INTEGRATED ANNUAL REPORT 2013 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO for 2013
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INTEGRATED ANNUAL REPORT 2013 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO For 2013 APPROVED by the Annual General Meeting of Shareholders of JSC Atomredmetzoloto on June 30, 2014 (Minutes No. 18) The Report has been preliminarily approved by Decision No. 119 of the Board of Directors of JSC Atomredmetzoloto dated May 28, 2014 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO FO R 2 0 1 3 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO For 2013 Table of Contents Chapter 2. Strategy and Management System 21 Information about the Report 4 2.1. Business Strategy 22 2.1.1. Corporate Mission and Values 22 2013 Key Performance Indicators 7 2.1.2. Natural Uranium Market Overview 2013 Main Events 8 and Outlook 23 Address by the Chairman of the Board of 2.1.3. Marketing and Sales Policy 25 Directors 10 2.1.4. Long-Term Strategy and Current Address by the Director General 11 Status of the Company 25 Chapter 1. About the Company 13 2.2. Management System 27 2.2.1. Corporate Governance 27 1.1. General Information about 2.2.2. Report of the Board of Directors JSC Atomredmetzoloto 14 on Priority Lines of Business 32 1.1.1. General Information 14 2.2.3. Risk Management 32 1.1.2. Historical Background 14 2.2.4. Internal Monitoring System: Asset 1.1.3. Holding Organisation 16 Protection 37 1.1.4. The Company’s Role in Rosatom’s 2.2.5. Procurement Management 38 Production Cycle 17 2.3. Strategic Assets 39 1.2. Presence in Markets 17 2.3.1. CJSC RUSBURMASH Activities 40 1.3. Value Chain and Business Model 18 2.3.2. JSC VNIPIpromtechnologii 1.3.1. Value Chain 18 Activities 45 1.3.2. Business Model 18 Miners on the way to their work site, JSC PIMCU 2 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO For 2013 Chapter 3. Effective Capital Chapter 4. Stakeholder Management 51 Engagement in the Course of Report Preparation 105 3.1. The Company’s Capital 52 3.2. Financial Capital Management 52 4.1. Discussions with Stakeholders in the 3.2.1. Financial Management 52 Course of Report Preparation 106 3.2.2. Investment Activities 58 4.2. Taking into Account Stakeholder Suggestions 107 3.3. Production Capital Management 60 by Chief Executives Address 3.3.1. Raw Material Base Development 60 4.3. Statement of Public Assurance 110 3.3.2. Uranium Production Methods 61 3.3.3. Uranium Production by JSC Atomredmetzoloto Russian Entities 63 3.3.4. Uranium Production by the Entities of Uranium One Inc. 65 About the Company 3.3.5. New Projects 67 3.3.6. Other Entities 68 3.3.7. Non-Nuclear Projects 69 3.3.8. Rosatom Production System: Complying with Product Quality Requirements 71 3.4. Human Capital Management 74 3.4.1. Management System 74 3.4.2. KPI System 74 3.4.3. Human Capital Features 76 and Management System Strategy 3.4.4. Remuneration System 79 3.4.5. Social Policy of the Company 80 3.4.6. Training and Development 82 3.4.7. Work with Students and Youth 84 3.4.8. Support for Veterans and Pensioners 84 3.4.9. Trade Unions and Collective Agreements 85 3.4.10. Occupational Health and Safety 86 3.5. Intellectual Capital Management 88 Management Capital Effective 3.5.1. Innovative Activities 88 3.6. Social Capital Management 90 3.6.1. Stakeholder Engagement 90 3.6.2. Developing Regions of Operation 92 3.7. Natural Capital Management 97 3.7.1. Environmental Policy of the Company 97 Appendices 113 3.7.2. Protection of Land and Biological Engagement Stakeholder Diversity 98 Appendix 1. Matrix of Company’s Activities and 3.7.3. Protection of Water Resources 100 Sustainable Development Data Significance 114 3.7.4. Air Protection 101 Appendix 2. Table of Standard GRI Disclosures 115 Appendices 3.7.5. Waste Treatment 102 Appendix 3. Table of Disclosures as per 3.7.6. Expenses Related to Environment the Reporting Standard of Rosatom State Preservation 104 Corporation 121 Appendix 4. Auditor’s Opinion on Financial Statements Accuracy 123 Appendix 5. Report on Compliance with the Code of Corporate Conduct 124 Appendix 6. Terms and Abbreviations 128 Feedback Questionnaire 131 Contact Information 133 3 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO For 2013 Information about the ■ environmental performance — JSC PIMCU, JSC Da- lur, and JSC Khiagda; Report ■ HR and occupational safety performance — JSC Atom- redmetzoloto, JSC PIMCU, JSC Dalur, JSC Khiagda, Information about the Report CJSC RUSBURMASH, and JSC VNIPIpromtechnologii; ■ financial indicators — based on consolidated state- The 2013 public Annual Report (hereinafter re- ments in compliance with IAS. ferred to as the “Report”) is the sixth report by ARMZ Uranium Holding Co. (hereinafter referred to as “JSC Regulatory Requirements and Atomredmetzoloto”, “ARMZ Uranium Holding Co.”, Standards Used in the Report the “Holding”, or the “Company”) summarising finan- cial, production, and non-financial results that give a The Report was drawn up according to Russian general idea of the Company’s activities in sustainable laws on open joint-stock company statements. Fi- development in particular. nancials are based