OREANDA-NEWS. December 29, 2009. The year 2009 has set an important milestone in the implementation of the intergovernmental agreement between the Russian Federation and the United States on the use of the highly enriched uranium retrieved from nuclear arms and dated 18 February 1993 (The HEU-LEU Agreement or, as known to the global community, the Megatons to Megawatts Program).

The HEU-LEU Agreement makes provisions for the low enriched uranium (LEU) downblended from highly enriched weapon grade uranium (HEU) by Rosatom State Corporation subsidiaries to be shipped to the USA and used there as fuel for US nuclear power plants. The executive contractors of the two parties to this Agreement are TENEX (a wholly owned subsidiary to JSC Atomenergoprom) and the United States Enrichment Corporation (USEC). Since the first LEU shipment on 31 May 1995, the USA have received around 11,049 tons of the material processed from 382 tons of HEU or 76% of the HEU-LEU Agreement total volume of 500 tons. Therefore, the Megatons to Megawatts Program has reached its final stage. Russia's currency earnings for the shipped material have exceeded USD 8.8 billion. Additionally, natural uranium material, or the so-called natural LEU component, priced at approximately USD 2.8 billion has been returned to the Russian Federation.

In accordance with its 2009 Business Plan, TENEX has undertaken a combination of actions to expand the portfolio of long-term agreements for the delivery of nuclear fuel cycle products and services to foreign customers, which constitutes the core area of business for the company and is the key component in the Crisis Management Program implemented by Rosatom State Corporation.

In 2009, TENEX having closed six contracts for the total of around USD 3 billion has, after a long pause, resumed direct commercial shipments of uranium products to US power companies. Therefore, along with reliable execution of the contract under the HEU-LEU Agreement, the company has made a breakthrough of Russian high-tech goods into the largest segment of the global nuclear market. In 2010, at least another three similar contracts are expected to be signed for an overall amount of about USD 1 billion.

During this year, new long-term contracts for the supply of low enriched uranium to the European Union and the Asian-Pacific region have been made and supplementary agreements to the existing contracts have been signed totaling USD 7.5 billion. By the end of 2009 the uranium products export order portfolio for the duration of 5 years (excluding the HEU-LEU shipments) will have gone above USD 8 billion (or 104% of the planned volume), whereas the overall order portfolio will have reached beyond 15 billion USD...

In total, foreign customers have consumed uranium products and services for the total amount of around USD 2 billion under commercial contracts; the Russian Federation budget has received another USD 900 million.

In 2009, the collaboration under the contract between TENEX and CNEIC of China has been continued in order to assist the assembly of the fourth stage of the uranium isotopic enrichment plant being built in China under the Russian state-of-the-art centrifuge technology. The construction of the said facility proceeds at full speed according to the schedule. Around 60% of the main machinery (i.e. gas centrifuge equipment) has already been delivered. The volume of auxiliary equipment shipments has totaled over USD 20 million. Forty-five per cent of the design and technology documents of the overall contracted amount has been developed and handed over to the Chinese side. It is worthwhile to make a special mention of the high appreciation expressed by the Chinese customer of the technical design for the facility construction, which was presented in July 2009 in Beijing jointly by TENEX and the All-Russian Scientific Research and Design Institute for Energy Technology (VNIPIET), a major design institute of the Russian energy industry, and received approval.

In May 2009, a Memorandum of Understanding was signed in Tokyo between TENEX and Toshiba Power System of Japan, a subsidiary to Toshiba Corporation. The MoU complements the Overall Framework Agreement on commercial cooperation concluded between JSC Atomenergoprom and Toshiba Corporation on 20 March 2008 and provides, among other things, for the evaluation of business concepts or commercial plans developed for the cooperation in production and supply of nuclear fuel cycle products and services, including, in particular, enriched uranium.

In December 2009, the first in Russia industrial-scale plant processing depleted uranium hexafluoride (DUHF, UF6) into uranium oxide concentrate (U3O8) was launched at the Joint Stock Company “Production Association “Electrochemical Plant” (EKhZ, a wholly owned subsidiary to JSC Atomenergoprom, Zelenogorsk, Krasnoyarsk Region). The new facility was build under a TENEX contract using the technology of French AREVA NC and is capable of processing 10 thousand tons of DUHF per year. Isolation of chemically aggressive fluorine at this plant will enable transformation of DUHF into the uranium oxide concentrate, a chemically stable product with chemical properties closely resembling uranium ores in natural state, easily conservable and making possible further use in the fuel production for the future nuclear power plants with fast neutron reactors.

