INTEGRATED ANNUAL REPORT 2013 NAC KAZATOMPROM JSC INTEGRATED ANNUAL REPORT 2013 CONTENT Key Performance Indicators 4 Key Events of 2013 6 1 About the Report 8 2 Company Overview and Business Model 10 Message from the Chairman of the Board of Directors 10 Message from the Chairman of the Management Board 12 About the Company 14 Mission, Vision, and Values 16 Business Model 17 3 Development Strategy and Key Performance Indicators 18 Key Performance Indicators and Forecasts for the Future 21 4 Operational Activity 24 4.1 Nuclear Direction 24 4.2 Non-Nuclear Direction 32 4.3 Development of Scientific, Technological and Innovation Potential 37 5 Sustainable Development 40 5.1 Interaction with Stakeholders 41 5.2 Personnel 44 5.3 Occupational Health and Industrial Safety 49 5.4 Environmental Protection 53 5.5 Development of Regions of Operations 60 6 Governance 64 6.1 Corporate Governance 64 6.2 Risk Management and Internal Control 81 6.3 Quality Management 85 7 Management Report on Financial and Operational Results 86 Annexes 98 Structure of Assets of NAC Kazatomprom JSC with Ownership Interest 98 Contact Information 100 Table of GRI Standard Elements 101 Consolidated Financial Statement 108 Glossary 196 KEY PERFORMANCE INDICATORS Mining and Production 5% -5% -7% 0% 2013 г. 12 568 2013 г. 203 2013 г. 99 2013 г. 4 613 2012 г. 11 931 2012 г. 213 2012 г. 107 2012 г. 4 598 03 000 6 0009 00012 000 15 000 0 50 100150 200 250 0 20 40 60 80 100120 0 1 000 2 0003 0004 0005 000 Uranium Production of NAC Tantalum Production, tons Beryllium Production, tons Electricity Production, mln Kazatomprom JSC by Equity of Ta of Be kWh Interest in all Subsidiaries & Affiliates, tons 0% 2013 г. 21 Share of NAC Kazatomprom JSC in the World Natural Uranium Market by the Equity Interest in all Subsidiaries & Affiliates 2012 г. 21 0 510152025 Financial Indicators -10% -29% -21% -6% 2013 г. 288 283 2013 г. 35 904 2013 г. 68 600 2013 г. 229 905 2012 г. 321 746 2012 г. 50 915 2012 г. 87 241 2012 г. 243 907 0 50 000100 000150 000 200 000 250 000 300 000 350 000 0 10 000 20 00030 00040 000 50 000 60 000 0 20 00040 000 60 000 80 00010 0000 0 50 000 100 000150 000 200 000 250 000 Income, KZT mln Income Attributable to EBITDA, KZT mln Cost of Sales, KZT mln Shareholders, KZT mln -30% -68% 2013 г. 36 532 2013 г. 7 637 2012 г. 51 997 2012 г. 23 501 0 10 000 20 00030 00040 000 50 000 60 000 0 5 00010 00015 000 20 000 25 000 Profit for the year, KZT mln Declared Dividends, KZT mln Non-Financial Indicators Human Resources OH&IS 4,5% 0% -3% 3% 2013 г. 27 342 2013 г. 14% 2013 г. 0,73 2013 г. 181 2012 г. 26 170 2012 г. 14% 2012 г. 0,75 2012 г. 176 0 5 000 10 00015 000 20 000 25 000 30 000 036912 15 0,0 0,10,2 0,30,4 0,50,6 0,70,8 0 50 100150 200 staff number staff turnover injury-frequency rate number of staff with annual radiation dose over 5 mSv, persons 4 2013 INTEGRATED ANNUAL REPORT Non-Financial Indicators Environmental Protection 2% 38% 184% 9% 2013 г. 3 669 2013 г. 12 681 2013 г. 7 114 2013 г. 1 234 2012 г. 3 606 2012 г. 9 221 2012 г. 2 509 2012 г. 1 128 0 5001 000 1 500 2 0002 5003 0003 5004 000 0 3 000 6 0009 00012 000 15 000 0 1 000 2 0003 0004 0005 0006 0007 0008 000 0 300 600 900 1 200 1 500 provision of site restortion, reusable water, thous. m3 environmental costs, KZT mln greenhouse gas emission, KZT mln thous. tons of CO2 equivalent Social 120% 3,8% 2013 г. 1 506 2013 г. 4 389 2012 г. 686 2012 г. 4 223 0 5001 000 1 500 2 000 0 1 000 2 0003 0004 0005 000 sponsor and charitable social tax and social support, KZT mln contributions, KZT mln 5 KEY EVENTS OF 2013 Experts from NAC Kazatomprom JSC and its subsidiaries & affiliates took part in the fifth Annual Workshop-Meeting on Current Scientific and Technological Issues of Uranium Industry. Energy and resource saving». Together with representatives of foreign companies involved in or planning the cooperation with JSC NAC Kazatomprom, the innovations in nuclear and uranium industries were discussed. JANUARY Meeting between representatives of NAC Kazatomprom JSC and the Nuclear Power Corporation of India (NPCIL) was held, where the issues of further development of bilateral cooperation in the area of nuclear energy were discussed, in particular, the supply of uranium to India. MARCH Opening of the representative office of NAC Kazatomprom JSC in the USA. The representative office was opened with the aim to increase the share of sales in the uranium market of the USA, to network and maintain regular direct contacts with all end-users of uranium in the MAY USA, as well as to promote the projects for market entry and sale of the higher value-added nuclear