” thous. tons of marketable ore electromagnetic probing. subsidized by the RF Ministry leaching methods from per annum are planned. Application of these methods of Education and Science ores of Streltsovskiy ore • A project was designed by will make it possible to reduce started in 2012. Scientific field deposits JSC VNIPIpromtekhnologii heap-leaching stockpile research performed by the for performing pilot uranium development and increase Trans-Baikal State University 2014 results: mining tests on mine No. their development quality. in 2014 were financed from 4 of PJSC PIMCU by the • Pilot-process works for subsidy funds in the amount • Pilot works for off-balance highly-efficient block in-situ heap leaching (HL) and of 50 mln. RUB. The project of dump processing technology leaching method. The project block in-situ leaching (BIL) uranium reserves modification development were completed implementation start is process intensification using at the bottom of Tulukuy open in PJSC PIMCU. The ore planned for 2015. surface-active agents (SAA) pit by the highly-efficient separation plant was put into • The A.A. Trofimuk Oil and continued in PJSC PIMCU. in-situ block leaching method. operation. Produced uranium Gas Geology and Geophysics The most efficient SAAs were Project implantation will make ore concentrates are sent Institute of the Siberian determined for off-balance it possible to include residual for processing by the heap Department of the Russian ore separation product HL uranium reserves at the leaching method, barren rock Academy of Sciences (OGGGI of conditions. Based on 2014 open pit bottom and walls in left after separation is sent the SD of the RAS) designed a results uranium extraction development and perform its for a crushing unit for ballast range of geophysical methods increase by 4.1% as compared reclamation in future. In 2015, production. In 2014, 162 for monitoring uranium ore to the current level was 70 mln. RUB from the subsidy thousand tons of marketable heap leaching process which achieved. of the RF Ministry of Education uranium ore were produced makes it possible to separate • The project “Creation of and Science are provided for from off-balance dumps. In developed and underleached the integrated lean-balance R&D for this project.
Project No. 6 The geodynamic ground RAS), Mining Institute of the pyrite cinder full disposal Improvement of is a multi-level complex of Far Eastern Department of the technology. Comparison underground uranium scientific-methodical and RAS (MI of the FED of the RAS) was made, and selection of technical tools of geodynamic and Mining National Mineral cost effective pyrite cinder deposit mining process monitoring, forecasting Resources University. processing technologies was and warning in the Streltsovskiy • The system is aimed at performed. In 2015, verification 2014 results: ore field deposit development assuring and increasing and pilot tests of the most • Research works were area designed involving the Ore underground mining safety on efficient technology under completed under the project Deposit Geology, Petrography, mines of PJSC PIMCU. current economic conditions are for geodynamic ground Mineralogy and Geochemistry • In 2014, the project was planned. A foreign Investor was (GDG) development of the Institute of the Russian launched for integrated attracted for project financing. Streltsovskiy ore field of PJSC Academy of Sciences (IGEM pyrite cinder processing of Project implementation will PIMCU. The main geodynamic of the RAS), Mining Institute the sulphuric acid plant of make it possible to improve the ground system components of the Kola Research Centre PJSC PIMCU providing for the environmental situation in the were put into pilot operation. of the RAS (MI of KRC of the development of the integrated vicinity of the plant.
Annual Report | JSC Atomredmetzoloto | 2014 66 3.5. Human Capital Management
3.5.1. Management which the average headcount system figure was reduced by 1 384 Svetlana Pomuleva, head of the recruitment, people (85.1%), and reduction training and development department of The personnel management of drilling operation volume JSC Atomredmetzoloto, responds to the system is based on the in JSC RUSBURMASH stakeholder’s proposal to include a subsection following principles: which resulted in average in the Report on involvement: headcount reduction by 200 • strict compliance with the people (12.3%). Russian Labour Code; • integral and socially In 2015, average personnel ”The Holding has been engaged in the study of involvement oriented personnel policy; headcount reduction by level for four years. Involvement level reduction for 2014 • increase of labour 1485 people as compared to is caused by a modification of organizational structures of productivity; 2014 is planned, including plants, production restructuring and personnel number • priority and career due to personnel number optimization. Herewith, I would like to note, that the development of own optimization measures work for employee involvement increase is continuously employees. performed in the fourth performed. This is an important task for the Holding, over quarter of 2014 in PJSC which all manager levels work. Involvement increase plans PIMCU. are developed annually based on the involvement level 3.5.2. Human study performed, which are further implemented. However, Herewith, in 2015 employee we deemed it impractical to introduce a separate section headcount increase by 0,06 Capital Features dedicated only to involvement given the close relationship thous. people is expected by between personnel involvement and the plant’s business the end of the year, which is Number of personnel performance, which is disclosed across the entire Report stipulated by commissioning specifying its dynamics. of a new sulphuric acid The average staff headcount production workshop in in 2014 as compared to the JSC Khiagda and planned previous year was reduced work volume growth in by 13.9% (1 626 people) and JSC RUSMURMASH on In 2015 – 2019, gradual made up 10 031 people. drilling area No. 2 and No. personnel number reduction The main reasons for 3 (projects: Pavlovskoye, by 25.2% is expected mainly headcount reduction were Verkhne-Bryantinskoye, due to further optimization of organizational measures in SUEK) and work area for JSC the organizational and staff 10,031 PJSC PIMCU, as a result of Khiagda. structure of PJSC PIMCU. people The average staff headcount
Table 19. Dynamics of the average headcount in 2012 – 2014, people
JSC PJSC JSC JSC JSC JSC LLC ARMZ TOTAL Atomredmetzoloto PIMCU Dalur Khiagda VNIPIpromtekhnologii RUSBURMASH Service
2014 156 7,929 448 413 402 587 96 10,031
2013 228 9,313 442 409 409 787 69 11,657
2012 236 8,753 437 336 442 757 64 11,025
67 Table 20. Average headcount dynamics in main regions of operation in 2012-2014, people
2012 2013 2014
Moscow* 813 773 711
Kurgan Region 567 563 554
Irkutsk region 137 127 119
Trans-Baikal Territory 9,070 9,695 8,261
Republic of Buryatia 438 499 387
Total: 11,025 11,657 10,031
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
The same trend is traced of PJSC PIMCU and JSC of the Holding.The number (156 people) was recorded in headcount dynamics RUSMURMASH. of employees working under at JSC RUSBURMASH, for regions of operation. a fixed-term labour contract which is typical of drilling- Headcount reduction is In the reporting time, 67 rose as compared to the operation volume change, observed in the Trans-Baikal people worked part-time, previous year from 2.9% to 4% whose value determines the and Republic of Buryatia which made up less than 1% and made up 345 people (3.5% overall number of production – regions of operation of the total average headcount of total number), of which 45% personnel.
Table 21. ARMZ Uranium Holding Co. personnel distribution by labor contract and employment type in 2012-2014, people
Employees working Employees working under a labour contract Year Headcount under a fixed-term labour concluded for an indefinite contract term 2014 8,430 8,085 345
2013* 11,719 11,379 340
2012* 11,920 11,515 405
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
Gender-age personnel composition
Table 22. ARMZ Uranium Holding personnel distribution by gender in 2012 – 2014, people
Men Women Total Year % of men from the % of women from the Number Number total number total number 2014 6,064 72 2,366 28 2013* 8,441 72 3,278 28
2012* 8,613 72 3,307 28
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
Annual Report | JSC Atomredmetzoloto | 2014 68 Personnel distribution by age
Table 23. ARMZ Uranium Holding personnel distribution by age in 2012 –2014, people
Under 35 years old From 36 to 50 years old Over 50 years old employee employee employee Total Year employee share (from employee share (from employee share (from headcount the total headcount the total headcount the total number) number) number) 2014 3,544 42% 2,954 35% 1,932 23%
2013* 5,100 44% 3,805 33% 2,814 24%
2012* 5,159 43% 3,808 32% 2,953 25%
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
In 2014, the share of Staff turnover turnover growth is stipulated number (JSC RUSBURMASH) employees aged from 36 to by personnel number and employee layoff due to 50 years old grew mainly due In the reporting period, optimization measures (JSC retirement to the reduction of employee the total turnover in the Atomredmetzoloto, PJSC share, whose age exceeds 50 Holding increased from PIMCU), increase of the fixed- (PJSC PIMCU, JSC years old. 24.9 to 40%. The total term labour contract share VNIPIpromtekhnologii).
Table 24. Staff turnover breakdown by gender in 2012 – 2014, %
Men Women Total Year Number of dismissed % from the total Number of dismissed from the total number turnover for any reason number for any reason 2014 2,938 29.3 1,076 10.7 40
2013* 2,334 20.0 567 4.9 24,9
2012* 1,786 16.2 886 8.0 24.2
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
Table 25. Number of dismissed employees broken down by regions of operation in 2012-2014, people
2012 2013 2014 Moscow* 208 235 266 42% Kurgan Region 31 85 72
Irkutsk region 47 28 76 young employees share Trans-Baikal Territory 2,308 2,461 3,254 from the total Republic of Buryatia 78 92 346 number
Total: 2,672 2,901 4,014
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
69 The company provides assistance to employees dismissed as a result of staffing measures, including by means of their employment at other plants, in cooperation with regional employment services, in access to databases of vacancies placed on regional websites and social networks. For the purpose of supporting laid-off employees of PJSC PIMCU, an agreement was signed in 2014 between Rosatom State Corporatin and OJSC MMC Norilsk Nickel on cooperation in employment, cooperation with the employment centre and plants in Krasnokamensk was organized, the database of dismissed workers was generated for their preferential employment in PJSC PIMCU when vacancies are open, and the following measures were conducted: social entrepreneurship contest “Your Business Start”; social entrepreneurship exhibition; social idea fair; webinars on the topic “Own business in a small town”. As a result of Awards for the participation the ARMZ Uranium Holding Co. measures conducted in PJSC PIMCU, 1 729 people were Olympics employed, including re-employed by PJSC PIMCU –291 people.
3.5.3. Remuneration System
Table 26. Expenses and deductions connected with remuneration, at plants of ARMZ Uranium Holding Co. in 2012 – 2014, mln. RUB.
Figure 2012* 2013* 2014
Payroll fund (including provisions) 6,467 7,391 6,281
Personal income tax 783 932 841
Taxes (insurance contributions) for PF 1,550 1,959 1,787
* Including data by ARMZ Service LLC (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company.
Table 27. Amount of salary at plants of ARMZ Uranium Holding Co. in 2012-2014, RUB.
Figure 2012 2013 2014
PJSC PIMCU 36,659 42,658 41,220
JSC Dalur 31,845 35,086 36,507
JSC Khiagda 52,631 55,347 56,545
JSC VNIPIpromtekhnologii 73,750 96,551 93,352
JSC RUSBURMASH 58,024 60,849 74,566
2015 Plans:
• Further performance of measures for unified remuneration system harmonization.
Annual Report | JSC Atomredmetzoloto | 2014 70 3.5.4. Social Policy . of the Company The volume of social expenses 313.9 was reduced in the reporting mln. RUB. period as compared to the previous year by 1.1% due to the volume of social employee number reduction payments in 2014 and made up 313.9 mln. RUB.
Herewith, specific expenses for social payments in terms of the number unit rose by 15.1% and made up 27.5 thous. RUB per annum per one employee
The ARMZ Uranium Holding Co. Olympics 26
19 17
11
8 6 2 4 4 0,5 2
Employee VMI Rendering assistance in housing conditions improvement Material assistance to employees
Employee voluntary insurance from accidents and diseases Non-state pension support Traveling to and from recreation and treatment facilities
Health resort treatment and children’s recreation Costs for sports and cultural public events Other social expenses
Non-working pensioner support Catering
Fig. 22. Social payments to employees, %
Table 28. Social expenses in 2012-2014, mln. RUB.,%
2014 Social programs 2012 2013 thous. % RUB. Employee VMI 50.9 41.9 47.5 17
Employee voluntary insurance from accidents and diseases 5.5 5.9 6.1 2
Health resort treatment and children’s recreation 1.4 0.5 1.3 0.5
Non-working pensioner support 54.5 65.0 72.2 26
Rendering assistance in housing conditions improvement 15.6 20.9 23.4 8
Non-state pension support 2.3 38.0 51.7 19
Costs for sports and cultural public events 24.6 41.2 16.2 6
Catering 6.8 9.0 11.1 4
Material assistance to employees 14.3 15.8 10.4 4
Traveling to and from recreation and treatment facilities 12.5 32.3 31.5 11
Other social expenses 6.9 8.1 5.3 2
Total social expenses 195.6 278.9 276.8 100
Expenses for social infrastructure object maintenance 7.9
Taxes (contributions) for social expenses 29,3
Total social expenses 313,9
71 2015 plans:
• Continue implementation ”Rosatom’s Man of the Year - 2014” contest of the unified social policy in the Holding as part of For acknowledgment of our employee merits at a high level implemented Rosatom Rosatom State Corporation for the second consecutive values: One step ahead, year held “Rosatom’s Man of the Year – 2014” contest. 50 Responsibility for the Result, nominations were established by three key areas: professions Efficiency, One Team, of divisions, general corporate and special nominations of Respect, and Safety. the director general of Rosatom State Corporation. Contest committees define one winner and two nominees in each nomination. The main selection criteria were major work 3.5.5. Employee results, original approaches to problem-solving corporate professional training value sharing and professional qualifications of candidates. In total, Holding’s employees submitted 56 applications (in and development 2013 – 26) for consideration by contest committees , from them 40 – for divisional nominations, 12 – for general corporate nominations, 4 – special nominations of the Director General Contest ”Man of the Year” of Rosatom State Corporation. 5 employees of the Holding became winners. The winner-awarding ceremony was held in 2014 results: Moscow. The contest is gaining in popularity, with employee interest doubling from the previous year!
