Annual Report 2009
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2009 ANNUAL REPORT ANNUAL 2009 ATOMREDMETZOLOTO 2009 ANNUAL REPORT ATOMREDMETZOLOTO APPROVED By the Annual General Shareholders Meeting of JSC Atomredmetzoloto June 30, 2010 (Minutes No. 5) This report was pre-approved by the resolution of the Board of Directors of JSC Atomredmetzoloto dated May 31, 2010 No 47. ABOUT THIS THIS ABOUT REPORT ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING Contents 1. About this Report ��������������������������������������������������� 6 6. Governance System �����������������������������������������������45 2. Company’s management statement ��������������������������� 8 6.1. Goal-Oriented Governance ������������������������������ 45 3. About the Company �����������������������������������������������11 6.2. Corporate Governance System �������������������������� 46 3.1. General Information about the Company ��������� 11 6.3. Board of Directors Report on Key Operations ��� 52 3.2. Structure of the Company, Organization 6.4. Key Risks and Risk Management Methods ������� 53 DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS of Production and Marketing Processes............. 12 7. Sustainable Development ��������������������������������������57 3.3. Geography of the Company’s Operations ���������� 14 7.1. Personnel ���������������������������������������������������������� 57 3.4. 2009 Key Operating Results 7.2. Social Policy. ���������������������������������������������������� 61 of the Company................................................. 16 7.3. Occupational health and Safety ������������������������� 62 3.5. Key Events of 2009. ������������������������������������������ 17 7.4. Environmental Protection and Safety ���������������� 64 4. Position of the Company in the Uranium Market 7.5. Development of the Regions of Operation ��������� 67 and its Development Strategy ���������������������������������19 7.6. Charity and Sponsorship ����������������������������������� 68 4.1. 2009 Natural Uranium Market. ������������������������� 19 7.7. Stakeholder Engagement ���������������������������������� 68 4.2. Uranium Market Development Prospects ��������� 21 8. Financial Performance. ������������������������������������������73 4.3. Key Development Areas 9. Exhibits ���������������������������������������������������������������77 and Investment Policy ��������������������������������������� 23 9.1. Abbreviations and Terms Used in the Report ����� 77 4.4. Competitive Advantages 9.2. Main Deposits of the Company ������������������������ 78 MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL and New Challenges ����������������������������������������� 26 9.3. Standard Disclosures Table – Sustainability 5. Business ���������������������������������������������������������������29 Reporting Guidelines 5.1. Geological Exploration Appraisal of Reserves (Global Reporting Initiative) ����������������������������� 80 and Resources. Licensing. ��������������������������������� 30 9.4. Nonfinancial Reporting Assurance �������������������� 85 5.2. Uranium Mining ���������������������������������������������� 31 9.5. Audit Report ����������������������������������������������������� 86 5.3. Construction of New Production Enterprises 9.6. Accounting Statements in Russia ����������������������������������������������������������� 35 (RAS, summary version) ����������������������������������� 88 5.4. Service and Other Companies ��������������������������� 38 9.7. Report of the Audit Commission ����������������������� 91 5.5. Non-Nuclear Material Related Projects ������������ 40 9.8. Details of the Company 5.6. Efficiency Management and Contact Information ���������������������������������� 92 and Innovations ������������������������������������������������ 41 9.9. Feedback Questionnaire ������������������������������������ 93 EXHIBITS 5 www.armz.ru ABOUT THIS REPORT 1. About this Report This Report describes the business of the Open Joint Stock substantial changes in the coverage, boundaries or Company Atomredmetzoloto («JSC Atomredmetzoloto», measurement methods applied for the purposes of this «ARMZ Uranium Holding Co.», «Company» or Report occurred as compared to previous periods. «ARMZ») in the Russian Federation, Kazakhstan, The Company publishes its reports annually. The Armenia, Namibia, Mongolia and a number of other previous report was published on July 01, 2009. In 2010 countries in 2009, and contains information on key events the Company prepared its second annual report which of Q1 2010. This report covers the business of all key presents in an integrated form financial and non- subsidiaries and affiliates of the Company. financial performance