fuel cycle products and to develop cooperation projects with American partners. Tekhsnabexport OJSC and NAC Kazatomprom JSC signed an agreement on book transfer operations with natural uranium, which is one of the important tools within the framework of cooperation between NAC Kazatomprom JSC and foreign energy companies, including power companies in the USA. JUNE Moody’s Investors Service rating agency confirmed NAC Kazatomprom JSC’s issuer rating at the level of Baa3 and the rating of unsecured priority stock at the level of Baa3. Outlook – ‘Stable’. Centre for Uranium Enrichment JSC (CUE), which is owned on the parity basis by NAC Kazatomprom JSC and TVEL JSC, has acquired a stock of shares (25% + 1 share) of Ural Electrochemical Integrated Plant JSC. CUE’s is one of the key directions of Kazakh-Russian SEPTEMBER cooperation in the nuclear field. A meeting with the Board of Directors of Cameco was held in NAC Kazatomprom JSC. The parties discussed uranium mining joint venture JV Inkai LLP, as well as joint projects in the area of nuclear fuel cycle. OCTOBER NAC Kazatomprom JSC and Kazakh-British Technical University JSC concluded Memorandum of Understanding on scientific and technical cooperation in order to implement research and innovative projects in the area of renewable energy, to establish joint working groups, as well as to train and retrain the experts in renewable energy sources. CUE’s project on uranium enrichment launched the implementation stage. The first commercial delivery of products took place in the amount of 300 thous. SWU. NOVEMBER 6 2013 INTEGRATED ANNUAL REPORT NAC Kazatomprom JSC completed the acquisition of 40 per cent shares of Caustic JSC, on which platform a series of import substituting productions is planned to be organized, namely: production of sodium hydroxide, hydrogen peroxide and soda. Within the framework of launching the plant of Kazakhstan Solar Silicon LLP for production of photovoltaic cells (subsidiary of NAC Kazatomprom JSC), launched production of cells – solar energy converters. DECEMBER MAEC-Kazatomprom LLP launched a new seawater desalination facility with a capacity of 12,000 tons per day. Events After the Reporting Date Vladimir Shkolnik, Chairman of the Board of NAC Kazatomprom JSC, participated in the III Nuclear Security Summit (NSS) in the official delegation headed by Nursultan Nazarbayev, President of the Republic of Kazakhstan. The main objective of the Summit was to discuss current issues of global nuclear security. MARCH On the territory of the solar panels production plant of Astana Solar LLP in Astana, a memorandum of cooperation was concluded between the group companies of the KazPV Kazakhstani project (Astana Solar, Kazakhstan Solar Silicon LLP and KazSilicon LLP), Qatar company of Qatar Solar Energy and American company of Clean Power Innovation, on supply of silicon, solar cells and wafers to the State of Qatar. The state corporation of Rosatom and NAC Kazatomprom JSC signed a memorandum of understanding and cooperation in the area of non-conventional (alternative) energy (solar JUNE and wind) and fabrication of rare and rare-earth metals. Nurlan Kapparov was appointed a new Chairman of the Board of NAC Kazatomprom JSC, succeeding Vladimir Shkolnik, who headed the company in past five years. This decision was made in connection with the public administration reform in the Republic of Kazakhstan. Vladimir Shkolnik led the Ministry of Energy of Kazakhstan. AUGUST 7 the reporting period, the priority for NAC Kazatomprom JSC (hereinafter - NAC Kazatomprom JSC, the Company) is to reflect the Company’s performance in the In key areas of strategic development. In addition, the Company focuses on the high standards of corporate governance and sustainable development. The key topics of this report are optimization of cost, international cooperation and 1 development of alternative energy sources. The Company strives to render information on the results of its activities promptly and fully in order to meet the expectations of all stakeholders. Starting from 2010, NAC Kazatomprom JSC publishes annual reports, where it reflects the information on not only the results of its operations, but sustainable development as well, in particular, on the issues of occupational health and environmental protection, industrial safety and social responsibility. Following current trends in the area of corporate reporting, since 2011 the Company conducts preparation of integrated reports in line with the leading international standards of corporate reporting, such as Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI).