General Information

Specific Features of Competition in the Global Enrichment Market

The enrichment industry is defined by the high barriers to entry for new producers due to a number of technological, economic and political reasons, and high barriers to exit the industry, which is attributed to the significant volume of investment required for building enrichment plants and the necessity for their full depreciation. This results in an oligopolistic competition in the NFC products and services market.

Such companies as Areva (France), Urenco (UK, Germany, the Netherlands) and USEC (USA) remain JSC "TECHSNABEXPORT" key competitors.

The level of price and non-price competition in the market for enriched uranium product (EUP), enrichment services and uranium conversion remains high, including the limits for supplies of Russian uranium products (the policy aimed at diversifying the suppliers introduced by the European Atomic Energy Council and limits on supplies to the USA according to the Amendment to the Suspension agreement). The limits imposed on supplies of Russian uranium products to the American market will be in place until 2020.

30

companies
from 16 countries purchase the Company's products and services

However, the Company has been successfully exporting EUP for decades, as well as uranium enrichment and isotope uranium enrichment services carried out by the Russian nuclear industry enterprises to all the key regional segments of the world market. Over 30 companies from 16 countries purchase the Company's products and services. The supplies of LEU under the Russian-American inter-governmental agreement "On utilising highly-enriched uranium from nuclear weapons" (the HEU-LEU Agreement) account for a considerable part of JSC "TECHSNABEXPORT" exports.

40%

of the requirements of the American NPPs are covered under the HEU-LEU Agreement supplies

In the reporting year the Company met about 36% of the demand of Western reactors in the uranium enrichment market, having an important share in all the key geographical segments of this market. Thus, JSC "TECHSNABEXPORT" supplies to the US, of which the majority falls under the HEU-LEU agreement, correspond to about 40% of the requirements of the American NPPs. The total share of the Company in the markets of the EU-15, Asia-Pacific Region, Latin America and Africa is estimated at 30%.

30%

total share of the Company in the markets of EU-15, Asia-Pacific, Latin America and Africa

Despite a certain reduction in this figure compared with the preceding period, the fact that the Company has been steadily providing uranium enrichment services to meet more than one third of the demand from Western reactors means that it has retained a stable position in the world uranium market. The negative impact of the Fukushima accident for the JSC "TECHSNABEXPORT" has been in part mitigated by prompt negotiations with the clients, including the restructuring of earlier supply agreements on mutually beneficial terms.

Remediation Activities After the Accident

The Company's export by regions (percentage of the physical volume of deliveries) is shown below. There is a trend toward a more even distribution of the Company's supplies between regions, largely due to expansion of the Company's presence in the burgeoning Asian market.

The Company's Export Structure by Region, %
 European region countries
 American region countries
 Asia-Pacific and African region countries

25%

growth of the Company's long-term contracts portfolio compared with 2010

The portfolio of the Company's long-term contracts with deliveries until 2025 and further, formed by the end of 2011, has increased by 25% year on year and is now worth USD 25 billion. This proves that the Company managed to retain the leadership in nuclear fuel cycle products supply in the long term.


25

usd billion
volume of the long-term contracts portfolio until 2025 and further

One of the key requirements for retaining the Company's stable market position in the long term is enhancement of the existing international regulation and legal framework. In the reporting year, considerable progress has been achieved in the area of establishing practical conditions to reach agreements on cooperation in peaceful use of nuclear energy with the USA, Japan, Australia and Canada (for more information see Analytical support of the State Atomic Energy Corporation ROSATOM projects).

The Company's stable position in the world uranium market is a result of a consistent implementation of the business strategy, which proves the effectiveness of its marketing tools (for more information see Strategy).