Table 29. Implemented measures as part of employee training and development of ARMZ Uranium Holding in 2014
Spartakiad was held among Holding’s employees involving teams from JSC Atomredmetzoloto, PJSC PIMCU, JSC Dalur, LLC ARMZ Service, JSC RUSBURMASH and JSC VNIPIpromtekhnologii. A separate team was represented by students of Moscow and regional higher educational establishments who won Employee value in “Youth talents – 2014” contest. Children of the Holding’s employees also formed their own select team, for whom the special program “Funny starts” including a family relay race. Participants competed in eight kinds of sports: mini-football, volleyball, table tennis, chess, darts, badminton, relay race and kettle bell lifting.
Three employee-awareness days were held. On average, each Awareness Day’s coverage surpassed Internal communications 7,000 people.
Training measures were organized and held for functional areas featuring employees of JSC Atomredmetzoloto and subsidiaries. The list of professions participating in “The best young worker by the profession of PJSC PIMCU” annual contest was expanded. Career-guidance measures were held to select candidates for entry into higher educational establishments in 2014. Implementation of the program of plant’s employee education in higher educational establishments and Professional specialized secondary educational establishments (targeted education) continued. development and training JSC Khiagda focused on precertification training of volunteer emergency response teams of the plant. This program is unique. It was developed specially for the nuclear industry and fully takes into consideration specific features of plant’s operation. Implementation of the mentor training program continued in PJSC PIMCU on the basis of the Union’s training centre. Mass training of middle managers in “Involvement Management” program was organized and held. As part of implementation of the industrial project “Career and succession management” Holding’s key position succession plans were developed, as a result, two managers were promoted in 2014.
Talent pool programs of Rosatom State Corporation were implemented (for senior management level – “Rosatom Heritage” program, for middle management level – “Rosatom Capital” program, for junior management – “Rosatom’s talents”. Two managers from the current talent pool were appointed to Talent Pool senior positions, cross-divisional displacements of two employees were implemented. Employees of the managing company and subsidiaries were additionally selected to the Managerial Talent Pool. Based on selection results, 22 people were enrolled in talent pool.
Annual Report | JSC Atomredmetzoloto | 2014 72 Table 30. Number of training hours per person broken down by ARMZ Uranium Holding plant in 2012-2014, hours/people
Category 2012 2013 2014
JSC Atomredmetzoloto 13 25 29
PJSC PIMCU 56 31 24
JSC VNIPIpromtekhnologii 28 47 25 Managers JSC Dalur 30 60 40
JSC RUSBURMASH 30 18 60
JSC Khiagda 134 73 50
JSC Atomredmetzoloto 0 0 27
PJSC PIMCU 66 59 49
JSC VNIPIpromtekhnologii 0 0 24 Subsidiaries JSC Dalur 9 133 104
JSC RUSBURMASH 16 16 159
JSC Khiagda 54 92 105
Table 31. The planned actions within training and development of ARMZ employees for 2015
Continuation of sports undertakings in the Company and corporate Spartakiad Employee value performance
Internal communications Three Awareness Days are planned in 2015 Development and implementation of the mentorship program at plants Development and implementation of programs aimed at developing managerial skills of Professional development and training middle and junior managers Performance of junior managers’ training in “Involvement Management” program Implementation of talent pool development programs “Rosatom Capital”, “Rosatom Heritage” and “Rosatom Talents” as well as performance of new selective measures with a Talent Pool view to form the pool of highly-potential middle and junior managers for preparation to work on key positions and projects
3.5.6. Work with • training of employees and ”Youth Talents” contest youth and students their family members in higher educational establishments On September 19, 2014 results of “Youth talents – 2014” (targeted training); contest were summed up, which has been organized by Search, attraction and support • engagement of higher the Holding for the fourth consecutive year. Students of of talented young people educational establishments’ over 15 Russian higher educational establishments took having required theoretical students in production and part in the contest. 3-rd, 4-th and 5-th year students knowledge and practical pre-graduation internship; could take part in the contest this year. Contest winners skills, – is one of the priority • mentorship organization; were 10 students, from them 7 3-4-th year students areas of the human resources • organization of training and were awarded with personalized scholarships, three 5-th policy of ARMZ Uranium advanced training work etc. year students participated in a special nomination, which Holding. Participants of “Rosatom was organized by JSC VNIPIpromtekhnologii and were Talents” talent tool took part awarded with money prizes. Staffing support of research in “Forsazh” youth innovative and production potential forum of Rosatom State development for a long-term Corporation. Forsazh youth and provision of succession forum has been held on the inside the Holding also territory of the Kaluga region continued to be key objectives since 2011. Forum format – of the work with youth and field camp with living in tents. students in 2014. Spartan conditions allow getting away from domestic The following youth work problems and working routine measures are implemented in and fully submerge in Forsazh the Holding: creative atmosphere.
Award winners ”Youth Talents” 73 2015 plans: draft specialized employee programs for industry’s needs. Stanislav Anikeev, human resource director of JSC Atomredmetzoloto, responds to the Continuation of active work stakeholder’s proposal to refine a human with students and youth, 3.5.7. Veteran- resources management section focusing on including as part of “Young company’s work for personnel retention, human Talents” program. The pensioner support capital development plans and laid off staff company is committed to support and adaptation: retaining talented employees, Support of non-working assuring comprehensive pensioners of JSC personnel development in Atomredmetzoloto is carried “The company is committed to helping those employees various training programs, as out in accordance with the who were selected for optimization measures, by means well as promoting employees Corporate Social Non- of their employment at other plants. In 2014, assistance with material remunerations working Pensioner Support in employment was provided to employees made for successfully implemented Program. 15 people are redundant, including creation of a real vacancy data base projects. Efficient and currently registered in ARMZ in Krasnokamensk companies and the Trans-Baikal promising employees are veteran organization В, 14 of Territory, employment assistance groups in Odnoklassniki included in the talent pool. them – merited pensioners, social network and work with the employment service Individual development plans 1 – merited pensioner of JSC of the Krasnokamensk district. Agreements were aimed at development of not Atomredmetzoloto. signed between Rosatom State Corporation and MMC only professional-technical Nornickel on cooperation, including recruitment of laid-off knowledge but also corporate employees of PJSC PIMCU. and management competences 2014 results: are developed for employees. Employee training is mainly • provision of medical service industry anniversary; concert to the Nuclear conducted on the basis of insurance program; • congratulations and product Industry Worker Day to the training centres of ANO • material assistance orders to the New Year; Russian Army Theatre, where Rosatom Corporate Academy payment to the Victory Day • invitation tickets were memorable gifts were also and ROSATOM-CICE&T which holiday and 69-th nuclear allocated for the festival handed over.
Table 32. Number of registered non-working pensioners in 2012-2014, people
Number of registered non-working pensioners 2012 2013 2014
Total 3,659 3,586 3,652
including
Merited nuclear industry pensioners 971 1,030 1,252
Honorary nuclear industry pensioners 2,675 2,556 2,400
3.5.8. Trade unions and collective agreements
As of 31.12.2014, 7 working employees and 17 non- working veteran-pensioners Table 33. Share of employees covered by collective agreements were registered by the trade union organization of JSC and included in trade unions in 2012-2014, people Atomredmetzoloto. 2012 2013 2014 At present, trade union organizations are operating Number of collective agreements in force at the plant 3 3 3 in PJSC PIMCU and JSC VNIPIpromtekhnologii, in Number of employees covered by collective agreements 10,400 10,198 7,097 which 5 736 staff members are registered. In JSC Dalur Number of trade union organizations at the plant 3 3 3 employee interests are Number of trade union organization members 8,804 8,333 5,743 represented by the Staff Board, which takes active participation in interaction with the employer.
Annual Report | JSC Atomredmetzoloto | 2014 74 In accordance with the RF Table 34. Average effective dose in 2013 – 2014, mSv Labour Code the minimum period of employee notification of organizational changes – 2012 average 2013 average 2014 average 2 months is applicable at all effective dose effective dose effective dose Holding’s plants. PJSC PIMCU 3.00 3.30 2.80 3.5.9. Occupational JSC Dalur 1.44 1.37 1.44 health and safety JSC Khiagda 1.05 1.19 1.08 JSC VNIPIpromtekhnologii 1.35 1.32 1.36 Ensuring Radiation Safety 2014 results: Within the reporting period, the individual • LTIFR at JSC Atomredmetzoloto - 10% • In 2014 at JSC effective exposure at JSC Atomredmetzoloto entities (absolute value 0.93). Atomredmetzoloto there Atomredmetzoloto companies went down by 12 % • accidents occurred only in were no casualties subject to was not more than 20 mSv. The (absolute value from 1.03 PJSC PIMCU, and the number investigation in accordance individual exposure of 100 mSv to 0.9) as compared to the of accidents for the past 12 with federal norms and was never exceeded from previous three years. The years was reduced by three regulations. 2009 to 2014. target value fixed by JSC fold;
16 on average 20 per year
15 8 on average 10 per year 5 5
0 2002-2011 2012-2013 2014
Fig. 23. Injury rate dynamics at JSC Atomredmetzoloto plants in 2002 – 2014, un.
2.5 2.23 2
1.5 1.11 1.07 1.03 1 1 0.93 actual valu 0.96 0.9 0.5 target value 0.39 0.55 0 base value 2011 2012 2013 2014
Fig. 24. Lost-time injury frequency rates (LTIFR) at JSC Atomredmetzoloto plants in 2011 – 2014
Table 35. Fatal injury Table 36. Lost days Table 37. Occupational frequency rate (FIFR) rate (LDR)* Diseases Rate (ODR)
2012 2013 2014 2012 2013 2014 2012 2013 2014
0.01 0.02 0.01 13.74 18.98 19.61 0.75 0.05 0.09
*2013 and 2014 data were recalculated due to the fact that since 2015 the LDR has been calculated based on the formula: (Number of lost days from accidents and occupational diseases/number of worked days)*200,000. 200,000 factor is calculated based on 50 work weeks, each lasting 40 work hours multiplied by 100 employees.
