Integrated Annual Report 2023
Kazatomprom
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Table of Contents | |
1.2. Business Model | 16 |
1.3. Company's Asset Structure | 18 |
1.4. Analysis of Performance Dynamics | 19 |
1.5. Uranium products market and competitive environment | 21 |
1.6. Sales and Distribution | 23 |
2. OPERATING AND FINANCIAL REVIEW | 41 |
2.1. Significant factors affecting the Group`s results of operations | 41 |
2.2. Key performance indicators analysis | 46 |
2.3. Uranium segment | 47 |
2.4. UMP Segment | 49 |
2.5. Cost of sales | 51 |
2.6. Selling expenses | 53 |
2.7. General & Administrative expenses (G&A) | 53 |
2.8. The share of associates' and JVs' results | 53 |
2.9. Profit before tax and tax expense | 54 |
2.10. Capital expenditures review | 55 |
2.11. Reserves and geological surveys | 57 |
2.12. Liquidity and capital sources | 57 |
2.13. Indebtedness | 60 |
2.14. Outstanding shares | 62 |
2.15. Guidance for 2024 | 63 |
3. ESG AND SUSTAINABLE BUSINESS | 66 |
3.1. Strategic approach | 66 |
3.1.1. Sustainable development milestones | 66 |
3.2. Climate Change and Energy Efficiency | 81 |
3.3. Environmental sustainability | 85 |
3.4. Health and Safety | 102 |
3.5. Human resources management | 113 |
3.6. Support for local communities | 126 |
3.7. Supply chain | 129 |
3.8. Science and Innovations | 132 |
4. CORPORATE GOVERNANCE | 138 |
4.1. Corporate governance system | 138 |
4.2. Corporate Governance Code | 139 |
4.3. General Meetings of Shareholders | 143 |
4.4. Board of Directors | 144 |
4.5. Management Board | 155 |
4.6. Remuneration | 160 |
4.7. Risk Management | 162 |
4.8. Internal control | 173 |
4.9. Shareholder engagement | 174 |
4.10. Tax transparency | 175 |
4.11. Compliance with laws and regulations | 177 |
4.12. Corporate ethics and compliance | 177 |
5. ANNEXES | 184 |
5.1. About the Report | 184 |
5.2. Key ESG indicators, 2021-2023 | 194 |
5.3. Association and International Initiative Membership and Partnership | 209 |
5.4. Reports by Chairmen of the Board of Directors Committees in 2023 | 210 |
5.5. Statement of responsibility from members of the Board of Directors and Management Board | 214 |
5.6. Group's subsidiaries, joint ventures, joint operations, and associates | 215 |
5.7. Contributing to the achievement of the UN Sustainable Development Goals | 217 |
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5.8. GRI Index | 220 |
5.9. TCFD Index | 240 |
5.10. SASB Index | 241 |
5.11. UNCTAD Index | 247 |
5.12. Independent Assurance Report | 250 |
5.13. Consolidated financial statements | 253 |
5.14. Glossary | 358 |
5.15. UK tax information | 361 |
5.16. Contacts | 363 |
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MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS
GRI 2-22
Dear Shareholders,
We bring to your attention the Kazatomprom's Annual Report for 2023. In this report you can find the key results of the Development Strategy implementation and the Company's performance over the past year.
2023 was a year of significant events and important achievements for us. Innovation, continuous development, and high-level technological expertise help Kazatomprom retain its leading position in the uranium sector. In 2023, Kazatomprom's contribution to global uranium production was about 20%. Kazakhstan accounted for about 39% of global uranium production.
Ulba-FA successfully implemented its plans. One of the primary objectives was global diversification of the client base and expansion of supply geography. In 2023, we delivered nuclear fuel to China, which confirms the high level of Company's technical expertise and readiness to develop new areas.
The 2023-2030 Sustainable Development Programme has become the basis of our growth and development strategy. This document defines our goals and objectives for environmental, social and corporate responsibility. We are committed to minimising our environmental impact and actively support social programmes, which contributes to the development of corporate governance principles.
Kazatomprom actively invests in the socio-economic development of the regions where it operates, supporting projects in education, sports, culture and charity. In 2023, the company allocated KZT 659 million for such projects. We recognise the importance of interaction with local communities and regularly hold public hearings on environmental and social policy issues.
ESG principles remain the cornerstone of our further development and our commitment to carbon neutrality and reducing environmental footprint. Our Company also actively monitors safety and environmental protection, adhering to international standards. In 2023, the Company successfully passed ISO 45001 and ISO 14001 compliance audits. It actively manages risks, conducts safety audits and records hazardous conditions, actions and incidents without consequences. During 2023, four accidents occurred at our entities resulting in injuries to five employees. A thorough investigation of each case was conducted to identify the causes and develop measures to prevent them in the future. No radiation incidents were recorded.
Transparency and responsibility remain the key principles of our work. We regularly monitor sanctions risks and maintain an open dialogue with our leaders and the public.
