REFERENCE: NAC Kazatomprom (Kazakhstan) - comments of KASE Listing commission
/IRBIS based on information of the KASE Listing commission, Apr 04, 02/ -
At the admittance of the first issue indexed inscribed coupon bonds of
National atomic company Kazatomprom CJSC into official list of the
Kazakhstan Stock Exchange (KASE) under category "A" the Listing
commission of the exchange decided to draw attention of potential investors
to the following aspects.
COMPETITION AND SALES MARKETS OF THE PRODUCTS
By the data of NAC Kazatomprom, its share in the world production of
uranium is 5% and will reach 7% by 2005. The basis for the stability and
effectiveness of the company is the unique raw materials base of uranium,
since Kazakhstan is the leading state in the world on reserves of uranium.
In 1991 the government of USA, fearing the loss of control over the market
due to sales of cheap uranium by CIS countries and protecting the interests
of western producers, started antidumping investigation. During the
investigation (beginning from November 1991) imports of uranium to the
USA from former USSR countries was completely banned. In 1992 the
countries of the European Union joined the ban. In 1999 all restrictions on
imports of Kazakhstani uranium were lifted and it allowed NAC
Kazatomprom to expand the sales markets and take the solid positions on
the world uranium market.
Till now the prices on uranium were quite low, which is explained by the
pressure of the uranium reserves accumulated during the cold war period.
Today stable growth of uranium prices is observed. By the estimates of the
analysts it will continue due to expected deficit of natural uranium and the
decrease in reserves. Under such condition NAC Kazatomprom can react to
the market accordingly.
The strategy of NAC Kazatomprom is directed to offering more deeply
processed goods as the deficit of uranium appears on the market, which will
help to increase the income from extraction and processing of uranium.
Besides, the company extracts uranium using the underground leaching
method, which ensures low cost. Similar low cost production exists only in
Uzbekistan, in fields of Canada and at copper and gold fields of Australia
and Africa, where uranium is a by-product. All other sources of uranium
supplies for the nuclear energy have high costs and can not compete with
the Kazakhstani uranium.
Apart from this, NAC Kazatomprom began the program of offering services
to western companies to process hardly processed uranium containing
products, which will allow the company to go into new markets and increase
the extraction of uranium for a certain buyer, including through the
establishment of joint ventures with the leading world-class companies.
Objective analysis of the world nuclear energy condition and the tasks set for
the energy sectors indicate that now the nuclear energy is the most
perspective sector. By taking into account this situation, new nuclear power
plants in developed countries of America, Europe and South-East Asia are
going to be built, which will increase the orders for fuel of nuclear stations.
Thus, in upcoming ten years there are all grounds for the existence of a solid
and guaranteed sales market for the company's uranium and the increase in
demand for fuel of nuclear stations.
Tantalum market is characterized by a quite favorable situation. Especially in
developed countries the production and consumption of tantalum products
will grow about at 8-10% a year. Forecasted level of prices for tantalum raw
materials will increase by 5-10% in upcoming 2-3 years. Now, the production
of tantalum items at UMZ OJSC accounts for more than 8% of the world
production. Until now the main sales were based on exchange production
basis. The major consumers of such services are Nottington Trading Ltd
(Switzerland), Metallurg International Resources GMBH (USA) and others.
Here comes the risk of interruptions in the production of this products due to
the absence of stable sources of raw materials. Now, the inspection and re-
evaluation of tantalum-niobium raw material base of Kazakhstan is being
Beryllium market is highly monopolized, but demand for beryllium bronze will
keep growing, and major producers will increase the production to satisfy the
demand. There are only three producers of beryllium in the world with
complete cycles: UMZ OJSC, American Brush Wellman and Chinese
NNMS, which mostly sells on domestic market. Brush Wellman is the major
producer of beryllium and produces about 260 tons a year. Of this number
more than 200 tons are alloys of beryllium with copper, aluminum and nickel.
The production volume of beryllium by NAC Kazatomprom will reach 23% of
the world's production, and UMZ OJSC is the major supplier of alloys on the
bases of copper, aluminum and nickel. Now the production capacity of UMZ
OJSC is going to be increased. In September 2000 long-term contract was
signed with Brush Wellman to supply significant volumes of beryllium which
guarantees stable production and possibility of increasing the production.