75 LTIFR value in 2014 as in manager and specialist and during underground event of detecting violations compared to 2013 was behavioural audit rules of transport operation were posing a threat to personnel increased, however, the actual JSC Dalur, JSC Khiagda and implemented. life and health; LTIFR value in 2014 was JSC RUSBURMASH; • tightening applicable improved, 0.9 indicator was 2015 and future plans: disciplinary measures when reached with the target value • for the purposes of detecting violations due to of 0.93 (-10%). boosting the level of employee • Injury rate reduction as rock wall and underground incentivization at PJSC PIMCU, compared to the base 2012 – transport operation: Positive results for injury assessment criteria for the 2014 period due to: rate level reduction and preventive work of HS division ——- monthly assessment of safe labour condition managers were developed ——inclusion of RPS method the preventive work of HS provision were possible due under the “Regulation on personnel training in division managers based on to implementation of the Personal Responsibility,” the introductory briefing developed criteria. following key measures: and the regulation on safe program when hiring. face-labor motivation was —in— troduction of an • implementation of the safety implemented at PJSC PIMCU. ——provision of electronic isolation indicator in division culture development project These measures enabled labour safety cabinet manager assessment continued based on the best to raise responsibility and operation for training, criteria when summing world practices with Dupont involvement of manager and briefings, health and up monthly HS work Science and Technologies: workers in daily health and safety knowledge check, results, non-application of safety work; engineering and technical disciplinary measures by ——behavioral safety audits • mentor HS training was personnel safety training management for violating were organized at all performed, measures for and certification for HS requirements due to divisions of PJSC PIMCU, existing personnel training underground worker groups rockfall and underground which made it possible system improvement for of PJSC PIMCU. transport operation. to identify and correct main profession groups were employees’ dangerous implemented; ——continuation of mentor • updating measures actions (behavior), eliminate • for labour safety and HS specialist training in for injury rate reduction hazardous working management system “Technosphere Safety”). from rockfall and during conditions capable of improvement, the electronic underground equipment resulting in occupational detected violation • conduction of unscheduled operation based on the 2013- injury and disease; recording and monitoring inspections, sudden 2014 work result review. implementation system was inspections at night and • implementation of the ——for safety culture introduced in PJSC PIMCU, evening time; electronic PPE issue development project inspections at night and • setting more stringent recording system by means replication on other S&A, evening time were organized, target detected violation of tests and selection of the internal trainers of PJSC measures for injury reduction levels; most efficient PPE to reduce PIMCU conducted training prevention from destruction • blasting suspension in the occupational diseases.
10 10 9 8 7 7 6 6 5 5 4 total 4 3 light 2 2 2 2 2 severe 1 1 1 1 1 lethal 0 group 2012 2013 2014
Fig. 25. Total number of accidents at JSC Atomredmetzoloto plants in 2012 – 2014
Annual Report | JSC Atomredmetzoloto | 2014 76 3.6. Social Capital Management
3.6.1. Stakeholder intrinsic to the nuclear industry. For a timely Definition response to possible, above Olga Scherbakova, human resources all, social and reputation director of PJSC PIMCU, responds to the JSC Atomredmetzoloto is risk occurrence, the stakeholder’s proposal to show Holding’s guided by the operation Holding continuously works restructured personnel as a stakeholder: openness and transparency with stakeholders and principle with due account systematizes, analyzes their of objective restrictions requests and proposals. “Of course, we took into account this proposal. I would like to add that in our daily work we are guided by the operation openness and transparency principle. And not only for stakeholders but also, above all, for plant’s employees. For example, major programs for personnel information and involvement in the managerial decision- making process are implemented in PJSC PIMCU.
In 2014 based on ARMZ stakeholder rank map was Uranium Holding management updated, which reflects an polls, comparative analysis interdependence between them of international, domestic and the Company. and industrial practices the
Exhibition-Fair of social ideas, Krasnokamensk
Investment Local State, community Shareholders communities supervisory bodies
ARMZ
Mass media, NGO Holding’s personnel, Business partners, Product consumers trade unions suppliers (JSC TVEL, JSC Tekhsnabexport)
77 Table 38. 2014 Stakeholder Engagement
Operating performance Stakeholders Interests Engagement mechanisms in 2014 • convening General Meetings of • building up and diversifying Shareholders; resource base; • information disclosure on an external Refer to “Corporate Shareholders • effective use of investments; website; Governance” section, • safety priority; • regular reporting; “Strategy and Management • approved figure achievement. • annual report presentations as part of system” chapter dialogues.
Refer to “Social Capital regular meetings; Investment effective use of investments and good • Management” section, • information disclosure on an external community growth quality. • “Operating results: capital website. management efficiency” chapter • social-economic development of regions; • public opinion polls; • social project implementation in regions • public hearings related to annual report Refer to the “Social Local of operation; publications; Capital Management” communities • maintaining a stable population • public hearings related to the section, “Operating results: employment level; construction of new facilities; capital management • environment. • information via mass media. efficiency” chapter State operating efficiency and stability; (federal authorities, • entering into cooperation agreements; operating safety and transparency; • authorities of • regular meetings; Refer to the “Social zero environmental impact; • constituent entities of • annual report presentations as part of Capital Management” regular tax deductions; • the Russian Federation), • dialogues and public hearings; section, “Operating results: developing regions of operation; local government • Annual Report publication on the official capital management environmental responsibility; • authorities, supervisory • website. efficiency” chapter responsible personnel and social policy. authorities • meetings and negotiations; stable cooperation; • • information disclosure on external protecting and complying with • • websites; shareholders’ rights and interests; Refer to the using a procurement website with a Business partners, development plan implementation; • “Production Capital • feedback system; suppliers stable financial standing; Management” section, • monitoring of compliance with the unified procurement system transparency; • “Operating results: capital • industrial procurement standard; financial solvency; management efficiency” • annual report presentations as part of stable orders. • • dialogues and public hearings. • fair, stable remuneration; • drawing up and signing collective • training, development, and career agreements; prospects; • Awareness Days; Holding’s personnel, • competitive social benefits; • regular meetings between managers Refer to the “Human trade unions, including • advanced training; and workers to discuss Holding activities, Capital Management” restructured personnel • zero environmental impact; including the Foremen Council at JSC section, “Operating results: of the Holding • developing regions of operation; PIMCU; capital management • guaranteed employment, stable salary; • internal mass media and feedback; efficiency” chapter • socially-responsible employer; • annual report presentations as part of • professional development. dialogues and public consultations. • regular meetings; feedback system; Product consumers • Refer to the stable and reliable supplies; quality assessment; (JSC TVEL, JSC • • “Operating results: capital product quality and price. analysis of expectations; Tekhnabexport) • • management efficiency” • information disclosure on an external chapter website. • company’s operation efficiency, openness and transparency; • press-releases; Mass media, research • industry and city-forming enterprise • press conferences and Awareness Days; Refer to the “Social and production development prospects; • annual report presentations as part of Capital Management” and environmental • environmental production safety; dialogues and public consultations; section, “Operating results: organizations • major developments, key performance • comments on issues related to ARMZ capital management indicators; Uranium Holding activities. efficiency” chapter • social responsibility.
Annual Report | JSC Atomredmetzoloto | 2014 78 2 High impact degree Holding’s 1.8 personnel, trade unions
1.6 Business partners, Medium impact suppliers degree Shareholders 1.4 State, supervisory bodies
1.2 Product consumers Local communities (JSC TVEL, JSC Tekhsnabexport)
1 Investment community
0.8 Mass media, NGO Company’s impact on stakeholders Company’s Low impact degree 0.6
0 0,2 0,4 0,6 0,8 1 1,2 1,4 1,6 1,8 2
Stakeholder impact on Company’s operations
Fig. 26. Stakeholder rank map of JSC Atomredmetzoloto
3.6.2. Holding’s As part of the open of CJSC TV-centre information policy, ARMZ (Krasnokamensk) – local information Uranium Holding is TV-company broadcasting openness as the widely represented on all its own programs on TNT Honorary certificate main stakeholder information resources of channel frequency on the of the communications Rosatom State Corporation: basis of federal licenses department of Rosatom interaction principle on the web-site http://www. and a corresponding State Corporation for rosatom.ru, in “Rosatom contract. the Gornyak successful cooperation Information openness implies Country” newspaper, in State Priargunya (Priargunye with mass media in 2014 compliance with the public Corporation’s video blog and Mine-worker) newspaper is interest and commercial “Rosatom Country” radio among TOP-10 of the rating secret balance of Holding’s program. of corporate publications plants. of industrial companies, Relevant information about annually conducted by In accordance with RF all aspects of ARMZ Uranium Production Management” legislation, Regulation of the Holding operations is portal http://www.up-pro. Central Bank of the Russian published by federal, regional ru/specprojects/rating- An official page of PJSC Federation dated 30.12.2014 and foreign mass media. corporativnyh-izdanij/ PIMCU was created in No. 454-П (“Regulation on Mass media representatives rating-2015.html. Odnoklassniki social network as the most Information Disclosure by may send inquiries and popular among Equity Securities Issuers”), applications via the web-site A permanent hotline Krasnokamensk Holding’s plants disclose of JSC Atomredmetzoloto with V.N.Verkhovtsev, dwellers. information in the form of (http://www.armz.ru/eng/ director general of JSC publication of resolutions press/contacts_for_mass_ Atomredmetzoloto, is adopted by the Company’s media/) and relevant sections organized at the following Board of Directors, of S&A web-sites. address http://www. disclosure of securities issue priargunsky.armz.ru/eng/ procedure stages, Annual Corporate newspapers are Here, you may leave your Report, Annual accounting published for employees comments and proposals (financial) reporting and of ARMZ Uranium Holding on the operation of ARMZ ranked first other documents. For this and dwellers of regions Uranium Holding and S&A and by information information disclosure, of operation. Issue of ask an interesting question. activity in the in particular, please the Gornyak Priargunya Time for reply does not exceed Trans-Baikal refer to web-sites of (Priargunye Mine-worker) one working day. territory based JSC Atomredmetzoloto newspaper in PJSC PIMCU on 2014 results* (http://www.armz.ru/ – Khiagda Herald in JSC Official groups of PJSC PIMCU eng/shareholders_and_ Khiagda, in JSC Dalur – Dalur were created in popular investors/information_ News. Besides, PJSC PIMCU Odnoklassniki disclosure/) and S&A. is the main shareholder (http://ok.ru/gruppaoaop) * based on IA examination 79 and Vkontakte (http://vk.com/ club72036988) Vladimir Vysotskiy, deputy director social networks. Here, general for special projects of JSC union’s news are published, TOP-100 of the Atomredmetzoloto, responds to the important topics are discussed stakeholder’s proposal to include the new subsection “Information openness of ARMZ and feedback with PIMCU most information Uranium Holding”: management is possible. Time open Russian for reply during the working enterprises* hours does not exceed three hours. “ARMZ press-service motto – responsiveness, professionalism and constant readiness for dialog. In 2014, In PJSC PIMCU”, JSC Dalur our PR-service did everything in its power to promptly and JSC Khiagda feedback is furnish you with updated, reliable information and provide also possible via corporate * Political and Economic comment from the Company’s chief executives. The newspapers and enterprises’ Communication Agency prospect for next years – to assure integration of a high personnel services. For level of social responsibility and involvement of the entire stakeholder comments, Atomredmetzoloto and all S&A multi-thousand team into successful operation of the questions and applications has a feedback form. Holding. official web-site of JSC
3.6.3. Development of various parts of the Russian of the decisions made. Social with all stakeholders has the Regions Federation – Kurgan region, tension in regions may an important role for the Republic of Buryatia, Trans- cause reputational damage Company, above all, with of Operation Baikal Territory and other to the Holding, thus posing state and local government regions. The company is a threat to reliable natural authorities. Operation in regions committed to demonstrating a raw material supplies. high social responsibility level Due to this, operation in Enterprises of ARMZ Uranium with due account of possible the region and constant Holding are located in social-economic implications integrated cooperation
Table 39. Taxes paid by ARMZ Uranium Holding Co. key entities to regional budgets, mln. RUB.
