Deputy CEO for Corporate Development and International Business
– How successful was 2013 for the Corporation’s international business?
– It was a very successful year for the Corporation in the international arena. The main achievement of the year was the enlargement of the overseas order portfolio; we brought it up to nearly US$ 73 billion. With that, we had about US$ 66 billion as of the beginning of the year, and during the year, the volume of implementation of contracts, with the respective reduction of the order portfolio, was about US$ 5 billion. Therefore, the growth from US$ 61 billion up to US$ 73 billion is a good result, given the fact that the markets did not demonstrate explosive development. It is important that that we are well ahead of our competitors in this indicator. This, no doubt, is a guarantee that in the next 10 years, the sector’s enterprises will have a stable source for development and investments.
– What are the targets for the future then?
– We will continue building up the portfolio. In spite of the uneasy conditions, the world nuclear industry lives in now. For 2014, we have set a target of building up the order portfolio from US$ 73 billion to 98 billion. This is an ambitious target, a very difficult one, but in my view it is absolutely realistic, since this would be a result of not only 2014 efforts, but also of the large-scale and complex work we have been doing over recent years.
At the beginning of the year, we signed an intergovernmental agreement with Hungary concerning construction of two new power units at Paks NPP. The contract to build two power units in Vietnam is also at a very advanced stage. Bangladesh is in the same situation. There are substantial developments in the contracts for NPP construction in a number of other countries as well. We also hope for additional contracting in the markets for the nuclear fuel cycle front end, servicing and a number of other products and services.
All these in combination give us grounds to believe that we have a great chance to build up the orders portfolio to this serious amount.
– How will ROSATOM’s integrated offer develop, and what makes it unique?
– Our advantage is that we are the only company in the world which can offer the full list of products in the entire technological chain of nuclear power, i.e. from uranium mining through the decommissioning of nuclear power plants. ROSATOM has no peer in the world. For example, our serious competitor, the French company AREVA group, can do many things, but it does not have the operation, the unique experience our Rosenergoatom utility has gained. This experience is essential for nuclear newcomers.
A project parameter such as the cost of a kWh has become a new demand in the market recently. Any customer, irrespectively of what relations it wants to establish with us – to hire us as the contractor or invite us to become a partner – ultimately asks us the same question: how many kWh of electricity will be produced by the plant? In this sense, why is the project we are implementing in Finland now so important? Because we have worked out the logic of costing the kWh together with the customer. Our Finnish partners are industrial companies, municipalities and other electricity consumers who link their development and investment plans to receiving electricity at a stable and predictable price.
– How will ROSATOM’s global presence expand in the coming years?
– As before, we will still try to expand the sales of products and services of ROSATOM. Communicating with each specific customer, we should be able not just to respond to its one-time request, but to offer the entre list of our products and services.
In the reporting year, we established the company Rusatom-International Network to strengthen our presence in specific markets. The regional offices, which were set up by this company in all the key regions where we have a presence, will be charged with offering the most complete list of goods, products and services to our clients.
JSC Rusatom Overseas is a ROSATOM entity established in 2011 to promote Russian nuclear technologies in the global market. Rusatom Overseas acts as an integrator of ROSATOM’s integrated solutions in nuclear power, leads the promotion of integrated offers, and leads the development of Russian nuclear business abroad. The company also plays the role of developer for ROSATOM’s overseas BOO (build-own-operate) projects.
184.108.40.206. Transformation of ROSATOM into the global nuclear technology leader
ROSATOM is a leader in the global market of nuclear technology and services. The goal of ROSATOM’s strategy is to achieve global nuclear technology leadership. In the long term, it is planned to substantially expand the scale of the international business as reflected in the target values of the Corporation and its organisations by 2030 (see Chapter “Activity strategy”).
Fig. ROSATOM global presence
ROSATOM’s Integrated Offer
The key competitive advantage of the Corporation in the nuclear power markets is the integrated offer of NPP construction, operation and servicing abroad. Being a responsible supplier of nuclear technology, the Corporation provides integrated solutions for NPP construction projects and actively facilitates nuclear power development in nuclear newcomer countries.
Russian NPP construction projects pertain to Generation III+ and include both active and passive safety systems. The defencein-depth approach is used at power units under construction. They fully meet the post-Fukushima safety requirements. Successes in the external markets confirm the high competitiveness of Russian nuclear technology.