on consolidated statements pre- Due to the diversified activities of CJSC RUSBUR- pared according to IAS requirements. You can find all MASH and JSC VNIPIpromtechnologii, their activities IAS statements at the JSC Atomredmetzoloto website are described in separate sections of this Annual (www.armz.ru). Report (unlike in the previous one). In each section, stakeholders can find the companies’ key competen- International standards related to public reports: cies and development prospects. ■ AA1000 Stakeholder Engagement Standards (Insti- For more details see Section 2.3.1. CJSC RUSBUR- tute of Social and Ethical Accountability); MASH Activities and 2.3.2. JSC VNIPIpromtechnologii ■ Sustainability Reporting Guidelines, Global Report- Activities. ing Initiative (GRI rev. G4.0); and ■ International Integrated Reporting Framework (IIRC, International <IR> Framework). Report Scope This Report deals with JSC Atomredmetzoloto’s main activities in Russia, Kazakhstan, Canada, and a The Report was prepared number of other countries for the period from January 1, 2013 through December 31, 2013, the Company’s in accordance with the Core plans for 2014, and the Company’s long-term plans. GRI G4.0 application option The Report covers all major subsidiaries and associ- ates (hereinafter referred to as “S&A”) of the Holding. Since Rosatom State Corporation’s uranium mining assets were restructured in 2013, JSC Atomredmetzolo- Rosatom State Corporation regulatory documents: to will further focus on the development of Rosatom’s ■ Public Reporting Policy of Rosatom State Atomic uranium assets in Russia. A new company, Uranium Energy Corporation; One Holding N.V., was established to manage the foreign ■ Public Annual Report Template for key (for the pur- uranium assets of Rosatom State Corporation during its pose of public reporting) entities of Rosatom State initial nuclear fuel cycle stages. With this connection, the Atomic Energy Corporation; and production and raw material base data for 2013 in this ■ Code of Conduct of Rosatom State Atomic Energy Report will be given in total for both Russian and foreign Corporation. assets; however the development strategy and prospects will only cover assets in Russia. In later reports, the data GRI Guidelines Application Option will be consolidated within the scope of ARMZ Uranium Holding Co. management. Performance indicators dis- The Report was prepared in accordance with the closed in the Report are based on the following: Core GRI G4.0 application option. ■ production performance is based on the assets of JSC PIMCU, JSC Dalur, JSC Khiagda, Uranium One Inc., Report Preparation and Contents JSC EGMK-Project, JSC Gornoye UMC, JSC Olovskaya MCC (Mining and Chemical Company), JSC Lunnoye, Stage 1: Development of the Report concept, including: CJSC RUSBURMASH, JSC VNIPIpromtechnologii, and ■ analysis of stakeholder suggestions/comments ARMZ Service LLC; provided during the previous reporting campaign; 4 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO For 2013 Eduard Shcherbina, Face Miner at underground uranium mine No. 1, JSC PIMCU Address by Chief Executives Address About the Company Strategy and Management System Strategy Effective Capital Management Capital Effective ■ updated methodological framework based on GRI, Priority topics of the Report: IIRC and Rosatom State Corporation requirements and other documents regulating the Report and ■ organisational changes within the Rosatom Mining ■ analysis of global best practices related to public Division and enhancing the efficiency of the Mining Engagement Stakeholder reporting. Division part located in Russia and ■ key production performance as of the end of the Stage 2: Selection of priority topics of the Report, year. including: Appendices ■ analysis of Company’s activities over 2013 and Stage 3: Development of Report contents, taking into stakeholder recommendations received during the account: 2012 Report preparation; ■ JSC Atomredmetzoloto mission; ■ list of significant topics; ■ JSC Atomredmetzoloto strategy; ■ checking the significance of the topics selected by ■ JSC Atomredmetzoloto current status; the Report Preparation and Audit Team; ■ Rosatom priorities; and ■ discussing priority topics with stakeholders (through ■ key stakeholders’ interests. questionnaires) and We also took account of requests received from ■ the Company’s management approving the priority stakeholders while preparing this annual report and topics. previous ones. 5 INTEGRATED ANNUAL REPORT JSC ATOMREDMETZOLOTO For 2013 On March 26, 2014, two dialogues were held dedi- ■ auditor’s report on financial statements accuracy cated to: (for more details see Appendix 4. Auditor’s Opinion ■ JSC Atomredmetzoloto 2013 Basic Performance on Financial Statements Accuracy). The auditor of and Efficiency Enhancing Measures and ARMZ Uranium Holding Co. is ZAO KPMG. ■ Organisational Changes within the Rosatom Mining The final revision of the Report was approved by the Division and JSC Atomredmetzoloto Development. Company’s Director General, the Board of Directors, On May 20, 2014, the Report draft was publicly dis- and the General Meeting of Shareholders.