Amount of paid taxes, mln. RUB. ARMZ Uranium Holding 2013 2014 Regional budget entities 2012 by the by the CTG CTG company company Regional budget total, including 277 148 59 139 81
JSC Dalur 270 142 52 134 72
JSC RUSBURMASH 7 6 7 5 9
Kurgan Region total, including 122 159 74 138 70
JSC Khiagda 101 139 57 132 64
JSC RUSBURMASH 21 20 17 6 6
Republic of Buryatia total, including 685 1 034 562 999 798
PJSC PIMCU 641 988 539 955 765
JSC RUSBURMASH 16 21 13 21 18
JSC Khiagda 27 25 10 23 14
Trans-Baikal Territory total, including 10 7 5 7 6
JSC RUSBURMASH 10 7 5 7 6
Irkutsk region total, including 0 0 0 2 2
JSC RUSBURMASH 0 0 0 2 2
Amursk region total, including 1 0 0 0 0
JSC RUSBURMASH 1 0 0 0 0
Total: 1 095 1 349 700 1 290 958
Annual Report | JSC Atomredmetzoloto | 2014 80 Economic impact of areas at an affordable level for of operation passengers due to offsetting of the carrier’s cost by the Vera Sorokina, chief accountant of Creation of a consolidated Government of Trans-Baikal JSC Atomredmetzoloto, responds to taxpayer group (CTG) in 2012 in territory; the stakeholder’s proposal to disclose information about the CTG more broadly: the nuclear industry will make • Argun sport gym was it possible to increase income opened in Krasnokamensk tax deductions in regional in November 2014 after the budgets, where production overhaul; capacities are registered • two kindergartens were “Participation in the CTG made it possible to reduce the and operate. The CTG opened (one completely aggregate income-tax burden of the Holding’s enterprises with comprised 34 companies of reconstructed, the second a simultaneous tax-deduction increase in the budgets of areas the nuclear industry, including one - constructed), which of operation. For example, only for 2014 under the CTG 958 5 Holding’s enterprises solved the problem of queues mln RUB were paid in regional budgets by Holding’s entities.” (JSC Atomredmetzoloto, in children’s pre-school JSC Khiagda, JSC Dalur, institutions in Krasnokamensk PJSC PIMCU and JSC town; RUSBURMASH). The most • an apartment building Table 40. Financial assistance received by significant gain was observed was commissioned in in the Trans-Baikal Territory Krasnokamensk; PJSC PIMCU from state authorities in 2012- budget due to PJSC PIMCU • RUB 100 mln was invested in 2014, mln. RUB. operation on its territory – an intra-city road network. RUB 809 mln in tax deductions Kurgan region, Dalmatovskiy were received in addition to the and Shumikhinskiy districts 2012 2013 2014 plan in 2014. • 15 mln. RUB were allocated 7.98 9.20 8.26 2014 results: in the budget of Dalmatovskiy Trans-Baikal Territory, Chita district for implementation of town, Krasnokamensk town important social projects, 500 Financial assistance according to the decree of the thous. RUB - in the budget of received from state Government of the Trans- During the second year of Shumikhinskiy district. authorities Baikal Territory. the Krasnokamensk and • free financial assistance Krasnokamensk District was provided to educational, Only PJSC PIMCU received PJSC PIMCU did not receive Social-Economic Development children’s pre-school and financial assistance from financial assistance from Program operation (was other social institutions, the state in 2014. For the state in the form of tax adopted in 2013.): in particular, the focus 2012-2014, subsidies of privileges. was on financing of school the Ministry of Education, • L-410 small capacity construction in Uksyanskoye Science and Youth Policy of JSC Khiagda, JSC Dalur, airplane was purchased, the village of Dalmatovskiy the Trans-Baikal Territory JSC RUSBURMASH and JSC number of flights along Chita– district, the total volume of were received to reimburse VNIPIpromtekhnologii did not Krasnokamensk–Chita route which was 30 mln. RUB part of the expenses for the receive financial assistance was increased to three per • two apartments buildings improvement of children’s from the state. week. Airfare is maintained were commissioned. health and recreation,
Table 41. Ratio of minimum salary in the region of operation to the initial level salary in 2012-2014, RUB.*
Region Name 2012 2013 2014
Minimum salary amount at Holding’s plants in the region of operation
Moscow 14,038.0 14,212.0 22,500.0
Kurgan Region 8,462.0 8,462.0 8,557.0
Irkutsk region 29,610.0 29,610.0 29,610.0
Trans-Baikal Territory 7,289.0 7,289.0 7,289.0
Republic of Buryatia 10,926.4 11,702.4 12,486.4
Minimum salary amount fixed in the region
Moscow 11,700.0 12,200.0 12,600.0
Kurgan Region 5,683.0 6,207.0 5,554.0
Irkutsk region 4,611.0 5,205.0 5,554.0
Trans-Baikal Territory 4,611.0 6,782.0 5,554.0
Republic of Buryatia 6,693.0 6,693.0 6,693.0
* Region of operation – RF constituent entity where the Holding carries out its operations: Moscow, Trans-Baikal Territory, Kurgan region, Republic of Buryatia and Irkutsk region. 81 Impact on local Economic impact on population in regions suppliers and contractors Yuri Murashko, PR and mass media of operation director of PJSC PIMCU, responds to the ARMZ Uranium Holding is stakeholder’s proposal to highlight the social ARMZ Uranium Holding able to affect contractor responsibility topic broader and tell about social programs implemented by ARMZ in is committed to following organizations by means regions of operation: business social responsibility of applying sanctions principles and, given for default stipulated geography of operations, sees by contracts as well as one of its main objectives in by means of payment “With active support of the Holding, Trans-Baikal Development the maintenance of stable withholding till execution of Fund, regional and urban authorities held “Your Business jobs and creation of new jobs obligations in full. Sanctions Start” contest in 2014. Each dweller of the Krasnokamesk both on territories of own are contained in a contract district was able to file an application for grant. Funds were operations and on territories forming an integral part of earmarked for implementing projects in the area of social of business partners – procurement documentation entrepreneurship. Prerequisites were project implementation suppliers and contractors. and are the same for all on the territory of the Krasnokamensk district, financial participants. stability and social orientation. Preference was given to To achieve these tasks, the initiatives aimed at creating new jobs and alternative self- Holding initiates corporate employment methods, because many district residents were in social programs for assuring Investments in social a difficult economic situation.” population employment in infrastructure and charity regions of operation. ARMZ Uranium Holding has For more details refer to a major impact on the social the subsection “Investments and economic development in social infrastructure and of areas of operation, not only charity” participating in the CTG and generating an income basis • “Your Business Start” contest (18 grants by 50 thous. RUB.): The unified remuneration of regional and local budgets business-ideas were supported to open a children’s creativity system (URS) being but also implementing a and development product shop, sweet bakery product cafe, implemented allowed to range of social and charitable creation of the sports-health improvement club “Mother and define a single approach programs. a baby” etc. to generation of salaries • “Create your own social business” Educational Course in the Holding and assure In 2014, the Charity • “Social Entrepreneurship Ideas” exhibition-fair stable salary to employees. Committee was established • Master-classes of working entrepreneurs Interaction with regional at JSC Atomredmetzoloto, • Series of webinars “Social entrepreneurship fundamentals” authorities, development of whose functions include corporate social programs determination of the and timely salary payment objectives and priority areas contribute to the reduction of charitable activities. of social tensions in the regions and the enhancement For more details refer to Fig. 27. Range of measures for promoting population of Holding companies’ the section “Activities of the self-employment and social entrepreneurship support attractiveness as employers. Charity Committee”. in Krasnokamensk town
The minimum salary at all In accordance with the enterprises is higher than the Regulation on Charitable minimum wage in regions of Activities priority areas include: Settlement of disputes operation. In 2014, a range of measures for interaction with local • educational program and for the development of Median salary rose by an project support; population self-employment communities average of 3%. • cultural-educational in Krasnokamensk was initiatives and cultural performed. Provision of nuclear Preference when hiring is heritage preservation; power development public given to local population • environmental measures JSC Atomredmetzoloto does acceptability is one of the provided that qualified support; not provide assistance to priority strategic tasks of personnel is available in the • popularization of grassroots commercial organizations, Rosatom State Corporation. region of operation. Over half and amateur sports and a donations to political parties JSC Atomredmetzoloto carries of senior managers of ARMZ healthy lifestyle; and does not take part in out activities in this area Uranium Holding in regions of • patriotic values support and state policy development and guided by the information operation is hired from local patriotic education. lobbying. openness principle. population. The Charity Committee of 2015 plans: For more details see section In the reporting period, as a Rosatom State Corporation 3.6.2. Holding’s information result of Company’s facilities approved the List of In 2015, a contest for openness as the main construction voluntary and/or charitable initiatives of JSC entrepreneurial initiative stakeholder interaction non-voluntary local population Atomredmetzoloto for 2014 in support will be held in principle. relocation was not performed. the amount of 4 mln. RUB. Krasnokamensk.
Annual Report | JSC Atomredmetzoloto | 2014 82 To raise operational No complaints about the makes it possible to enhance International Forum, ”АTOMEX transparency and expand impact on local community the attractiveness of products 2013” International Nuclear interaction with all have been received in JSC and services for the target Industry Suppliers , 39-th stakeholders, since 2008 Atomredmetzoloto. audience: thorough informing annual symposium of the the Holding has been a of potential customers World Nuclear Association key company (in terms of allows us to convince them to etc. Not only ARMZ Uranium reporting) of Rosatom State Marketing give their preference to the Holding but also key S&A Corporation publishing communications mining-division products of took part in these events. In integrated annual reports State Corporation Rosatom. 2015, the Company plans to every year. Marketing communications, continue implementation of including promotional In 2014, as part of the marketing communication In case of problems of measures, advertisements, marketing activities JSC plan in terms of participation interaction with the company, participation in exhibitions Atomredmetzoloto took part in exhibitions, conferences and the Holding will be guided by RF – one of the most areas in 20 events which included forums dedicated to innovative legislation and requirements of of JSC Atomredmetzoloto such major industrial developments and advantages Rosatom State Corporation. operations. Work in this area events as “ATOMEXPO 2013” of Holding plants’ products.
Exhibition-Fair of social ideas, Krasnokamensk
83 3.7. Natural Capital Management
3.7.1. Environmental 3.7.2. Protection of 20 13.57 Policy of the Company land resources and 10 Operations of JSC biodiversity Atomredmetzoloto in terms 0 of environmental protection The in-situ leaching method and rational use of natural is the most environmentally- -10 resources is aimed, above friendly, as the natural all, at meeting legislative landscape remains virtually -20 2012 requirements. undisturbed when it is used. This method is used at JSC -30 2013 The environmental policy Khiagda and JSC Dalur plants. of JSC Atomredmetzoloto -40 2014 was developed based on ISO If deposits are developed by a -44.79 14001 international standard mining method (PJSC PIMCU), -50 and Environmental Policy of a mined underground space is Rosatom State Corporation. formed; in order to ensure its Fig. 28. Total number of disturbed lands safety and minimize its radon in PJSC PIMCU in 2012 – 2014, ha* yield, the Plant fills it in with Main objectives are: a cement-sand and gravel mixture. • develop and implement measures to ensure maximum After deposit’s development environmental impact works for disturbed land reduction; reclamation are performed. 35 31.871 • conserve the environment in the production areas, 30 recultivate land; 25.974 • reduce industrial effluents 25 23.485 and emissions discharge; • reduce emissions of 20 pollutants into atmospheric air; 15 • efficient use of energy resources; 10 2012 • continuous environmental monitoring. 5 2013 • reduce the environmental aspect relevance level. 0 2014
Fig. 29. Total number of disturbed lands in JSC Dalur in 2012 – 2014, ha*
128.22
100 2012 41.78 50 30.834 2013
0 2014
Fig. 30. Total number of disturbed lands in JSC Khiagda in 2012 – 2014, ha*
*2014 negative values are explained by reduced number of disturbed lands (more lands were reclaimed than were disturbed)
Annual Report | JSC Atomredmetzoloto | 2014 84 3.7.3. Water resource protection
Water intake
Table 42. Water Intake by Purposes and Holding’s Companies, in 2013 – 2014, thous. m³
Water Water intake Total intake for for domestic Subsurface Exceeding Enterprise water production and drinking sources the limits intake needs needs 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 PJSC 22,043.81 22,260.99 6,998.99 6,060.14 34,279.19 34,159.97 28,960.59 28,359.97 0 0 PIMCU JSC Dalur 41.13 46.00 48.71 47.55 89.84 93.55 89.84 93.54 0 0
JSC Khiagda 59.2 157.15 17.84 18.49 74.04 185.65 81.97 185.65 0 0
Reduction of water intake in Table 43. Effluent water discharge of PJSC PIMCU in 2012 – 2014, thous. m³ PJSC PIMCU for domestic and drinking needs is explained by populations and Year/water volume 2012 2013 2014 entrepreneurs’ installing water meters for a more Number of discharge effluent waters 12,768.9 13 12,720.07 accurate water consumption metering and population outflow from the town. Effluent water discharge
JSC Dalur JSC Khiagda Due to a closed process cycle, Domestic effluent water No effluent water discharge effluent waters containing discharges from the sewerage in surface-water bodies. harmful chemicals and system are removed to treatment Discharge is made on terrain radionuclides were not facilities of a specialized plant on but of solely treated waters. discharged. a contract basis. This discharge is not rated.