indicators, including sustainable The performance indicators provided in this Report development aspects. This annual report reflects the belong to the following perimeters: company’s contribution to achieving competitiveness by Operating results are given for the following the State Atomic Energy Corporation Rosatom companies: JSC PIMCU, JSC Dalur, JSC Khiagda, («Rosatom» or «Rosatom State Corporation») in the ZARECHNOYE, JSC JV Akbastau, JSC Elkon global nuclear product and technology market, and MMP, JSC UMC Gornoe, JSC OMCC, ARMZ’s influence over social and economic JSC Lunnoe, UMC, RUSBURMASH INC, LLP development of the regions of its operation and the JV RBM-Kazakhstan, LLC USC ARMZ, Karatau. environment. Environmental indicators – JSC Dalur, The Report was prepared taking into account the JSC Khiagda, JSC PIMCU. priorities designated by the Corporation as the key HR and H&S information – shareholder of the Company and its key stakeholders: JSC Atomredmetzoloto, JSC OMCC, LLC USC consumers of uranium products, business partners, ARMZ, UMC, JSC PIMCU, JSC Dalur, JSC regional and local authorities, local communities. For Khiagda, RUSBURMASH INC, JSC Elkon MMP, the first time this Report describes the strategy and risk JSC Lunnoe, JSC UMC Gornoe. management matters. The Report shows how Rosatom’s There were no substantial changes in the structure of strategy is implemented through the strategy of ARMZ the Company’s assets that could affect the comparability using the opportunities which became available during with previous reports on a consolidated basis. No the crisis. 6 www.armz.ru ABOUT THIS THIS ABOUT REPORT ABOUT THIS THIS ABOUT REPORT ADDRESS OF TOP MANAGEMENT TOP OF PERFORMANCE ADDRESS KEY 2009 INDICATORS INTERNATIONAL URANIUM MARKET MARKET SUMMARY URANIUM COMPANY’S INTERNATIONAL STANDING MARKETING DEVELOPMENT PROSPECTS INTERNATIONAL AREAS DEVELOPMENT IN PRIORITY INVOLVEMENT ORGANIZATIONS In particular, the Report contains a disclosure on This Report was prepared in accordance with the diversification of the natural uranium resource base requirements of the Russian laws applicable to the through acquisition of highly efficient foreign assets. reporting of open joint stock companies, and the Public These operations, together with the development of 14 Reporting Policy of Rosatom State Corporation. The projects at all stages of the life of deposits, are aimed at financial information is based on the Company’s ensuring firmly guaranteed long-term supplies to the accounting statements prepared under the IFRS. Full customers. The Report shows the interplay of the version of the Company’s IFRS and RAS statements is strategic priorities, corporate policies and standards, provided on its web-site. In the course of preparation of governance system, including target management using this annual report the Company held consultations and the key performance indicators, and the results hearings on the report in accordance with the achieved. international standards series AA 1000 AS. ARMZ used The Report contains a detailed overview of the the recommendations of the Global Reporting Initiative Company’s development prospects which is based on (GRI) Sustainability Reporting Guidelines, and key MANAGEMENT GOVERNANCE RISK DEVELOPMENT CORPORATE PERFORMANCE SUSTAINABLE FINANCIAL detailed analysis of the global natural uranium market. performance indicators developed by the Russian Union In connection with this, the Report contains looking of Industrialists and Entrepreneurs (RSPP). The Report forward statements. Such terms as «believes», includes a table showing the level of compliance with the «anticipates», «expects», «intends» and «plans» and GRI G3 indicators and the RSPP key performance similar terms reflect the existing forecasts and opinions indicators. of the Company’s management with respect to the future The level of GRI G3 compliance is rated as С+. results. There is always a risk that preliminary estimates, Accuracy of data contained in this Report was confirmed forecasts, plans and other similar statements will not by the Company's Audit Commission. materialize. It should be taken into account that due to a The annual report (the non-financial information) was whole number of material events the actual results may audited pursuant to the international standards. substantially differ from the planned or target results, PricewaterhouseCoopers acted as independent auditor. expected results, estimates and intentions described in the forward-looking statements. EXHIBITS 7 www.armz.ru ADDRESS OF COMPANY’S TOP MANAGEMENT Dear readers! Acting in line with the strategy of State Corporation Rosatom, ARMZ Uranium Holding Co. successfully attains its