Production and extraction

World Leadership in Uranium Mining

Kazakhstan is the world leader in uranium mining in the world and produces about 42% of the world’s uranium production. JSC NAC Kazatomprom (hereinafter – Kazatomprom) is the national operator of the Republic of Kazakhstan on export and import of uranium and its compounds, nuclear fuel for nuclear power plants, special equipment and technologies.

Kazatomprom is the world’s largest producer of natural uranium with priority access to one of the world’s largest resource bases. All of the company’s uranium deposits are suitable for cost-effective and the least environmentally harmful in-situ leach mining, which, combined with a long operating life of mining assets, allows Kazatomprom to remain among the world’s leading producers with the lowest uranium production costs.

Kazatomprom’s shares have been traded on the Astana International Financial Center and the London Stock Exchange since November 2018.

Key performance results

The 2022 was turbulent for Kazakhstan and the entire world community. The 2022 has experienced risk management processes that have proven their resilience in key areas such as finance, operations and supply chains. The Company continues to monitor the situation and respond to emerging challenges.

The events that took place in 2022 in the country and in the world did not have a significant impact on the activities of Kazatomprom.

All enterprises have been working and are working without interruption due to the introduction of timely measures on preventing the destabilization of the situation at work and ensuring the safety of personnel and production sites.

In 2022, Kazatomprom shipped contracted volumes via its regular route without any interruptions or problems related to logistics.

In 2022, Kazatomprom successfully delivered natural uranium via the Trans-Caspian International Transport Route, which has been used by the company as an alternative since 2018. This was done in order to offset the potential risk of unavailability of the main route.

The Company continues to monitor the situation with sanctions against Russia and their potential impact on the transportation of finished products through the territory of the Russian Federation. To date, there are no restrictions related to the supply of finished products to the Company’s customers around the world.

However, the management of Kazatomprom is closely monitoring the current situation, and is ready to make decisions that will minimize risks and ensure the continuity and efficiency of the holding’s activities.

Prospects

Against the background of the energy crisis associated with rising prices for fossil energy carriers and the need to achieve decarbonization goals, nuclear energy has become increasingly regarded by countries as a reliable low-carbon energy source.

The growth of activity of energy companies in the long-term uranium market against the background of the geopolitical situation and positive changes in the nuclear power plant market has become a driver of decision-making by manufacturers around the world about restarting suspended and launching new production facilities in the coming years.

These factors also influenced the company’s decision to increase production volumes from 80% to 90% of the nominal volumes specified in subsurface use contracts in 2024.

Despite the continuing uncertainty, Kazatomprom showed good results in 2022.

Consolidated revenue in 2022 for the first time amounted to KZT1 trillion, an increase by 45% compared to 2021. This was mainly due to increased average selling price associated with growth of the spot price and a weakening of KZT against USD, while sales volumes in 2022 were comparable to 2021.

Operating profit in 2022 amounted to KZT456 billion, an increase by 91% compared to 2021, which is also a consequence of the growth in the average selling price of products.

Net profit for 2022 amounted to KZT473 billion⁵, an increase by 115% compared to 2021.

Production volumes were 3% lower compared to last year and amounted to 21227 tonnes on a 100% basis due to the impact of the COVID-19 pandemic on well development in 2021.

As a rule, the development of wells and the extraction of uranium by underground well leaching takes from eight to ten months, and therefore in 2021 delays and limited access to certain key materials and equipment affected the schedule of commissioning wells, which resulted in a decrease in production in 2022.

Consolidated sales volumes in 2022 were similar to those of 2021 and amounted to 16358 tonnes.

Due to the increase in the spot price of uranium, the average selling price for the Group in 2022 amounted to KZT52051 per 1 kilogram, which is 42% higher compared to 2021.

The first delivery of Kazakhstan’s nuclear fuel

In 2021, the Ulba-TVS LLP plant for the production of fuel assemblies was put into commercial operation. In December 2022, the plant carried out the first delivery of nuclear fuel (slightly more than 30 tonnes of low-enriched uranium in the form of fuel assemblies) to China, where the products were accepted by the Chinese corporation CGNPC-URC. In 2024, Ulba-TVS plans to increase production volumes to reach full production capacity, which is 200 tonnes of uranium in the form of fuel assemblies per year. This is the only production facility in Kazakhstan for the production of nuclear fuel for nuclear power plants and has a guaranteed market for 20 years ahead.

Occupational health and industrial safety

Industrial safety has been and remains for Kazatomprom an absolute priority. The company is constantly improving the level of industrial safety, and statistics in recent years show a trend to reduce the number of accidents.

Production activities are conducted in compliance with Kazakhstan and international requirements, comprehensive measures are implemented to prevent accidents, systematic work is carried out to improve the safety culture among employees and managers at all levels.

In 2022, Kazatomprom allocated more than KZT8 billion for the implementation of labor protection and industrial safety programs (similar to 2021).

Radiation exposure and nuclear safety remained stable in 2022 without any excess or radiation accidents. In 2023, the issues of labor protection, ecology and radiation safety will also remain key for Kazatomprom.

Plans for 2023

Kazatomprom’s expectations for the volume of production in 2023 are still consistent with the market-oriented strategy. The company maintains its intentions to reduce production by 20% from 2018 to 2023 (compared to the production levels set under the subsoil use contracts).

Sales volume in 2023 is expected to range from 15,400 to 15,900 tonnes.

Kazatomprom still strives to maintain the target level of stocks (stock balances), which corresponds to approximately six-seven-month production volume of the Company in proportion to the share of participation.

The financial performance of the company may be affected by factors such as difficulties with the supply of necessary raw materials, changes in the Tax Code of the Republic of Kazakhstan and possible requests for social contributions.

Kazatomprom retained its position as the largest producer and seller of natural uranium in 2022, and is confident in the long-term prospects of the nuclear industry.

The company’s strategy in 2022 has remained unchanged: Kazatomprom continues to focus on market discipline in production and sales, in order to obtain benefits and create value for all stakeholders.

Kazatomprom continues to operate in accordance with the highest international professional standards in key aspects of its activities, such as transparency, corporate governance, as well as health, safety and environmental protection.