OREANDA-NEWS. January 18, 2010. The year 2009 was an important landmark in implementing the Agreement between the Government of the Russian Federation and Government of the United States of America concerning the disposition of high enriched uranium extracted from nuclear weapons dated February 18, 1993 (HEU-LEU Agreement, known to the world community as Megatons to Megawatts Program).

The HEU-LEU Agreement stipulates deliveries to the USA of low enriched uranium (LEU) produced by enterprises affiliated to the Rosatom State Corporation from weapons-grade high enriched uranium (HEU) to be used as fuel for US nuclear power plants. The Executive Agents of the Parties to the Agreement are the Joint Stock Company "Techsnabexport" (100 percent stock are held by the JSC "Atomenergoprom") and United States Enrichment Corporation.

From the moment the first LEU shipment was delivered to the USA in May 31, 1995, about 11,049 MT of the material produced as a result of downblending 382 MT of HEU — 76 percent of the total amount of 500 MT envisaged by the Agreement. Thus the Megatons to Megawatts Program has entered its final stage. Hard currency proceeds received by Russia for the delivered material exceed USD 8.8 billion. In addition, natural uranium — the so-called HEU feed — with estimated cost of USD 2.8 billion was returned to the Russian Federation.

In compliance with the 2009 business plan the JSC "Techsnabexport" took a series of measures aimed at expanding the portfolio of long-term contracts for supply of products and services of the nuclear fuel cycle to foreign customers — the main direction of the Company activities and key element in the program of the anti-crisis activities by the Rosatom State Corporation.

After a lengthy interval the JSC "Techsnabexport" resumed in 2009 direct commercial deliveries of uranium products to US utilities under six contracts worth nearly USD 3 billion. Along with a stable implementation of the HEU-LEU Agreement, Russian high-tech products gained access to the largest segment of the world nuclear market. At least three similar contracts worth nearly USD 1 billion are expected to be signed in 2010.

Long-term contracts were engaged and amendments were signed to the current contracts for low enriched uranium deliveries to the European Union and Asia and Pacific countries for a total amount of about USD 7.5 billion. As of the end of 2009 the portfolio of export orders for uranium products within a five-year period (excluding the deliveries under HEU-LEU Agreement) will exceed USD 8 billion (104 percent of the planned figures), while the total portfolio will exceed USD 15 billion.

Under commercial contracts alone the Company delivered to foreign customers in 2009 uranium products and services worth about USD 2 billion, and the proceeds from the HEU-LEU program over USD 900 million were channeled to the Russian Federation budget.

In 2009 the JSC "Techsnabexport" continued cooperation with the China Nuclear Energy Industry Corporation (CNEIC) and rendered assistance to the People’s Republic of China in construction of the fourth line of uranium enrichment plant based on the advanced Russian gaseous centrifuge technology. Construction is underway in strict compliance with the work schedule. Delivery of almost 60 percent of the basic equipment — gaseous centrifuges, has been completed. The volume of auxiliary equipment deliveries exceeded USD 20 million. Forty five percent of design and technological documentation has been developed and transferred to the Chinese side. It should be noted that the Chinese customers highly appraised the technical design for construction of the facility that was successfully defended in Beijing in July 2009 by experts from the JSC "Techsnabexport" and VNIPIET designing institute.

The JSC "Techsnabexport" and Toshiba Power Systems (Japan) a member of the Toshiba Corporation signed in May 2009 in Tokyo a Memorandum of Understanding. It is aimed at further development of the General framework agreement on business cooperation between the JSC "Atomenergoprom" and Toshiba Corporation signed on March 20, 2009. It stipulates, among other things, investigation of business concepts or commercial plans for cooperation in the field of production and deliveries of products and services of the nuclear fuel cycle, specifically enriched uranium.

In December 2009 the first Russian commercial plant for reprocessing depleted uranium hexafluoride (DUHF) to uranium octoxide was commissioned at the JSC "Production Association Electrochemical Plant" (ECP, Zelenogorsk, Krasnoyarsk Territory, 100 percent subsidiary of the JSC "Atomenergoprom"). New production is based on a technology by the French company AREVA NC. Recovering of chemically aggressive fluoride will allow converting DUHF to uranium octoxide — a product with features close to natural uranium, which is chemically stable and easy for conservation, could be further used for fabrication of nuclear fuel to be used in fast neutron reactors.