Fig. Integrated offer for foreign customers: competence build-up elements
220.127.116.11. Results of 2013
In the reporting year, ROSATOM continued actively building up its overseas order portfolio for a ten-year period. As of 2013, it amounted to US$ 72.7 billion, up 9 % from the total of 2013.
In 2013, ROSATOM’s proceeds from international sales was US$ 5.0 billion, up 2.5 % from the target.
The overseas order portfolio for a 10-year period (without the HEU deal) was US$ 72.7 billion, up 1 % from the target (KPI for 2013).
Table. Change of ROSATOM overseas order portfolio
|Overseas order portfolio for a ten-year period (including export operations of Russian companies; without the HEU deal) (bln US$), including:
|NPP construction abroad
|FAs and other activities
|Portfolio of orders for NPP construction abroad (number of power units)
Results of NPP construction abroad
The main increase in the portfolio of nuclear construction abroad was at the expense of new contracts for construction of NPPs. As of the end of the reporting year, the Corporation’s portfolio contained 19 nuclear power units.
In 2013, work was carried out on sites in five countries where 11 power units are under construction in total. In addition, documents of entitlement were signed for eight more nuclear power units abroad:
- Kudankulam NPP (India) – Units 3 and 4;
- Ninh Thuan-1 NPP (Vietnam) – two power units;
- Khmelnitsky NPP (Ukraine) – two power units;
- Hanhikivi NPP (Finland) – one power unit;
- Armenian NPP (Armenia) – one power unit.
Fig. ROSATOM’s positions in the international nuclear construction market (number of power units)
In the reporting year, ROSATOM entered the international market of servicing for NPPs of Russian designs. To this end, the specialised company JSC Rusatom Service started operation at the end of 2012. Following the results of 2013, JSC Rusatom Service signed contracts for maintenance and repair, modernisation, service life extension as well as uprating and supply of equipment and spares and tooling with NPPs in Armenia, Bulgaria, China, Czech Republic, Hungary, Iran, Slovakia and Ukraine. JSC Rusatom Service has formed a pool of partners – Russian and foreign companies, which provide equipment and services (over 50 companies) – which meets the requirements and wishes of the foreign clients in an integrated manner.
The Corporation’s plans of overseas nuclear construction
The Corporation’s 2014 plans, in addition to the ongoing NPP construction, include:
- the first power of Kudankulam NPP Unit 2 in India;
- preparation for implementation of the Hanhikivi NPP project in Finland;
- signing of an IGA on cooperation in construction and an IGA on providing an export loan to finance construction of Pals NPP Units 5 and 6 in Hungary;
- signing of an IGA concerning cooperation in construction of an NPP in Jordan;
- carrying out preliminary activities related to the construction project of Ruppur NPP Units 1 and 2 in Bangladesh;
- drafting and signing of a contract for development of an engineering design for Ninh Thuan-1 NPP in Vietnam.
In the mid-term, efforts to enter new markets will be continued. This includes plans of cooperation with Argentina, Brazil, Indonesia, Malaysia, Nigeria, Saudi Arabia, and South Africa to promote Russian nuclear technologies. It is planned to develop infrastructure and a network of international representation offices in the priority regions of the Corporation’s business development plans to concentrate competences and resources.
The Corporation’s results in the NFC front-end markets
Overseas natural uranium mining activities
Fig. Distribution of natural uranium deliveries by ROSATOM over the world’s regions, %
In 2013, ROSATOM restructured its uranium mining assets: the company Uranium One Holding N.V. was established to consolidate the foreign assets of ROSATOM in the front-end of the nuclear fuel cycle (JSC Atomredmetzoloto in its future activities will focus on the development of the Corporation’s uranium assets in Russia).
In the reporting year, Uranium One’s enterprises mined 5,086 tonnes of uranium.
In 2013, the Government of Tanzania granted ROSATOM a special mining licence for the Mkuju River project. Negotiations continue with the Government of Tanzania concerning terms and conditions of the agreement on deposit development and other issues that require regulatory approvals.
In the reporting year, the mine Southern Inkai in Kazakhstan reached its full production capacity of 2,000 tonnes of uranium a year.
