JSC Techsnabexport

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 TENEX » Dear Readers » Key results in the reporting period » Contracting and sales
 

Contracting and sales

In the reporting year, the Company, as before, set its priority on impeccable performance of its existing contracts, in addition to preparing and signing new long-term contracts for uranium product deliveries, while also focusing on the development of cooperation with end users, i.e. foreign utilities. In 2013, JSC Techsnabexport signed nine new contracts for enriched uranium deliveries, prolonged two existing contracts, and signed five amedments to existing contracts for uranium product deliveries.

25
US $ billion
Long-term export contracts portfolio in comparable prices

The reporting year results demonstrate a total for the long-term export contracts portfolio at nearly US $25 billion in comparable prices.

The Company retained its sound position in the global uranium market, as evidenced by the sustainable provision of uranium enrichment services to meet about one-third of the needs of the Western-design reactors and by the sizeable portfolio of longterm orders.

In the reporting year, the Company continued building up a fullscale Material Account System (MAS)13 both abroad and in Russia. The Company optimises existing material account agreements with key nuclear fuel producers (in the USA: AREVA NP (Richland, Washington), GNF-A (Wilmington, North Carolina), and Westinghouse (Columbia, South Carolina) and in Western Europe: AREVA (Romans, France), AREVA (Lingen, Germany), Westinghouse (Västerås, Sweden), and Westinghouse (Springfields, UK)), as well as with conversion

a chemical process transforming U3O8 into UF6.
companies (CAMECO (Saskatoon, Canada) and ConverDyn (Englewood, Colorado, USA)).

The importance of this area of JSC Techsnabexport’s business activities is conditioned in many respects by the necessity for the efficient use of its own containers for uranium product shipments and the start of large-scale implementation of commercial uranium product delivery contracts for US customers upon completion of the HEU-LEU Agreement.

In 2013, the foundation of the Russian MAS was laid. In June, a material account agreement was concluded with NAC Kazatomprom, which defined the terms and conditions of physical deliveries of natural uranium from Kazakhstan to Russian conversion

a chemical process transforming U3O8 into UF6.
plants and of subsequent book transfer operations.
In 2013, the foundation of the Russian MAS was laid. In June, a material account agreement was concluded with NAC Kazatomprom, which defined the terms and conditions of physical deliveries of natural uranium from Kazakhstan to Russian conversion

a chemical process transforming U3O8 into UF6.
plants and of subsequent book transfer operations. This will enhance the interaction of JSC Techsnabexport and NAC Kazatomprom with their mutual foreign customers, specifically relating to the deliveries of Kazakh natural uranium for subsequent processing in Russia (uranium conversion

a chemical process transforming U3O8 into UF6.
and/or enrichment) using the book transfer approach, which will be for the ultimate benefit of the customers.
Geographically, in 2013, the Company was mainly exporting to the USA and EU-15

Separative Work Unit
countries.

The geography of the key activities in the reporting period is described below.

North America

47%
Share of deliveries to North America in the total exports of JSC Techsnabexport

In the reporting year, the Company continued strengthening Russia’s position in the North American uranium market. In 2013, the share of the Company’s exports to North America was about 47% (over US $1.4 billion) of the total exports (including deliveries under the HEU-LEU Programme), or 20% (over US $0.4 billion) of commercial supplies.

In terms of the Amendment of 2008 to the Suspension Agreement, the Company continued, with the active participation of its affiliate in the USA, to secure additional contracts for both packaged EUP and uranium enrichment and conversion

a chemical process transforming U3O8 into UF6.
services. Seven contracts for the delivery of Russian NFC products worth over US $346 million were concluded with US utilities.

Following the results of the reporting year, JSC Techsnabexport has mid-term and long-term contracts in its exports portfolio, of which 16 are direct contracts and 3 contracts which were concluded through the Company’s subsidiary, TENAM Corporation. Those contracts were signed with 12 US utilities and totalled approximately US $5.8 billion14. This covers over 80% of the limits for product supplies to the US market, as agreed upon under the Suspension Agreement Amendment for 2014–2020.

Additionally in 2013, two spot transactions for EUP delivery were made through TENAM Corporation. The material came from the Company’s inventories stored at the GNF-A fuel fabrication facility in the USA.

