NAC Kazatomprom has changed its strategy to be more responsive to prevailing market conditions, CEO Galymzhan Pirmatov told delegates attending the World Nuclear Association Symposium 2018 in London today.
Over the past 20 years the Kazakh uranium producer has transformed from a small uranium company to the largest uranium producer in the world, and diversified into other areas of the front end of the nuclear fuel cycle, Primatov said. Such a growth strategy was reasonable, but the company has had to revisit its strategy in recognition of significant changes to the market since 2011, he said.
The last decade has seen uranium demand falling from previous forecasts while supply is unchanged. Surplus enrichment capacity has also seen more material enter an already oversupplied market.
“We all made capex cuts and made operating cost savings where possible, but continued to delay making difficult decisions on the supply side,” Primatov said. “We even increased production at Kazatomprom.” However, it became clear that this was not sustainable.
In response, Kazatomprom has changed its strategy and has a new mission statement: to sustainably develop its uranium deposits and their value-chain components in order to create long-term value for all its stakeholders. It has identified new strategic goals to enable it to fulfil that mission.
To be more market-centric, the company will adjust production levels to meet market forecasts, he said. In December 2017 Kazatomprom announced it would cut uranium production by 20% over a three-year period beginning in January. For 2018 alone, this means more than 5500 tU less coming into the market. The company is looking at opportunities for earlier closure of older mines. It also now views uranium as an asset to be managed, rather than a resource to be used, he said.
The company has refocused on its core business, divesting business or shutting down plants which are either not making money or part of that core. This year, Kazatomprom has divested an integrated electricity and water utility in western Kazakhstan, a small unit originally set up to build Kazakhstan’s first commercial nuclear power plant, and three companies involved in solar panel production. Over 30 subsidiaries have been divested to date. The company will maintain a presence in the front end of the nuclear fuel cycle to help expands its options to meet the diverse fuel needs of its customers.
To meet the strategic goal of enhanced sales and marketing capabilities, the company is focusing on changing processes and systems to deliver on time and to meet customer needs. The THK trading house, established in Zug, Switzerland, has already signed long-term contracts – some more than ten years ahead – and can now meet any tailored needs of its customers, he said. And as a trading house it can buy, as well as sell, uranium.
“We are participating in providing better liquidity and transparency to the market,” Pirmatov said.
Kazatomprom in July made its first delivery of over 3100 tU, representing more than a quarter of its 2018 uranium production, to London-based Yellow Cake plc under a long-term contract between the two companies.
Source: World Nuclear News