The Company’s experts actively promoted Russian foreign policy initiatives in creating an international legal framework and infrastructure for assured supply of nuclear fuel and strengthening the international regime of nuclear non-proliferation. In 2009 the government level arrangements were finalized concerning the participation of authorized organizations from Ukraine and Armenia in the International Uranium Enrichment Center (IUEC) established by Russia (the JSC "Techsnabexport") and Kazakhstan (NAK "Kazatomprom") in 2007 in Angarsk. In compliance with the decision by the sole shareholder’ (the JSC "Atomenergoprom") the JSC "Techsnabexport" transferred in October 2009 its shares in the IUEC to the Rosatom State Corporation.

At its November 2009 meeting the IAEA Board of Governors passed a resolution supporting the Russian Federation’s initiative on establishing on the Russian Federation territory a physical stockpile of low enriched uranium and deliveries by IAEA of low enriched uranium from the stockpile to its Member States, which was a diplomatic breakthrough in creating an international system for assured supply of fuel for NPP’s and mitigating the risks of proliferation of sensitive nuclear technologies. The materials from the physical stockpile is expected to remain under the management by the JSC "IUEC" and will be transferred, in case IAEA receives a request for delivery, from the JSC "IUEC" under a relevant contract with IAEA.

All preliminary stages have been successfully accomplished, including a positive judgment by the state technical expertise required by the Russian Government for making a decision on establishing a Russian-Kazakhstan Uranium Enrichment Center in Angarsk as an important component in the program for integrating nuclear power complexes of the two countries.

The Company representatives actively participated in various projects and activities by international organizations in the nuclear area, such as the World Nuclear Association (WNA), Nuclear Energy Institute (NEI), and IAEA. The primary goal is strengthening cooperation with the key players on the segments of the world market of products and services of the nuclear fuel cycle, exchange of information on the status and prospects of market development, working out and promotion of a consolidated position on various issues important for global nuclear industry.

The Company experts were directly involved in drafting a legislation submitted for consideration by the State Duma in 2009. It is aimed at improving government regulation of foreign trade barter transactions that are extremely important for export companies in the nuclear industry. Adopting the draft legislation will significantly improve competitive positions of Russian suppliers on the world uranium market.

In December 2009 the Court of Appeal, Svea circuit (Sweden) dismissed the claim by the Globe Nuclear Services Supply GNSS to reverse the previous award in favor of the JSC "Techsnabexport" (100 percent subsidiary of the JSC "Atomenergoprom") granted by the International commercial Arbitration court in Stockholm (Sweden). The ruling by the Swedish Court of Appeal is final and unappealable. Therefore by confirming the regularity of the arbitration award, the Swedish Court of Appeal has put an end to the process initiated by GNSS over six years ago in 2003 aimed at vindicating over USD 1 billion from the Russian Federation budget.

Within the framework of a three-year project aimed at creating an integrated system for public accounting by the Rosatom State Corporation launched in 2009, the Company participated in a pilot project for preparation of public statements for 2008 by a number of key organizations in the nuclear industry. The Company was also actively involved in implementing an industry project on introducing the Ethical Code of the Rosatom State Corporation.

In April 2009 the Director General A. A. Grigoriev approved the list of the Company fellows who received high credits from the jury of the Seventh International competition of scientific and educational projects "Energy of the Future-2009". The personal grants are intended for one year, and will be paid on a monthly basis from June 2009 till May 2010 inclusive. The grant amount is 1 500 Rubles per month.

In October 2009 in Madrid, Spain the JSC "Techsnabexport" was awarded Europe’s International Prize "For Quality". This prize is awarded on an annual basis by the Editorial Office publishing group jointly with the Trade Leaders Club. Europe’s Prize "For Quality" 2009 is not the only international award received by the JSC "Techsnabexport" throughout its 46 years of operation. It is another evidence of high estimation of the Company’s contribution in developing trade with nuclear materials and services and international cooperation.

Among the priority tasks of the JSC "Techsnabexport" in 2010 it is worthy to note continued work on long-term contracting and increasing the contract portfolio up to USD 20 billion; isolation of non-core assets and concentration on core activities (export of products and services of nuclear fuel cycle); incorporation of the JSC "SPb Isotope" within the Company’s contours aimed at improving the competitive environment in logistics and supplies; assistance to establishing the Fuel Company based on the JSC "TVEL"; participation in technical and economic studies of joint projects for deployment in foreign countries of enrichment facilities based on Russian gaseous centrifuge technologies.