Expenses

Production cost, RUR mln
Item 2009 2010 2011 2011 on
2010, %
Production cost in uranium operations (cost of uranium raw material, enrichment and conversion services) 49,411 50,279 44,734 89.0
supplies to domestic market 10,850 1,724 0 0
supplies to international market 38,561 48,555 44,734 92.1
Other costs in production cost (products for resale, insurance, delivery, storage of raw material, etc.) 4,832 6,748 1,290 19.1
Total 54,243 57,027 46,024 80.7

A 7.9% decrease in the production cost within the uranium business for the purposes of supplies to the foreign market in 2011 over 2010 was determined by a reduction of total costs of uranium raw material, enrichment and conversion services due to the changes in the structure of sales and production parameters: in 2011 no raw material, received from the Japanese energy companies on account of the payment for the raw component of the EUP, was sold; in addition, the actual volume of supplied and purchased products diminished compared to 2010. Despite an increase in the price of the uranium raw material issued to be used in production, as well as an increase in the price of enrichment and conversion services, the total production cost decreased in 2011 over 2010, because a drop in the actual volume of purchased products levelled off the negative impact of the price increase.

A decrease of production cost and other costs within the production cost in the reporting year compared to 2010 is determined by the termination of shipments in the internal market and completion of shipments under the contract for providing technical assistance for the 4th construction stage of a gas centrifuge plant in China.

Business expenses, RUR mln
Item 2009 2010 2011 2011 on
2010, %
EUP Insurance 741 767 561 73.1
EUP Delivery 437 628 521 83.0
Other business expenses (insurance of business risks, customs fee and duties for export, EUP storage, contractors' services, etc.) 508 1,117 1,260 112.8
Total 1,686 2,512 2,342 93.2

A 6.8% decrease in business expenses in 2011 over 2010 was largely determined by the following factors:

  • a decrease in the actual sales as a result of the accident in Japan in March 2011;
  • a reduction in insurance tariffs within the Company's 2011 insurance scheme, which is developed in cooperation with JSC Atomic insurance broker;
  • completion of shipments under the contract for providing technical assistance for the 4th construction stage of a gas centrifuge plant in China.

A 12.8% increase in other business costs is associated with an increase in the cost of business risk insurance, which, in its turn, occurred as a result of a corresponding increase of the total amount of revenue from the sales in 2011 over 2010 (please see Appendix 1).

A 2.1% decrease in general administrative expenses in 2011 over 2010 resulted from the Company's consistent policy of maintenance cost reduction.

Management expenses, RUR mln
Item 2009 2010 2011 2011 on
2010, %
Personnel costs 1,146 1,215 1,263 104.0
Costs of buildings, machinery and vehicles maintenance, telecommunications, IT, etc. 507 327 288 88.1
Consulting and other services (excluding charity and sponsorship) 344 266 219 82.3
Total 1,997 1,808 1,770 97.9