The risk of beryllium production for NAC Kazatomprom is minimized by the
existing long-term contracts and reserves that ensure the company's
production for at least 20 years.
NAC Kazatomprom conducts geological survey of the uranium reserves,
extracts, processes and produces more deeply processed products from
uranium, but does not service the nuclear reactors that exist in Kazakhstan.
Geological survey of the uranium reserves does not carry much
environmental risks because the specifics of Volkovgeologya OJSC activities
which the geological survey of the uranium fields and study of radioactivity
situation in the country.
Extraction of uranium
Extraction of uranium at all fields of NAC Kazatomprom is conducted by the
most progressive method - underground well leaching, where the minimum
damage is made to the landscape and subsoil. Based on generally accepted
international estimates, the risk of radiation hazards at the enterprises which
are engaged in extraction of uranium using UWL method does not exist at all
in case of emergencies, and under the external influence is very low (the
emission of radionuclids creates additional radiation which is almost not
detected due to natural radiation level). Solid radioactive waste, which is
collected during the production, is characterized as low radioactive. The
enterprises of NAC Kazatomprom dispose them in special burial grounds
based on the norms adopted in Kazakhstan.
Contamination of underground water
The monitoring of the underground water is the key issue under UWL
extraction. There are number of wells used to monitor the waterbearing
levels, where the samples of water are taken constantly to make necessary
measurements. The extraction site is blocked by sanitation zone, which
stretches for 500m around the ore field. In water samples taken from the
monitoring wells at the enterprises of NAC Kazatomprom there is no
radionuclide contamination over the norms (NRB - 99). Besides, it should be
mentioned that all uranium mines developed by the companies are located in
deserted regions of Kazakhstan, far from dwelling places.
Air pollution is constantly monitored both by NAC Kazatomprom and the
specialists of Environment Protection Committee of the Ministry of Natural
Resources and Environment Protection of Kazakhstan. The main sources of
the pollution are the boilers used to heat the settlements of the miners and
other facilities of the plant. Other sources - are vehicles and diesel
stations. In this case noxious emissions to the air by the regular vehicles of
the company and boilers does not exceed the norms. Therefore, there is no
environmental hazard to the nature and people.
Processing and production of more deeply processed goods
The most of hazardous production is focused at UMZ OJSC. Considering the
specifics of the production at the plant, in order to continue the working
process, and to meet the requirements of environment protection legislature
and other norms of Kazakhstan all necessary normative-permissions on
limits of emissions and wastes were obtained, the permission on special use
of the resources was obtained, where the limits of emissions, wastes and
disposals of production wastes are set, production monitoring over the
environment and the influence of the UMZ OJSC production on the
environment are organized. There were no claims from the state bodies of
Kazakhstan over the environmental danger of UMZ OJSC during the last 10
years. Based on the legislature acts UMZ OJSC signed an agreement to
insure against the environmental pollution for KZT20.0m and for further
recultivation of the land used during the production the liquidation fund
amounting to 1% of the cost of sold goods was founded.
NAC Kazatomprom had taken and keeps taking all necessary measures to
maintain all environmental and radioactive protection measures, including
conducting independent international environmental expertise, which
concluded of satisfactory condition of the environment at its enterprises after
the investigation of uranium production of NAC Kazatomprom. The company
plans to conduct an Environmental certification of all the production by
independent international organization in 2002.
As of October 1, 2001 wearout of fixed assets of all enterprises of NAC
Kazatomprom was about 51% on average. Investments into the renewal of
worn out equipment during the last three years reduced the wearout degree
of major extraction and production facilities of the enterprises by 7% on
average. The capital investments in 1998-2000 and in 9 months of 2001
Major technological equipment of NAC Kazatomprom enterprises have also
a high degree of wearout. The company is conducting coordinated policy on
renewal and modernization of the major production facilities, which will
eliminate the risks of interruptions and stable work of all technological
equipment of NAC Kazatomprom and it will lead to the improvement of the
quality of products and cut their volumes.
After considering the facts mentioned above the management of NAC
Kazatomprom guarantees to minimize the risks related to full or partial halt of
the company's production.