The reporting year saw further EUP deliveries as part of the first commercial contract made under the Amendment of 2008 to the Suspension Agreement – with Exelon. The year 2013 also witnessed the completion of the first deliveries under a new commercial contract with USEC.

Commitments to meet 100% of EUP needs under a long-term contract with the Mexican utility CFE were fulfilled in their full scope and in a timely manner.

Europe

43%
Share of deliveries to Europe (EU-15

Separative Work Unit
) in the total exports of JSC Techsnabexport

The European region still remains the largest target market of the Company. In 2013, European customers were delivered uranium products worth over US $1.3 billion, or about 43% of the Company’s total exports (including deliveries under the HEU-LEU Programme), or 65% of the total commercial exports.

Customers of the products exported by the Company are the utilities of the EU-15

Separative Work Unit
area, including EDF (France), E.ON and EnBW (Germany), OKG (Sweden), TVO (Finland), ENUSA (Spain), and AXPO AG (Switzerland).

As of late 2013, JSC Techsnabexport’s export portfolio held long-term and mid-term contracts for uranium deliveries until 2025, signed with ten utilities in the region. At the reporting year-end of 2013, agreements were reached to prolong one long-term contract and three amendments were signed regarding spot and mid-term deliveries of uranium products at a total of about US $650 million.

JSC Techsnabexport continued to hold regular meetings with the European utilities to apprise them of the condition and development of the quality management system and environmental management system in both the Company and the sector as a whole.

As most European utilities pursue the policy of corporate social responsibility that binds them to cooperate only with suppliers who act in observance of international standards (DIN EN ISO 14001:2009, DIN EN ISO 9001:2008, etc.), the Company not only fully meets these requirements, but also requires them from its own vendors.

JSC Techsnabexport continued to hold regular meetings with the European utilities to apprise them of the condition and development of the quality management system and environmental management system in both the Company and the sector as a whole.

The supplier companies are regularly audited to ensure they meet the requirements of the international standards in the field of management and social responsibility, as well as other international regulations. In 2013, the Company’s European customers conducted audits of the management systems at JSC SCC and JSC PA ECP.

Consultations on the disposal of liquid radioactive waste at JSC SCC were held with representatives of EDF (France) with the involvement of ROSATOM.

Asia-Pacific, the Middle East, and Africa

10%
Share of deliveries to Asia-Pacific, the Middle East, and Africa in the total exports of JSC Techsnabexport

The adverse consequences of the accident at Fukushima-Daiichi NPP were obviously most apparent in Japan, which did not operate most of its reactors in the reporting year and shut down all nuclear reactors beginning in mid-September 2013.

Even though current fuel requirements are lacking, plans to restart certain reactors15 in Japan in 2014 persist. The Company therefore focused its activities in the area of restructuring some existing contracts (as a result, one of the contracts was prolonged) and on pre-contract preparation for a number of new projects.

In 2013, the Company continued execute its long-term contracts made with customers in Asia, Africa, and the Middle East; also, two amendments to the existing uranium product supply contract were signed.

The three transactions totalled approximately US $100 million.

As of the reporting year-end, JSC Techsnabexport’s share of deliveries to the Asia-Pacific region (the Republic of Korea, People’s Republic of China, and Japan), the Middle East (UAE), and Africa (RSA) was about 10% (over US $0.3 billion) of the total exports (including deliveries under the HEU-LEU Programme), or 15% of the commercial uranium product exports.

13 Foreign trade practices for commercial-grade uranium products feature widespread use of mechanisms enabling them to be circulated, bought and sold cash-free. A Material Accounts System (MAS) is a tool to increase the efficiency of transactions involving raw materials processed on toll principles (conversion

a chemical process transforming U3O8 into UF6.
, enrichment) and customer-owned processed products (uranium hexafluoride, EUP). Non-cash transactions with uranium are similar to non-cash transactions in the banking sector. MAS combines a contract for uranium product processing (a contract for customer-owned feed) with a contract for its ‘impersonal’ storage at the contractor’s facility where transfer of title is stipulated from one person (for example, the feed supplier) to another one (e.g. the purchaser of processing services) during the storage period.
14 In comparable prices.
15 In the second half of the reporting year a number of Japanese utilities applied to the national regulator seeking restart permits for their reactors.


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