The Company demonstrates financial strength, investment attractiveness, and a high level of investor trust. The "value over volume" strategic approach adopted in 2018 has proven its effectiveness.
Lower production costs and improved financial performance were the results of efforts to enhance operational efficiency. Control over production costs at a competitive level allows the Company to maintain high profitability, keeping EBITDA Margin at least 50%. Kazatomprom's share price increased by 45%, providing shareholders with a return of 51%.
With current trends such as growing energy consumption in developing countries and increasing demand for clean energy, the uranium and uranium products market presents significant prospects for development. Kazatomprom, as a leader in uranium production, makes a significant contribution to the development of energy and environmentally sustainable technologies.
We continue to explore various spheres for the Company's further development to maximise the use of our competitive advantages and strengthen further long-term development. Continuous strengthening of its position and investments in new technologies will help the Company successfully deliver on its ambitious plans and remain a key player in this forward-looking market segment.
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The Board will continue to provide governance and performance improvement to the Company, representing the interests of all parties involved. On behalf of the Board of Directors, I would like to thank all our stakeholders - especially Kazatomprom's shareholders, employees, customers and partners - for their mutually beneficial cooperation in 2023.
Arman Argingazin
Chairman of the Board of Directors
Independent Director of NAC Kazatomprom JSC
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MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD
GRI 2-22
Dear colleagues, partners and investors,
Hereby I would like to present the Kazatomprom's integrated annual report for 2023 containing the key performance results of the nuclear holding company.
I am proud to address you to share the key events that have shaped our path in 2023. The year was a time of significant achievements and strategic moments that strengthened our position in the global nuclear arena and enhanced our relationships with partners around the world.
The renewal of subsoil use contracts for our subsidiaries including Kazatomprom-SaUran LLP and RU- 6 LLP ensures stable and sustainable uranium production in Kazakhstan on a long-term basis. This step not only supports our nuclear development strategy but also confirms our position as one of the world's leading uranium producers.
We successfully deliver uranium to the Romanian energy company Societatea Natională Nuclearelectrica S.A. via the Trans-Caspian International Transport Route. This demonstrates our reliability as a nuclear fuel supplier to the global market. This also reflects our geographic expansion strategy which gives us additional confidence for the future.
The IAEA Head's visit to the Republic of Kazakhstan and his visit to our facilities emphasised the importance of our country as a key player in the global nuclear fuel market. This is recognition of our role and contribution to the common good and safety in the field of nuclear energy. We are proud to be an important link in ensuring international safety standards.
The launch of the refining facility in the Turkestan region was a significant event. This allowed us to improve product quality and increase the uranium recovery rate to 100%. The project not only raises our technology platform to a new level but also benefits society through the creation of new jobs and the development of the region.
The signing of a co-operation agreement with Framatome and the execution of a long-term uranium supply contract with China National Uranium Corporation Limited open new horizons for our company. This not only expands our partnerships but also helps us meet the growing demand for clean energy, thereby supporting our commitment to innovation and development.
Another important step in our strategic partnership is the signing of the contract on uranium supply to the Barakah nuclear power plant in the UAE during the President of Kazakhstan's official visit. This contract confirms our reputation as a reliable supplier and our commitment to global energy security.
On the occasion of the fifth anniversary of our IPO, I would like to express my sincere gratitude to all our partners, investors and employees for their support and trust. This significant anniversary reminds us of our common path to success and the appreciation of every member of our team. We appreciate your role in helping us achieve our goals and are confident in continuing our mutually beneficial partnership in the future. Thank you for your trust and participation in our success.
Meirzhan Yussupov
Chairman of the Management Board
NAC Kazatomprom JSC
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HIGHLIGHTS 2023 | |
Indicator | 2023 |
Production highlights | |
Uranium output (in proportion to the shareholding) | 11,169 tonnes |
Niobium product output | 7.7 tonnes of Nb |
Beryllium product output | 842.8 tonnes of Be |
Tantalum product output | 153.8 tonnes of Ta |
Fuel pellet output | 196.5 tonnes |
Financial highlights | |
Group revenue, KZT billion | 1,435 |
Operating profit, KZT billion | 580.3 |
Net debt/adjusted EBITDA | (0.15) |
Earnings per share, KZT/share | 1,616 |
Dividends paid, KZT billion | 201 |
Sustainable development | |
Headcount across the Holding, employees | 21,554 |
Female share of total headcount, % | 17.2 |
Contributions to budgets for the social and economic development of the | |
regions where the Company operates, KZT million | 2,264 |
LTIFR (per 1 million man-hours) | 0.15 |
120.6 thousand tonnes | |
GHG emissions (Scope 1) | СО2 eq. |
Awards and ratings |
The international Carbon Disclosure Project (CDP) has assigned the company a "B" ("management") climate rating for 2023.
S&P Global Ratings has assigned a CSA (Corporate Sustainability Assessment) rating of 43/100. Top 3 ranking of Best ESG Disclosure by PwC
Kazatomprom Integrated Annual Report 2022 won the gold MarCom Award.
