of the Chief
NAC Kazatomprom JSC
Dear Colleagues, Partners and Investors,
I am proud to present Kazatomprom’s annual report for 2018. The achievements of the atomic holding company mirror the contribution it has made to the socio-economic development, preservation of the environment and wellbeing of the citizens of the Republic of Kazakhstan.
Our successful IPO is both the result of a strong preparatory collaboration with Samruk-Kazyna in the lead up to the flotation and a sign of confidence from our new shareholders. Our ability to meet our obligations will build the company’s reputation and this, along with market and operational factors, will be reflected in the value of our shares.
The company’s mission, per our new development strategy, is to effectively and safely develop uranium deposits and components of the nuclear value chain to create long-term value for all of our stakeholders. Our planned operating activities will not start with an increase in production volumes, but an appropriate response to market conditions. Kazatomprom reduced its uranium production by about 8% from previously planned production levels in 2017 and will do so again, by 20%, between 2018 and 2020. Partially due to Kazatomprom’s actions in 2018, global supply and demand for uranium products became more balanced.
As the world’s largest uranium producer, we have been able to forge strong relationships with most of the world’s leading uranium consumers with a view to supplying our natural uranium products to more regions, solidifying our customer base. Our main customers are nuclear power operators and our key export markets are China, Southeast Asia, North America, Europe and the Asia-Pacific region. In 2018, Kazatomprom produced a record amount of natural uranium, becoming not only the world’s largest uranium producer, but also the world’s largest seller.
As part of our efforts to expand our presence in all areas of the nuclear fuel cycle, Kazatomprom signed an agreement with Cameco Corporation in December 2018, which will allow us to use Cameco’s refining and conversion technologies by 2020. If market conditions are favourable, this will enable us to explore the economic feasibility of using these technologies in the Republic of Kazakhstan.
Last year, we completed the acquisition of a 40.05% stake in Energy Asia (BVI) Limited and a 16.02% stake in the share capital of JV Kharasan-U from Energy Asia Holdings (BVI) Limited. The purchases brought Kazatomprom’s shareholdings in Baiken-U LLP, Kyzylkum LLP and JV Kharasan-U LLP to 52.5%, 50% and 50%, respectively.
Kazatomprom applies best practices when it comes to health and safety and environmental protection, and these topics will remain of paramount importance to our team. In 2018, we adopted an environmental and social action plan to achieve full compliance with the best international industry practices, including IFC Performance Standards. We continue to support the socio-economic and infrastructural development of uranium mining regions, allocating funds for these purposes under our subsoil-use contracts. We also met all of our social-guarantee commitments in 2018 and further improved our corporate governance processes.
Kazatomprom’s results in 2018 were entirely due to the efforts of the entire workforce — a close-knit and highly efficient team, working in line with our core values.
Our 2018 results confirm the effectiveness of our strategy and the importance of the priorities we identified. I am confident that in 2019, Kazatomprom will maintain its momentum and continue to strengthen its leading position in the global uranium market, achieving high production rates, maximising the efficiency of all business processes and increasing the long-term value of the company.