3.7.4. Atmospheric Table 44. Emissions of pollutants in the atmosphere in 2012 – 2014, air protection PJSC PIMCU, tons
Year/pollutant name 2012 2013 2014
Carbon oxide 870.9 929.2 809.0
Sulfur dioxide 6,424.9 6,462.7 5,541.0
Nitrogen oxides (in terms of NO2) 1,864.9 2,043.6 1,987.5
Nonorganic dust 205.7 179.3 172,3
Other coal ash 5,223.3 6,477.0 5,626.8
Total 14,595.92
PJSC PIMCU Reduction of sulphur dioxide facility and vanadium catalyst reconstruction, with 99.6% ash emissions is mainly due to replacement. collection efficiency. Boiler units Reduction of carbon oxide sulphur contents reduction No. 8 and 5 with 88.4% and 91.4% emissions is stipulated by boiler in burnt coal from 0.204% Ash emissions’ reduction due efficiency were decommissioned unit repair works in 2013 – 2014 to 0.189%, reduction of to commissioning of boiler for repair. and burning mode optimization sulphuric acid production unit No. 1 in February 2014 on boiler units No. 1, 6, 7. in sulphuric acid production after gas treatment system
85 JSC Khiagda Table 45. Emissions of pollutants in the atmosphere in 2012 – 2014, Emission volume increase JSC Khiagda, tons in 2014 stems from reconstruction of the coal boiler-house of the in-situ Year/Pollutant Name 2012 2013 2014 leaching workshop, whose Carbon oxide 73.82 69.57 167.809 capacity grew by a factor of 2.07, entailing a coal Sulfur dioxide 9.88 9.37 20.985 consumption increase; moreover, new production Nitrogen oxides (in terms of NO2) 4.60 11.26 9.953 facilities were commissioned Nonorganic dust 0.14 0.35 1.282 and a modular boiler-house at a rotation camp was installed. Other coal ash 0.35 2.96 29.937
Total 106.73 118.013 247.684 JSC Dalur
In 2014, 15% more emissions were produced as compared Table 46. Emissions of pollutants in the atmosphere in 2012 – 2014, to 2013 due to the receipt of new limits from December JSC Dalur, tons 11, 2013 for Khokhlovskoye deposit, from December Year/Pollutant Name 2012 2013 2014 25, 2014 for Dalmatovskoye deposit (volume of limits was Carbon oxide 4.50 3.92 4.532 increased due to expansion of production volumes, Sulfur dioxide 0 0 0.00016 hence, waste generation was increased). Nitrogen oxides (in terms of NO2) 1.983 1.727 1.995 Nonorganic dust 0.001 0.001 0
Other coal ash 3.59 3.63 0
Total 10.40 9.56 10.431
The Argun River, Trans-Baikal Territory
Annual Report | JSC Atomredmetzoloto | 2014 86 3.7.5. Waste Handling Table 47. All Hazard Classes Waste Generation in 2012 – 2014, tons
In JSC Dalur 33% more emissions were produced as compared to 2013 due Enterprise Year PJSC PIMCU JSC Dalur JSC Khiagda to the receipt of new limits from October 1, 2013, 08 Hazard class, year for Khokhlovskoye deposit, from October 8, 2014, 2014 2012 3.810 0.007 0.087 for Dalmatovskoye deposit 1 Hazard class 2013 3.430 0.010 0.066 (volume of limits was increased due to expansion 2014 3.580 0.008 0.084 of production volumes, hence, waste generation was 2012 1.390 0.122 2.018 increased). 2 Hazard class 2013 0.640 0.000 1.963
2014 0.260 0.000 1.521
2012 930.900 0.336 1.385
3 Hazard class 2013 152.560 0.000 4.739
2014 321.360 0.120 3.328
2012 2020.600 22.800 5,131.500
4 Hazard class 2013 2650.900 45.000 3,380.700
2014 2453.800 44.228 18,553.699
2012 21,279,598.000 7.600 7,082.900
5 Hazard Class 2013 24,467,312.300 6.900 1,893.800
2014 24,578,781.600 25.071 4,281.092
2012 21,282,555.000 30.870 12,217.400
Total 2013 24,470,120.000 51.900 5,281.200
2014 24,581,560.600 69.427 22,839.724 24,469,897.370 4,950.860 2013 0.000 Waste used at the plant, located on (99.99%) (93.7%) operated facilities, tons (%) 2014 24,482,362.500 0.000 3,918.084 38,213.632 25.600 332.690 Waste transferred to specialized 2013 contractors for processing and (0.001%) (50%) (6.3%) decontamination, tons (%) 2014 60,914.900 23.048 463.534
2013 none none none Exceeding the limits 2014 none none none
3.7.6. Expenses Table 48. Environmental protection expenses in 2014, thous. RUB.
Related to Name of activity PJSC PIMCU JSC Dalur JSC Khiagda Environmental Conservation Atmospheric air protection 50,765.000 242.000 2,236.000 Water resource protection 37,255.000 392.000 16,297.000 Expenses were increased by 22% in 2014 due to JSC Mineral resources protection 35.320 - - Dalur (increase of tariffs of specialized companies Waste Handling 35,517.000 286.000 761.000 rendering environmental- Rational use, protection and rehabilitation 50,047.000 94.000 6,587.000 measurement services and of lands an increase in environmental measurement volumes Fee for negative impact 8,417.431 26.900 546.000 (volumes of sample emissions Ensuring Environmental Radiation Safety 3,165.000 2,790.000 2,965.000 into the atmosphere). Miscellaneous expenses 4,823.680 1,679.100 5,088.410
Total 190,025.430 5,510.000 34,480.410
87 CHAPTER 4
INTERACTION with stakeholders when drafting the Report
Annual Report | JSC Atomredmetzoloto | 2014 88 4.1. Dialog with Stakeholders in the Course of Report Preparation
JSC Atomredmetzoloto Dialogue No. 1. Dialogue No. 2–3. Public consultations is committed to assuring Discussion of JSC Structural No. 4. a high level of openness and transparency of its Atomredmetzoloto transformations in Discussion of operations, maintaining 2014 annual report the mining division the 2014 JSC active communications with all stakeholders, which are concept of Rosatom State Atomredmetzoloto implemented when drafting Corporation and annual report draft December 05, 2014 public reports. development of JSC from 10:00 to 12:00 April 29, 2015 For more details about Atomredmetozoloto interaction principles, key Main production results of the from 10.00 to 11.30 stakeholder interests and mining division of Rosatom February 19, 2015 interaction mechanisms refer State Corporation in 2014, from 09:00 to 12:00 The 2014 JSC Atomredmetzoloto to sect. 3.6.1.Stakeholder main parameters and future annual report draft was Definition. Report’s specific features were prepared with due account of discussed at the event. Issues of Rosatom mining stakeholder comments voiced In accordance with the division’s evolution amidst during dialogues was presented Standard on interaction with global changes on the on public consultations on April stakeholders АА1000SES global uranium market and 29, 2015. Based on the event’s when drafting the Report four JSC Atomredmetzoloto results stakeholders put forward dialogues were held to discuss development concept were proposals for improving the the concept, priority topic and discussed. Report text and interaction draft annual report. Besides, process. stakeholders participated in the procedure of Report’s For more details about past major aspect highlighting and Victoria Dolina, annual report preparation events refer to the web-site of public assurance. project manager responds to the JSC Atomredmetzoloto http:// stakeholder’s proposal to include in the www.armz.ru/eng/press/ Report quotes of Holding’s employees news/?id=669&p=1 responsible for implementation of landmark projects:
“For the first time this year we decided to place Holding’s employee quotes in the Report. And we decided to do it in a close link “stakeholder’s question asked at the dialogue – Company’s representative answer”. In our opinion, such a form discloses a close relationship of the annual report preparation process with the opinion of stakeholders”.
4.2. Taking into Account Stakeholder Suggestions
Table 49. Fulfillment of obligations assumed when drafting the 2013 annual report
Stakeholder proposals based on the results of dialogues with Accounting of JSC Atomredmetzoloto proposals stakeholders A proposal to make strategy development a priority topic of the Considered. “Enhancing business efficiency of ARMZ Uranium annual report of the next reporting period. Holding as a key strategic area” was selected as the priority one. Considered. Due to annual report drafting budget optimization, a GRI G4 compliance level must be verified by a non-financial audit. decision was made not to perform a non-financial audit. Considered. The chapter “Operating Results: capital management Add the chapter “Operating Results” to the table of contents.” efficiency” is provided in the Report’s structure Include major events beyond the reporting period in the subsection For the future. Will be taken into account when drafting the 2014 “Key Events”. report concept. Disclose capital in a specific business model, i.e. show each capital Considered. The business-model reflects Company’s value creation type and volume at the start of the reporting period, plus source of highlights. increment (value creation) based on annual results.
89 Table 50. Accounting of the most significant stakeholder proposals put forward in dialogues when drafting the 2014 Report
Stakeholder proposals based on the results of Employees who provided №. Proposals’ accounting dialogues with stakeholders comments Ivan Krupyanko, Head of ARMZ PR and Considered when preparing the made-up regional authorities relations 1 Make a Smart-PDF version of the Report. version of the Report. department For more details see pages 7 Nikolay Krailin, Disclose the competitiveness topic more broadly, Advisor to the Director Considered when modifying section 2.1.3. 2 focus on output-product quality improvements and General “Marketing and sales policy”. customer requirements. For more details see pages 23 Marina Liborakina, Deputy Director General for Expand a section dedicated to the strategy, if Considered when drafting section 2.1.4. ARMZ Business Strategy and 3 possible, digitize information specified in it. Add Long-Term Strategy and Current Status of Development information explaining strategy selection, its focus. the Company. For more details see pages 24 Evgeniy Palchikov, Reflect diversification in the Report’s structure, ARMZ Director for Considered when drafting section 2.1.5. Plans for 4 consider a possibility for introducing a separate Development 2015 and the mid-term. section dedicated to this topic. For more details see pages 25 Vladislav Matus, Reflect the foreign-affairs context, imposition Considered when drafting section 2.1.7. ARMZ Deputy Director General 5 of anti-Russian sanctions and their impact on Cooperation with foreign partners. For more details see Holding’s performance. pages 26 Anatoly Ostroukh, Deputy HR Director – head of In addition, disclose information about the ARMZ compensation, benefit Considered in section 2.2.1. “Corporate 6 KPI system, about Company’s management and HR record management Governance”. remuneration. department For more details see pages 30 Victor Zakharov, ARMZ Deputy Director Considered when modifying the section General for Economics and 7 Show risk growth or decrease dynamics in 2014. “Risk Management”. Finance For more details see pages 36 Victor Svyatetskiy, Considered when drafting the Report’s First Deputy Director Place brief sections in the Report dedicated to ARMZ structure, section 2.3 was introduced. 8 General uranium assets. Holding’s uranium chain development For more details see prospects and strategy. pages 39 Dmitry Teplinskiy, First Deputy Director Provide results of plants’ production operations 9 Considered in the report text. General of PJSC PIMCU disclosed in the report with comments. For more details see pages 40 Leonid Ivanchikov, Considered partially when modifying Sustain a balance in the disclosure of information Head of the human sections 2.3. “Holding’s operating results about uranium assets, disclosing not only resources management 10 and uranium chain development prospects”, performance indicators but also data on the department of JSC Dalur 3.5. “Human Capital Management” and 3.7. environment, personnel and safety. For more details see “Natural Capital Management” pages 43 Bella Mikhailovskaya, Considered when modifying sections 2.3. Head of the human Elaborate a template of reporting information “Holding’s operating results and uranium resources management 11 disclosure about Company’s uranium assets in chain development prospects”, 3.5. “Human department of JSC Khiagda special brief reports Capital Management” and 3.7. “Natural For more details see Capital Management” pages 45
Annual Report | JSC Atomredmetzoloto | 2014 90 Stakeholder proposals based on the results of Employees who provided №. Proposals’ accounting dialogues with stakeholders comments Sergey Migalin, Disclose information about Company’s credit history Considered in section 3.2. “Financial Capital ARMZ Financial Director 12 in the Report. Management”. For more details see pages 49 Svetlana Pomuleva, ARMZ selection, training and Create a subsection in the report dedicated to Partially considered in section 3.5. “Human 13. development team leader personnel involvement. Capital Management”. For more details see pages 67 Modify the human capital management section Stanislav Anikeev, focusing on company’s work for personnel retention, Considered when modifying section 3.5. ARMZ HR Director 14 human capital development plans as well as support “Human Capital Management”. For more details see and adaptation of laid-off staff. pages 74 Olga Scherbakova, Revise the list of Company’s stakeholders, show Considered in section 3.6. “Social Capital HR Director of PJSC PIMCU 15 restructured personnel of ARMZ Uranium Holding Management”. For more details see as a stakeholder. pages 77 Vladimir Vysotskiy, Considered when modifying the Report’s ARMZ Deputy Director Include the subsection “Information Openness of structure, section 3.6.2 was introduced. 15 General for Special Projects ARMZ Uranium Holding”. Holding’s information openness as the main For more details see stakeholder interaction principle pages 80 Vera Sorokina, Disclose information about the CGT more broadly in Considered in section 3.6.3. “Development ARMZ Chief Accountant 17 the Report of Areas of Operation”. For more details see pages 81 Yuri Murashko, To highlight the Holding’s social responsibility topic PR and mass media relations more broadly in the Report, disclose information Considered in section 3.6. “Social Capital 18 director of PJSC PIMCU about social programs implemented in regions of Management”. For more details see operation in 2014. pages 82 Victoria Dolina, ARMZ annual report Include in the Report quotes of Holding’s employees 19 Considered when drafting the Report’s text. preparation project manager responsible for landmark project implementation. For more details see pages 89 Consider the business diversification topic (in terms of interaction with other divisions of Rosatom State For the future. Will be considered when 20 Corporation) as a priority for the 2015 annual report drafting the 2015 annual report concept. of the Company.
Dialogue for discussing the annual report concept
91 4.3. Report’s Statement of Public Assurance
Background We note that Company for the second pany and stakeholders were discussed in the Report. The JSC Atomredmetzoloto man- year already has been using the method Report reflects issues of stra- agement (hereinafter referred tegic development, financial to as “ARMZ Uranium Hold- for evaluation of operational aspect and economic performance, ing Co.” or the “Company”) and social, environmen- submitted its 2014 Integrated significance based on international tal, and economic impact. Annual Report (hereinafter Herewith, major operational referred to as the “Report”) standards aspects, as we understand, for us to review in terms of are those aspects which completeness and relevance deal with actual or potential of information disclosed in it impacts on stakeholders or as well as evaluate manage- During the Report’s public realizes the importance and which may affect evaluations ment’s actions for response assurance we did not set the prospects of engaging stake- and decisions of key stake- to stakeholder wishes and task to verify information holders. holders. remarks. authenticity. Verification of the degree of Report’s compliance Another obvious advantage We note that for the second For this purpose, the Com- with any reporting systems, of the Report is that it was year already, the Company pany provided us and our both Russian and international prepared in compliance has been using a method for representatives with the ones, is also not included in with international standards the evaluation of operational opportunity to participate and the task of this statement. (Global Reporting Initiative aspect significance based put forward our comments in (GRI rev. G4.0), АА1000 In- on international standards, four meetings with stakehold- We confirm our independence statute of Social and Ethical which enables the Company ers, which were held: and the objectiveness of our Accountability standards, to consider the stakeholder appraisals, express our per- and International Integrated opinion. In our view, there are • on 05.12.2014. Dialogue sonal expert opinion and not Reporting Framework (IR no reasons to doubt in topic No. 1. Discussion of JSC the opinion of the companies 1.0)). Report’s contents, priority setting result authen- Atomredmetzoloto 2014 we represent. All participants completeness, relevance and ticity and relevance. annual report concept; of public consultations were significance of information absolutely free to express presented in it enable to note The priority topic of the Hold- • 19.02.2015. Dialogue No. their opinion. We confirm that positive Company’s develop- ing’s Report “ARMZ Uranium 2. “On main 2014 results and have not received any remu- ment dynamics and its opera- Holding Business Efficiency measures for PJSC PIMCU neration from the Company tion efficiency enhancement. Enhancement as a key stra- efficiency enhancement” for participation in the public tegic area disclosed in a sep- assurance procedure. We deem it necessary to arate chapter of the Report, • 19.02.2015. Dialogue No. emphasize constructive has cross-references with 2. “On main 2014 results and Our work results are executed interaction with stakeholders other chapters, which assures measures for JSC Khiagda in the form of this Statement demonstrated by Holding’s information disclosure coher- and JSC Dalur efficiency of Public Assurance contain- management both during ence. We acknowledge that enhancement” ing judgments, in respect of Report’s drafting and during the Company on dialogues which we have reached over- dialogues and public consul- offered stakeholders to gen- • 29.04.2015. Public all agreement. tations held and high quality erate recommendations for consultations to discuss the of these events. the priority topic disclosure draft annual report. Evaluations, in the Report. In our opinion, We are not aware of any facts all significant information Draft Report remarks and that could undermine the for priority topics has been Evaluation Procedure recommendations accuracy of the data included disclosed. in the Report. We think that We have the required compe- We positively evaluate the the information disclosed in Comprehensiveness tence and experience in the Report in terms of its structure the Report is sufficient both area of corporate responsibil- and contents. JSC Atomredmet- in terms of compliance with We believe that the Report ity, sustainable development zoloto prepared an informative international public reporting contains all significant and non-financial reporting. and well-structured report standards and taking into information. Information is meeting our expectations. We account stakeholder com- presented quite comprehen- Our statement is based on find it very important that the ments made at the Report sibly in a balanced manner: the comparative analysis of Report has been prepared preparation stage. We believe almost all sides of Compa- two Report versions (draft voluntarily for seven consec- that it is the integrated Report ny’s operations, which affect Report for public consulta- utive years now and is a good that should represent the offi- economy, social area and tions and final Report version) example of an enhanced trans- cial position of the Company’s the environment and repre- and materials submitted to parency on the part of the Com- management with regard to sent an interest for stake- us based on dialogue results pany. In preparing the Report, socially significant issues and holders, were described. To and consultations (minutes of the Company demonstrated activities of the Company. ensure compliance with the events, stakeholder remark that it intended to ensure public comprehensiveness prin- accounting table) as well as and environmental satisfaction Significance of ciple, the Report contains on comments received from and was prepared to engage in references to regulating management and employees open dialogue with stakeholders Information documents and additional of the Holding during mea- about various issues concerning public sources, including sures for Report’s public its activities. We can see that We think that all the most the corporate website of the assurance. the Company’s management important topics for the Com- Company.
Annual Report | JSC Atomredmetzoloto | 2014 92 We are not aware of significant responds to stakeholder The Company has undertaken information non-disclosure. remarks, proposals and rec- ommendations. tremendous work in order to expand Company’s Reaction The Company recorded stake- the audience and engage new to Stakeholders’ holder recommendations Comments and in minutes of dialogues and stakeholder representatives public consultations, carried Suggestions out a thorough analysis and took them into consideration demonstrated that it was part. We note separately that When drafting the Report, not only when drafting the eager to react to stakeholder the Company has undertaken four events with stakehold- final version of the Report but suggestions and recommen- tremendous work in order ers were performed. We also in Company’s operations. dations and deal with the to expand the audience and believe that the Company Besides, the Company reacted issues raised. engage new stakeholder regularly involves stakehold- to stakeholder remarks put representatives. ers in annual report drafting forward during a previous We note high public and responds to all ques- reporting campaign. dialogue preparation and tions received during public organization quality, in which dialogues. The Company’s Thus, in the course of Report representatives of a wide management constructively preparation the Company range of stakeholders took
Signatures of assurers:
Stepan Mikhailovitch Zhiryakov member of the Federation Council of the Federal Assembly of the Russian Federation from the Trans- Baikal Territory - representative in the Federation Council of the Federal Assembly of the Russian Federation from a legislative (representative) state authority of the Trans-Baikal Territory
Grigory Anatolievitch Mashkovtsev Director General of the N.M. Fedorovskiy All-Russian Scientific Research Institute of Mineral Resources (FSUE VIMS)
Olga Kanunnikova Acting Head of the Town of Krasnokamensk Council
Ivan Aleksandrovitch Kiselev Deputy of the Legislative Assembly of the Trans-Baikal Territory
Aleksandr Anatolievitch Morozov Deputy of the Municipal District Council “Town of Krasnokamensk and Krasnokamensk District”
Sergey Aleksandrovitch Zaikin Deputy of the Municipal District Council “Town of Krasnokamensk and Krasnokamensk District”
Dmitry Sergeevitch Suvorov Deputy head of local administration ME “Bauntovskiy – Evenki district”
Olga Vladimirovna Plyamina Executive Director of V.I. Vernadskiy Non-Governmental Environmental Foundation
Alan Vladimirovich Khasiev Chairman of Oka interregional public environmental movement
93 Appendices
Appendix 1. Matrix of the Company’s Activities and Sustainable 1 2.5 Development Data 5 Significance 54 51 58 55 The average score given 19 4221 to each of the aspects was 9 57 2 14 determined separately on 2 the basis of evaluation by 52 50 56 15 17 6 16 JSC Atomredmetzoloto 13 24 3649 representatives and 4 12 22 53 37 18 external stakeholders’ 4411 28 representatives. A data 3 significance matrix was 27 7 10 20 43 8 1.5 developed on the basis of the 38 48 34 33 39 above analysis (see Figure 47 23 31 25 29 30 Matrix of Company’s 26 35 32 Activities and Sustainable 30 46 40 45 Development Data Significance).
Significance for the Stakeholders for Significance 1 41 The most significant aspects were aspects which received maximum scores in a questionnaire.
The horizontal axis 0.5 demonstrates significance for the Company and the vertical one demonstrates significance for external stakeholders. 0 0.5 1 1.5 2 2.5
Significance for the Company
Insignificant Quite significant The most significant
Economic Human Rights Responsibility for Production
1 Financial result 16 Investment for environment 28 Non-discrimination 44 Customer’s Health and Safety 2 Uranium markets Environmental standards 29 Freedom of association 3 Non-direct economic 17 Environmental impact man- 30 Child labour 45 Labels impacts agement 31 Compulsory labour 46 Local entities 4 Procurement 18 Emergency preparedness 32 Security 47 Compliance with requirements 5 Business Sustainability 33 Rights 48 Privacy right 6 Innovations Social Approaches 34 Complaints 7 Cormanagement for Labour Organization 8 Diversification and Decent Work Society Specific aspects 9 Investment 19 Employment 35 Local Communities 49 Place in NFC Environmental 20 Employees and managers 36 Anti-corruption 50 Global uranium markets cooperation 37 State policy 51 Development strategy 10 Materials 21 Health and safety 38 Rivalry encumbrance 52 Value Chain 11 Energy 22 Education 39 Compliance 53 Cooperation with partners 12 Water 23 Equal possibilities 40 Societal impact 54 Future Forecast 13 Emissions and waste 24 Social security 41 Complaints 55 Raw Material Base Development 14 Product safety 25 Suppliers 42 Impact in the territories of 56 Efficiency Management 15 Compliance with environmen- 26 Complaints operation 57 Occupational health and safety tal standards 27 Remuneration 43 Marketing
Fig. 31. Matrix of the Company’s Activities and Sustainable Development Data Significance
Annual Report | JSC Atomredmetzoloto | 2014 94 Appendix 2. Table of Standard GRI Disclosures (in accordance with the “Core” level)
Reflected GRI GRI Subclause in the Report Section/Clause Page Comments Report GENERAL STANDARD DISCLOSURES
Strategy and Analysis Address by the Chairman of the Board of Directors 1 G 4-1 Statement of the senior manager + and Address by the Director General 4 3.6. Social Capital G 4-2 Description of key impacts, risks, and 2 Management 77 opportunities. 2.2.3. Risk management 33 Organization Profile 1.1. General Information 3 G 4-3 Name of the organization + about JSC Atomredmetzoloto 12 1.1. General Information 4 G 4-4 Types of products and services + about JSC Atomredmetzoloto 12 G 4-5 Location of the organisation’s 5 + Contact information 109 headquarters G 4-6 Countries where the organisation 1.1. General Information 6 + operates about JSC Atomredmetzoloto 12 1.1. General Information 7 G 4-7 Nature of ownership and legal form + about JSC Atomredmetzoloto 12 8 G 4-8 Main markets + 1.2. Market Presence 14 2014 Key Performance Indicators, 8 3.5.2. Human Capital 9 G 4-9 Scale of the organisation + Features, 67 1.1.3. Holding’s Structure, 13 3.2.1. Financial Management 49 Substantial portion of the organization’s work performed by workers who are legally recognized as self-employed, or by individuals other 3.5.2. Human Capital 10 G 4-10 Number of employees + than full-time or freelance Features 67 employees, including full-time or freelance employees of contractors — not registered. No major seasonal changes in the number of personnel. G 4-11 Percentage of total employees covered 3.5.8. Trade unions and 11 + by collective bargaining agreements collective agreements 74 1.3. Value Chain and 12 G 4-12 Supply chain + Business Model 15 Changes in the location of suppliers, the structure G 4-13 Changes regarding the organization’s 1.1. General Information 13 + of the supply chain, or in size, structure, or ownership about JSC Atomredmetzoloto 12 relationships with suppliers — none. 2.1.3. Marketing and sales 14 G 4-14 Precautionary principle + policy 23 2.2.3. Risk management 33 G 4-15 Externally developed charters, 1.1. General Information 15 + principles, or other initiatives about JSC Atomredmetzoloto 12 G 4-16 Membership in organizations and 1.1. General Information 16 + associations about JSC Atomredmetzoloto 12
95 Reflected GRI GRI Subclause in the Report Section/Clause Page Comments Report GENERAL STANDARD DISCLOSURES
Strategy and Analysis
Identified Material Aspects and Boundaries
17 G 4-17 Reporting outline + Information about the Report 6
G 4-18 Process for defining the report content 18 + Information about the Report 6 and the Aspect Boundaries 19 G 4-19 Material Aspects + Information about the Report 6 G 4-20 Material Aspect Boundaries inside the 20 + Information about the Report 6 organization Information about material G 4-21 Material Aspect Boundaries outside 21 + Information about the Report 6 aspects is presented only on the organization the organization’s profile No figures were restated within the reporting period. G 4-22 Restatements as compared to the 22 + There were no material previous report changes in measurement and calculation procedures. Data on human capital features are given including data by ARMZ Service LLC 23 G 4-23 Scope and Aspect Boundaries Changes + Information about the Report 6 (ESK ARMZ LLC) which were not reflected in 2012 and 2013 public reports of the Company Stakeholder Engagement
24 G 4-24 List of stakeholder groups + 3.6.1. Stakeholder Definition 77 G 4-25 Identification and selection of 25 + 3.6.1. Stakeholder Definition 77 stakeholders with whom to engage G 4-26 Organisation’s approach to 26 + 3.6.1. Stakeholder Definition 77 stakeholder engagement G 4-27 Key topics and concerns that have 4.2. Taking into Account 27 + been raised through stakeholder engagement Stakeholder Suggestions 89 General Information about the Report
28 G 4-28 Reporting period + Information about the Report 6 The 2013 JSC Atomredmetzoloto Annual Report was published on the Holding's website www. 29 G 4-29 Date of most recent previous report + armz.ru (Shareholders and Investors > Information disclosure > Annual Reports) on July 1, 2014. 30 G 4-30 Reporting cycle + Information about the Report 6
31 G 4-31 Contact point + Contact information 109 Appendix 2. Table of Standard 32 G 4-32 GRI Content Index table + GRI Disclosures (in accor- 94 dance with the “Core” level) 4.3 Public assurance of the 33 G 4-33 External assurance of the Report + report 92 Corporate governance 2.2.1. Corporate Governance, 28 34 G4-34 Corporate Governance structure + 2.2.3. Risk Management, 33 3.2.2. Investment activities 55
Annual Report | JSC Atomredmetzoloto | 2014 96 Reflected GRI GRI Subclause in the Report Section/Clause Page Comments Report GENERAL STANDARD DISCLOSURES
Strategy and Analysis
35 G4-35 Authority Delegation Procedure + 2.2.1. Corporate governance 28
G4-36 Liability for decisions on 36 + 2.2.1. Corporate governance 28 environmental, economic and social issues G4-37 Procedures for consultations on 3.6. Social Capital 37 + economic, environmental and social problems Management 77 G4-38 Composition of the supreme corporate 38 + 2.2.1. Corporate governance 28 governance body G4-39 Concurrent holding posts of the 39 Chairman of the Board of Directors and the + 2.2.1. Corporate governance 28 Director General G4-40 Procedure for nomination and selection 40 + 2.2.1. Corporate governance 28 of candidates to the Board of Directors 41 G4-48 Report Approval + Information about the Report
42 G4-51 Remuneration Rules + 2.2.1. Corporate governance 28
43 G4-52 Procedure for remuneration definition + 2.2.1. Corporate governance 28
Ethics and good faith G4-56 Values, principles, standards, and 2.1.1. Corporate Mission and 44 + norms of behaviour Values 20 SPECIFIC STANDARD DISCLOSURES: Information about management approaches 3.2. Financial capital 45 G4-SMA Financial performance management 49 2.1.2. Natural Uranium 46 G4-SMA Uranium markets Market Overview and Outlook 21 3.6.3. Development of the 47 G4-SMA Non-direct economic impacts Regions of Operation 80
48 G4-SMA Procurement 2.2.3. Risk management 33 49 G4-SMA Business Sustainability 2.1. Business Strategy 20
50 G4-SMA Innovations 3.4.1. Innovative activities 65
51 G4-SMA Corporate governance 2.2.1. Corporate governance 28
2.1.5. Plans for 2015 and the 52 G4-SMA Diversification mid term 25
53 G4-SMA Investments 3.2.2. Investment activities 55 3.3.1. Raw Material Base 54 G4-SMA Materials Development 57 3.3.5. Rosatom Production 55 G4-SMA Energy System. Complying with Prod- uct Quality Requirements 63 3.7.3. Water resource 56 G4-SMA Water protection 85
57 G4-SMA Emissions and waste 3.7.5. Waste Handling 87 3.5.9. Occupational health 58 G4-SMA Product safety and safety 75 G4-SMA Compliance with environmental 3.7.1. Environmental Policy 59 standards of the Company 84
97 Reflected GRI GRI Subclause in the Report Section/Clause Page Comments Report GENERAL STANDARD DISCLOSURES
Strategy and Analysis 3.7.6. Expenses Related to 60 G4-SMA Environmental protection expenses Environment Conservation 87 3.7.1. Environmental Policy of 61 G4-SMA Environmental impact management the Company 84 3.5.9. Occupational health 62 G4-SMA Emergency preparedness and safety 75 63 G4-SMA Employment 3.5.2. Human Capital Features 67 3.5.9. Occupational health and 64 G4-SMA Health and safety safety 75 3.5.4. Social Policy of the 65 G4-SMA Social support Company 71 66 G4-SMA Remuneration 3.5.3. Remuneration System 70 3.5.9. Occupational health 67 G4-SMA Safety assurance and safety 75 2.2.4. Internal Monitoring 68 G4-SMA Anti-corruption System. Risk Protection 34 3.6.3. Development of the 69 G4-SMA Impact on territories of operation Regions of Operation 80 2.1.3. Marketing and Sales 70 G4-SMA Marketing policy Policy 23
1.1.4. The Company’s Role in 71 G4-SMA Place in Rosatom NFC Rosatom’s Production Cycle 14 2.1.2. Natural Uranium 72 G4-SMA Global uranium markets Market Overview and 21 Outlook 73 G4-SMA Development strategy 2.1. Business Strategy 20
74 G4-SMA Value Chain 1.3.1. Value Chain 15 2.1.3. Marketing and Sales 75 G4-SMA Partner Engagement Policy 23 2.1.5. Plans for 2015 and the 76 G4-SMA Future Forecast mid term 25 3.3.1. Raw Material Base 77 G4-SMA Raw Material Base Development Development 57 Chapter 3. Operating 78 G4-SMA Efficiency Management results: capital management efficiency 48 79 G4-SMA Risk management 2.2.3. Risk management 33
Specific standard disclosures: Performance indicators
“Economic” Category. “Economic performance” Aspect Key 2014 results, 8 3.2.1. Financial Management, 49 Key 2014 results, 3.2.1. Financial 3.5.3. Remuneration Management, 3.5.3. Remuneration System, System, 70 80 3.5.4. Social Policy of the Company, 3.6.3. + 3.5.4. Social Policy of the Development of regions of operation, 2.2.1. Company, 71 Corporate governance 3.6.3. Development of regions of operation, 80 2.2.1. Corporate governance 28 3.5.7. Support of veteran- EC3 Coverage of the organization’s defined pensioners 74 81 + benefit plan obligations 3.5.4. Social Policy of the Company 71
Annual Report | JSC Atomredmetzoloto | 2014 98 Reflected GRI GRI Subclause in the Report Section/Clause Page Comments Report GENERAL STANDARD DISCLOSURES
Strategy and Analysis
“Economic” Category. “Market Presence” Aspect EC4 Financial assistance received from the 3.6.3. Development of the 82 + state Regions of Operation 80 EC5 Ratios of standard entry level wage by 3.6. Social Capital 83 gender compared to local minimum wage at + Management 77 significant locations of operation EC7 Development and impact of investments 3.6. Social Capital 84 + in infrastructure and free services Management 77 EC8 Major non-direct economic impacts, 3.6. Social Capital 85 + including impact area Management 77 “Environmental” Category. “General Information” Aspect 3.3.5. Rosatom Production System. Complying 86 EN 6 Power consumption reduction + with Product Quality Requirements 63 3.7.3. Water resource EN 8 Total amount of withdrawn water broken 87 + protection down by sources 85
3.7.2. Protection of land 88 EN 13 Preserved and restored habitats + resources and biodiversity 84
3.7.4. Atmospheric air EN 21 Emissions of significant pollutants into 89 + protection the atmosphere 85
EN31 Total environmental protection 3.7.6. Expenses Related to 90 + expenditures and investments by type Environment Conservation 87 “Social” Category. ”Employment” Aspect LA1 Total number and rates of new employee 3.5.2. Human Capital Information on new employee 91 hires and employee turnover by age group, + Features 67 hires is not collected. gender, and region LA2 Benefits provided to full-time employees, which are not provided to temporary or 3.5.4. Social Policy of the 92 + part-time employees broken down by major Company 71 regions of operation “Social” Category. “Employee and management relationships” LA4 Minimum period of notification of 3.5.8. Trade unions and 93 material changes in company’s operation and + collective agreements 74 whether it is defined in a collective agreement “Social” Category. “Occupational Health and Safety” LA6 Type of injury and rates of injury, occupational diseases, lost days, and 3.4.10. Occupational health 94 + absenteeism, and total number of work- and safety 75 related fatalities, by region and by gender “Social” Category. ”Training and Education” Aspect LA9 Average hours of training per year 3.5.5. Employee professional 95 per employee by gender and by employee + training and development 72 category
99 Reflected GRI GRI Subclause in the Report Section/Clause Page Comments Report GENERAL STANDARD DISCLOSURES
Strategy and Analysis LA10 Programs for skills management and lifelong learning that support the continued 3.5.5. Employee professional 96 + employability of employees and assist them in training and development 72 managing career endings Category: “Society”. “Public Policy” Aspect SO6 Total value of political contributions by 97 + country and recipient/ beneficiary
Annual Report | JSC Atomredmetzoloto | 2014 100 Appendix 3. Table of Disclosures as per the Reporting Standard of Rosatom State Corporation
Indicator Name Indicator Report Section
2.1.2. Natural Uranium 1.3. Market Presence 1.3.1. Natural Uranium Market Description Market Overview and Outlook 2.1.2. Natural Uranium 1.3.2. Share on the natural uranium market Market Overview and Outlook 3.2. Financial capital 1.4. Structure and main 1.4.1. Number of organizations, revenues and number of employees by management areas of operation Corporation’s areas of operation 3.5. Human Capital Management 2.1.1. Net asset value 2.1.2. Current liquidity ratio 2.1.3. Quick assets ratio 3.2. Financial capital 2.1. Financial Capital 2.1.4. Absolute liquidity ratio management 2.1.6. Structure of capital and liabilities (specifying the ratio of borrowed and own funds) 3.3.3. Uranium Production 2.2.1. Uranium mining production capacities, tons/year (uranium production 2.2. Production capital by JSC Atomredmerzoloto volume) Russian Entities 2.3. Intellectual capital 2.3.1. Intangible assets value, bln. RUB. 2.4.1. Average headcount broken down by areas of operations, thous. people 2.4.4. Average personnel age, years old 2.4.5. Share of specialists under 35 years old, % 3.5. Human Capital 2.4. Human Capital 2.4.6. Personnel involvement, % Management 2.4.9. Total number of employees broken down by the employment contract, region and gender 2.4.12. Number of employees covered by collective agreements 3.6.2. Holding’s information openness as the main 2.5. Social capital 2.5.3. Industrial mass media stakeholder interaction principle 2.6.1. Volume of monitored uranium raw materials base with a competitive 3.3.1. Raw Material Base production cost, Russian assets), thous. t. Development 2.6. Natural Capital 2.6.2. Affiliation, size, protection status and value in terms of biodiversity of 3.7. Natural Capital water bodies and related habitats, on which discharges of the organization Management Natural and surface effluent from its territory have a major impact Capital Management 3.2.1 Risk and risk management system description 2.2.3. Risk management 3.3.1. Number and results of in-house checks, including performed by the 3.2. Risk management 2.2.4. Internal Monitoring internal control department, with respect to financial-business activities of System. Asset protection the company 3.5. Human Capital 3.10 - Personnel Expenses 3.10.1 Personnel Expenses Structure Management 4.1. Dialog with 3.14. Social-Reputational 3.14.2. Activities with stakeholders as part of public reporting drafting Stakeholders in the Course Capital Management of Report Preparation
101 Appendix 4. Opinion of the Internal Control Directorate
JOINT-STOCK COMPANY ATOMREDMETZOLOTO
The opinion based on the internal audit results of non-financial data of 2014 JSC Atomredmetzoloto annual report
The annual report (hereinafter - Report) was drafted in accordance with order dated 31.12.2014 No. 003/341-P “On the organization of work for drafting 2014 JSC Atomredmetzoloto annual report. The Internal Control Directorate of JSC Atomredmetzoloto controlled the process of the Company’s 2014 annual report drafting, including collection and consolidation of data important for stakeholders and provision of completeness and authenticity of the information disclosed. Our responsibility lies in expressing an opinion about the efficiency of the internal control system of public annual reporting generation process and about compliance of the Report generation procedure with requirements of current legislation, standards of Rosatom State Corporation, internal regulatory documents of JSC Atomredmetzoloto in the area of public reporting. Based on the performed control activities, it may be stated that the information presented in the Report fully reflects operations of JSC Atomredmetzoloto in 2014 in all material aspects. The document contains the required information about the control system, key projects of the Company and their implementation results, main events and plans.