On 18 October 2013, the deal to buy back 100 % of Uranium One’s shares was closed. All common shares of Uranium One in circulation that were not owned by subsidiaries of the Corporation (which indirectly held 51.4 % of Uranium One’s common shares in circulation) were bought by Effective Energy N.V. (later renamed “Uranium One Holding N.V.”) for C$ 2.86 per share.
As a result of the deal, 89.07 % of the shares of Uranium One Inc. were consolidated as the property of Uranium One Holding N.V., which manages the international mining assets and projects of ROSATOM. In December 2013, the controlling block of stock of Uranium One Holding N.V. of 57 % was made the property of JSC AtomCapital, whose sole shareholder is ROSATOM.
In uranium mining outside Russia ROSATOM in 2013 faced problems with access to capital and currency risk in the global financial markets. To mitigate the impacts of these factors, the Corporation refinanced its ruble bonds, entered into currency swap deals, placed primary secured bonds and opened a revolving line of credit. In the framework of the activities to reduce sensitivity to the price of uranium, expenditures were cut, including through the mothballing of the Honeymoon mine (Australia) and suspension of building up mining output at the Willow Creek mine (U.S.).
Nuclear fuel supplies
In 2013, the main results of external economic activities related to supplies of nuclear fuel and fuel assemblies were:
- signing of a contract for fuel supplies to Dukovany NPP;
- signing of a contract for supplies of fuel and its components to Tianwan NPP Units 3 and 4;
- signing of a contract for fuel supplies for the start up and subsequent operation of Hanhikivi NPP;
- successful completion of qualification of JSC CMP (a JSC TVEL’s affiliate) by Candu Energy Inc. as a supplier of zirconium pressure tubes for CANDU reactors.
The export of uranium products
In 2013, ROSATOM completed deliveries to the USA of low-enriched uranium (LEU), produced by the downblending of 500 tonnes of highly enriched uranium (HEU) extracted from dismantled nuclear warheads (the HEU Agreement). The LEU shipment schedule and obligations related to delivery of the feed component of LEU (FC LEU) to customers were met by JSC Techsnabexport in full and in a timely manner. In 2013, the volume of deliveries was over US$ 1 billion. For details, see the annual report of JSC Techsnabexport for 2013.
The U.S. Secretary of Energy signed a document which stated that the Russian party had fulfilled its obligations under the Agreement between the Government of the United States of America and the Government of the Russian Federation Concerning the Disposition of Highly Enriched Uranium Extracted from Nuclear Weapons.
In the situation of continued high competition in the global market for NFC products due to oversupply, JSC Techsnabexport, the leading sectoral exporter of NFC front-end products and services, concluded nine new contracts and prolonged two existing contracts, as well as signing five addenda to the uranium product export contracts. JSC Techsnabexport’s deliveries cover about one third of the uranium enrichment needs of NPPs in the U.S., Western Europe and the Asia Pacific Region.
Fig. Uranium product exports, million US$
Fig. Uranium product exports by region, %
Plans of the Corporation in the international NFC front-end markets
Natural uranium mining:
- work to optimise operations of Uranium One, to increase efficiency and to reduce costs on the company scale;
- to increase mining output at the Akbastau and Kharasan mines in Kazakhstan in accordance with the production plans.
In the mid-term, Uranium One will continue developing the existing portfolio of assets in Kazakhstan and Africa to ensure the growth of mining output during the next 3-5 years. Given the possibilities available to Uranium One, such as an increase in mining output at mines in Kazakhstan and implementation of the Mkuju River Project in Tanzania, the full-scale use of the entire asset portfolio will allow raising mining volumes by 50 % from the 2013 level.
Supplies of nuclear fuel and FAs:
- signing of contracts for fuel supplies to Slovak NPPs after 2015;
- supply of a batch of TVS-KVADRAT fuel assemblies to be loaded into a foreign reactor PWR;
- writing of justification documents for deployment of TVS-2M fuel as first loads for Tianwan NPP Units 3 and 4 (China);
- approval by Euratom Supply Agency of a contract for nuclear fuel supply to Hanhikivi NPP (Finland).
Supplies of uranium products:
- consultations with the U.S. Department of Commerce on drafting a new Amendment to the Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation (Suspension Agreement);
- further development of the Far East route for transportation of uranium products to APR countries;
- preparation and exchange of notes with the Japanese party on measures of control of the Japanese nuclear material in the territory of Russia.
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