Kazatomprom Integrated Annual Report 2022 received the highest score, 5 stars, from the RAEX annual report rating
Kazatomprom Integrated Annual Report 2022 was recognised as the best annual report for 2022 in the non-financial sector in the KASE annual report competition.
KASE Diploma "For the Pursuit of Transparency" in 2022 among listed companies of non-financial sector of economy.
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MILESTONES 2023
January
- Company renewed subsoil use contracts for two Kazatomprom's enterprises.
April
- Kazatomprom successfully delivered uranium for Romania's nuclear power plant.
- IAEA Head visited the IAEA LEU Bank and the Ulba-FA plant located on the territory of Ulba Metallurgical Plant JSC.
May
- Company delivered the second batch of fuel assemblies (FA) to a nuclear power plant in China.
- Kazatomprom published information on the election of its new Board of Directors.
July
- Kazatomprom launched a refining facility in the Turkestan region.
September
- Kazatomprom has got representation at the country pavilion at the IAEA General Conference.
- Kazatomprom awarded the best production employees.
October
- Kazatomprom exported a batch of fuel assemblies for a Chinese NPP.
November
- Kazatomprom and Framatome signed an agreement to develop co-operation in the field of the nuclear fuel cycle.
- Kazatomprom signed a long-term uranium supply contract with China National Uranium Corporation Limited.
- Kazatomprom signed a long-term uranium supply contract with State Nuclear Uranium Resource Development Company Limited.
- Kazatomprom celebrated five years since its IPO.
- Kazatomprom and Siemens signed an agreement on cooperation in digitalisation and automation.
- Kazatomprom delivered the third and fourth batches of fuel assemblies to the nuclear power plant in China.
December
- Kazatomprom delivered the fifth batch of fuel assemblies to the nuclear power plant in China
- The fuel assembly production plant Ulba-FA LLP received Framatome certificate on fuel assemblies production of AFA 3G design type A.
- Kazatomprom signed a contract with Emirates Nuclear Energy Corporation for the natural uranium concentrate supply.
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1. BUSINESS PROFILE 1.1 Our Strategy
Mission
To develop our uranium deposits and value chain components to create long-term value for all Company stakeholders in line with sustainable development principles.
Vision
To become the Partner of Choice for the global nuclear fuel industry.
Values
- Security and safety.
- Professionalism.
- Responsibility.
- Development.
- Team.
GRI 2-6
Kazatomprom is the largest global producer of natural uranium with priority access to one of the world's largest uranium reserves.
Core business:
- natural uranium mining;
- making uranium products;
- prospecting and exploration;
- producing rare metals.
The Company's assets include the entire range of enterprises involved in the product chain - from prospecting and exploration, uranium mining, and nuclear fuel cycle products manufacture to science, social welfare and staff training.
The Company employs over 21,000 people. Kazatomprom is committed to sustainable development and international standards of corporate social responsibility. The Company's achievements have been recognised with international and national awards.
Kazatomprom is:
- The world's largest uranium producer: in excess of 20% of the world's uranium production.
- Owner of the largest uranium reserves with priority access to a high-quality resource base.
- Low-costand easy-to-scale uranium mining by in-situ recovery.
- Industry leader in operational efficiency, occupational health and safety as well as environmental protection.
- A leader in the development of strategies for the sustainable, long-term future of the uranium market.
In 2018, Kazatomprom adopted a new development strategy, focusing on five strategic goals for 2018- 2028:
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Focus on the core business.
Streamline mining, processing and sales volumes based on market conditions. Create value by enhancing marketing function and expanding sales channels. Introduce best-practice business processes.
Develop industry leader corporate culture.
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Strategy Implementation in 2023
Strategic goals | Key results |
Focus on the core | • In 2023, Kazatomprom retained its position of the leading global |
business | uranium producer (on respective production share basis). As per data |
provided by UxC Kazatomprom's uranium production in 2023 made up | |
20% of the total global primary supply. The Holding's share which | |
comprises all the uranium supply by Kazakhstan as a country amounted | |
to 39% of the global share of uranium supply in 2023. | |
• In 2023, Ulba-FA LLP delivered four batches of fuel assemblies (FA) | |
(about 130 tonnes of low-enriched uranium). All fuel assemblies in the | |
deliveries passed acceptance control and were accepted by the | |
Chinese nuclear power plant. |
Streamline mining, processing and sales volumes based on market conditions
Create value by enhancing marketing function and expanding sales channels
- Kazatomprom's production volume expectations remain consistent with a market-oriented strategy and intent to optimize uranium production volumes in line with market conditions and the Company's production capabilities.
- Successful operation of THK, Kazatomprom's trading subsidiary.
- Kazatomprom and the UAE energy company Emirates Nuclear Energy Corporation signed the first-ever contract for the supply of Kazakh natural uranium concentrate for the energy needs of the UAE Barakah nuclear power plant. Execution of this contract with a major UAE energy company will serve as a new impetus for co-operation between the nuclear companies of both countries as well as open a new country in Kazatomprom's sales geography.
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Kazatomprom JSC published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 12:45:39 UTC.