Internal Control Director N.V. Sytnik
Annual Report | JSC Atomredmetzoloto | 2014 102 Appendix 5. Auditor’s opinion on consolidated financial statements as per IFRS
Joint-Stock CompanvKPMG Telephone +7(495) 937 4477 10 Presnenskava emb.O Fax +7 (495) 937 4400/99 Moscow, Russia 123317 Internet www.kmpg .ru
Auditor’s Opinion
To the Shareholders and Board of Directors of JSC Atomredmetzoloto
We have audited the attached consolidated financial statements of JSC Atomredmetzoloto and its subsidiaries (hereinafter referred to as the «Group») consisting of the consolidated financial position report as of December 31, 2014 and consolidated profit and loss statement and statements of other aggregate income, changes in equity and cash flows in 2014, as well as comments offering a summary of the Group’s accounting policy and other explanatory information.
Responsibility of the management of the audited entity for the consolidated financial statements
The management of the audited entity is responsible for the preparation and accurate presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards, as well as for such internal control as the management deems necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility Our responsibility is to express our opinion on the accuracy of these consolidated financial statements based on our audit. We conducted our audit in accordance with Russian federal auditing standards and the International Standards on Auditing. These standards require that we comply with ethical norms and plan and perform the audit so as to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
Audited entity: JSC Atomredmetzoloto The independent auditor JSC KPMG. Company registered (JSC ARMZ) in accordance with legislation of the Russian Federation, Registered by the Interdistrict Inspectorate member of KPMG independent companies network of the Federal Tax Service No.43 for Moscow. comprising KPMG International Cooperative («KPMG International») registered in accordance with the legislation Certificated dated August 02, 2002 of Switzerland Series 77 №007893992 Entered into the Unified State Register of Legal Entities under the Principal Registered by the registration chamber. Certificated dated State Registration Number 1027700043645 on August 02. 2002. May 25,1992 No.011 .585. 109004. Moscow.22 Bolshoi Drovyanoipereulok. Entered in the Unified State Register of Legal Entities by the Interdistrict Inspectorate of the Ministry of the Russian Federation forTaxes and Levies No. 39 for Moscow under No. 1027700125628 on August 13. 2002 Certificate of 77 series No. 005721432. Member of the Non-profit partnership Auditor’s Chamber of Russia. Principal Registration number of the entry in the state register of auditors and audit companies 10301000804
103 Joint-Stock Company Page 2
An audit involves performing procedures to obtain audit evidence supporting the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the professional judgement of the auditor, including an assessment of the risks of material misstatement, whether due to fraud or error. In assessing this risk, the auditor considers the system of internal controls relevant to the preparation and accurate presentation of the consolidated financial statements in order to draft the appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of internal controls. An audit also includes evaluating the appropriateness of accounting policies adopted and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of (consolidated) financial statements. We believe that the audit evidence we have obtained in our audit serves as a reasonable basis for expressing our audit opinion on the accuracy of these consolidated financial statements.
Opinion In our opinion, the consolidated financial statements fairly present in all material respects the financial position of the Group as of December 31, 2014, and the results of its operations and its cash flows for 2014 in accordance with International Financial Re- porting Standards.
A. A. Kim. Director, power of attorney dated March 16, 2015 No. 11/15 JSC KPMG A pril 30, 2015 Moscow, Russian Federation
Annual Report | JSC Atomredmetzoloto | 2014 104 Appendix 6. List of abbreviations and terms
GRI Global Reporting Initiative
Internal Rate Of Return, Generally Accepted Abbreviation Irr) — Interest Rate, At Which Net Presentvalue IRR (Npv) Is 0. M&A Engl. Mergers and Acquisitions (Engl. Net Present Value, Generally Accepted Abbreviation Npv) — Sum Of Discounted Payment Flow NPV Values Specified By Today. PFS Prefeasibility Study
SAP SRM Engl. Supplier Relationship Management
U1H Uranium One Holding
AIMEPFMS Automated Information and Measurement Electrical Power Fiscal Metering System
AIMTMS Automated Information-Measurement Technical Metering System
APRIMS Automated Power Resource Information and Measurement System
AEMS Automated Environmental Monitoring System
NPP Nuclear Power Plant
BIL Block In-Situ Leaching
ES Explosive Substances
OL Overhead Lines
SC DG Director General Of Rosatom State Corporation
GDG Geodynamic Ground
SCMR State Commission on Mineral Reserves
HMP Hydrometallurgical Plant
HM Hydrometallurgy
MI of KRC of the RAS Federal State Budgetary Enterprise Mining Institute Of The Kola Research Centre Of The Ras
FP Finished Products
GE Geological Exploration
GTF Geotechnological Field
S&A Subsidiary and Associated Companies
VMI Voluntary Medical Insurance
CSP Crushing and Screening Plant
ЕРСМ Engineering, Procurement, Construction and Project Management
SURS Single Unified Remuneration System
UOC Uranium Oxide Concentrate Statement Of Compliance Of The Constructed Facility With Design Documentation and Requirements Of SoC Technical Regulations Federal State Budgetary Educational Institution Mining Institute Of The Far Eastern Department Of The MI of the FED of the RAS Ras Order Of The Red Banner Of Labour Federal State Budgetary Institute Ore Deposit Geology, Petrography, IGEM of the RAS Mineralogy and Geochemistry Institute Of The Russian Academy Of Sciences IT Information Technologies
IPPMS Information Project Portfolio Management System
HL Heap Leaching
CTG Consolidated Taxpayer Group
105 IPSS Integrated Physical Security System
LDR Lost Days Rate
ODR Occupational Diseases Rate
KPI Key Performance Indicators
CSR Corporate Social Responsibility
CRMS Corporate Risk Management System
LSU Local Sorption Unit
IAEA International Atomic Energy Agency
MS Mass Systems
RMB Raw Materials Base
IIRC International Integrated Reporting Council
IFRS International Financial Reporting Standards
Procurement Financial and Logistical Procurement
R&D Research and Development
NRNU MEPhI National Research Nuclear University Mephi (Moscow Engineering Physics Institute)
NFC IS Initial Stage Of The Nuclear Fuel Cycle
EIA Environmental Impact Assessment
PW Pilot Work
MWTF Mine Water Treatment Facilities
PTW Pilot Technical Works
OECD Organization For Economic Cooperation and Development
SAA Surface-Active Agents
AVCP Automatic Voltage Control Point
ISL In-Situ Leaching
SGM Sand and Gravel Mixture
NWBS Nuclear Waste Burial Site
DEW Design and Exploration Work
EEP Efficiency Enhancement Programme
PS Product Solution
DISL Downhole In Situ Leaching
DED Design and Estimate Documentation
RPS Rosatom Production System
UUM Underground Uranium Mine
RAW Radioactive Waste
RR Repair and Restoration
REM Rare Earth Metals
Rosnedra Federal Subsoil Resources Management Agency
OCP Ore Concentration Plant.
AS Average Salary
SAP Sulphuric Acid Plant
TDES Technical Data Exchange System
Annual Report | JSC Atomredmetzoloto | 2014 106 JV Joint Venture
DISL Downhole In-Situ Leaching
AFCF Adjusted Free Cash Flow
SRO Self-Regulating Organizations
FPS Fuel and Power Sector
FS Feasibility Study
TPP Thermal Power Plant
TSC Transport and Storage Container
UMAPD Underground Mining-Auxiliary Production Directorate
FSTEC of Russia Federal Service For Technical and Export Control
FFMS Federal Financial Markets Service
FTP Federal Target Program
KhOF Khiagda Ore Field
CLB Central Logistics Base
SAPS Sulfuric Acid Production Shop
VFD Variable Frequency Drive
LF Launch Facility
NFC Nuclear Fuel Cycle
107 Feedback Questionnaire
Feedback: Your opinion is very important to us
You have read the 2014 Annual Report of JSC Atomredmetzoloto. Your opinion regarding the Report is critical to us. We would appreciate your answering several simple questions to help us improve the quality of the Company’s reporting.
1. Have you found in the Report any meaningful information that addresses your concerns? Yes No Just looked through the report Please identify the most important information and what is missing in this Report 2. Does the information provided in the report of JSC Atomredmetzoloto contribute to more efficient interaction with the Company? Yes No I don’t need it
3. What information did you find most useful and what was lacking? 4. Which sections of the report have you found particularly interesting? 5. Which sections of the report were the least interesting to you? 6. Have you found this report to be accurate and fair? 7. Will you be looking forward to the next annual report of JSC Atomredmetzoloto? Yes No 8. What would you like the next report to be like? 9. What recommendations on the Holding and its S&A performance improvement would you like to give? 10. Other comments. 11. Please indicate what group of stakeholders you represent (you can select no more than two options): Shareholder Investor Contractor/supplier Company operating in the same industry Industrial consumer Small and medium business representative Representative of federal governmental authorities Representative of regional governmental authorities Representative of local authorities Representative of a non-governmental environmental organization Representative of a business association or another public association Representative of mass media ARMZ Uranium Holding Co. employee Employee of a Holding’s subsidiary or affiliate Other (please specify). To receive a reply to your comments, please indicate your contact details (full name, post box, zip code, phone number, e-mail), and we will contact you. Thank you!
Annual Report | JSC Atomredmetzoloto | 2014 108 Contact information
Full company name Joint-Stock Company Atomredmetzoloto
Abbreviated company name JSC Atomredmetzoloto
Location of headquarters (principal business office) and post address 22 Bolshoy Drovyanoy Per., Moscow, 109004 Russia
Phone/fax: (495) 508-88-08 / 508-88-10
E-mail [email protected]
Registering authority, registration number and date Moscow Registration Chamber, No. 004.997 dated 22.02.1995
OGRN (Principle State Registration Number) 1027700043645
INN (Taxpayer Identification Number)/ KPP (Tax Registration Reason Code) 7706016076 / 774850001
Main type of activities Geologic exploration and production of natural resources, including resources containing nuclear and radioactive materials, and uranium concentrate production
Web-site http://www.armz.ru
Information about the Company’s Registrar Open Joint-Stock Company R.O.S.T.
Registrar’s details:
OGRN (Primary State Registration Number) 1027739216757, INN (Taxpayer Identification Number) 7726030449.
Registered address: 18 Stromynka Ul., Bldg. 13, Moscow, Russia
Telephone/fax (495) 771-73-36.
Ivan Krupyanko Head of Public and Regional Authorities Relations Department ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) 22 Bolshoy Drovyanoy Per., Moscow, 109004 Russia
Tel.: +7-495-508-8808, ext. 177 Fax: +7-495-508-8810 E-mail: [email protected]
Victoria Dolina Annual Report Project Manager ARMZ Uranium Holding Co. (JSC Atomredmetzoloto) 22 Bolshoy Drovyanoy Per., Moscow, 109004 Russia
Tel.: +7-495-508-8808, ext. 146 Fax: +7-495-508-8810 E-mail: [email protected]
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