TENEX personnel have actively assisted the promotion of Russian cross-border initiatives as relates to the establishment of an international legal framework and infrastructure to guarantee nuclear fuel supply and reinforce the global nuclear non-proliferation effort. In 2009, government-level agreements were signed that made possible participation of authorized Ukrainian and Armenian agencies in the activities of the International Uranium Enrichment Center (IUEC) founded by Russia (TENEX) and Kazakhstan (Kazatomprom, National Atomic Company) in Angarsk in 2007. Under the decision made by JSC Atomenergoprom (the sole shareholder), TENEX handed over its stock in the IUEC to Rosatom State Corporation in October 2009.

In November 2009, the IAEA Board of Governors adopted a resolution supporting the Russian Federation Government initiative to establish and maintain in Russia a stock of low enriched uranium and to carry out LEU supplies therefrom to the IAEA for its member-states. This became a diplomatic breakthrough in the process of establishment of an international system guaranteeing reliable nuclear power plant fuel supplies and lowering the risks of proliferation for sensitive nuclear technologies. It is suggested that the said stock will be managed by the IUEC and will be transferred under a corresponding contract, when an appropriate supply request arrives from the IAEA, from the IUEC to the IAEA.

All the necessary preliminary stages have been accomplished, including obtaining an approval from the State Technical Expert Board, prerequisite for the Russian Federation Government to consider the establishment of the Russian-Kazakhstan Center for Uranium Enrichment in Angarsk that is key to the nuclear power industries Integration Program of the two countries.

TENEX personnel have taken an active part in various projects and initiatives carried out by international industrial agencies, such as the World Nuclear Association (WNA), the US Nuclear Energy Institute (NEI) and the IAEA. The primary goals of this activity are to facilitate interaction with the key players in the global market segments of nuclear fuel cycle products and services, to make information exchange on the current state and development prospects in the market, to work out and promote a joint stance on various important issues of the global nuclear industry.

A draft law prepared with direct participation from TENEX addressing the state regulation of foreign-trade barter contracts was submitted to the State Duma (the Lower Chamber of the Russian Federation Parliament) for consideration in 2009. This draft law is of paramount importance for the industry exporters. The adoption of the law would considerably reinforce the competitiveness of Russian suppliers at the global uranium market.

In December 2009, the Svea District Court of Appeal (Sweden) dismissed the suit by Globe Nuclear Services and Supply GNSS, Limited (an intermediary company formerly engaged in the work under the HEU-LEU Agreement as it pertained to the sale of the LEU natural component) to repeal the ruling of the international commercial arbitration in Stockholm (Sweden) previously made in favor of TENEX. The said Court of Appeal ruling is binding and cannot be appealed. Thereby, the legitimacy of the arbitration ruling was confirmed by a Swedish Court of Appeal and the lawsuit having gone for over six years and initiated by GNSS in order to gain over USD 1 billion from the Russian Federation budget was finally brought to an end.

As part of the three-year program launched in 2009 to deploy a publicly available integrated report system at Rosatom State Corporation, TENEX participated in a pilot project undertaken by a number of key industry agencies to prepare the reports for the year 2008 and make them available to the public. The company also takes an active part in the implementation of the industry-specific project to introduce the Rosatom State Corporation Code of Ethics.

Mr. A.A. Grigoriev, TENEX Director General, approved the list of the grant-holders who had received high appraisal of the contest jury at the Seventh Future Energy 2009 International Contest of Scientific and Educational Projects. The grant-holders will receive monthly grants for the duration of one year starting June 2009 and ending May 2010. The grant amount will make 1,500 rubles a month.

This October TENEX received an International European Quality Award (the New Millennium Award) in Madrid (Spain). This prize is awarded annually jointly by a publishing group Editorial Office and the Trade Leaders' Club. This 2009 European Quality Award is far from being the first international award received by TENEX over the 46 years of operation and confirms again the appreciation of the company's contribution into the trade of nuclear materials and services, as well as into international cooperation.

Among the major tasks TENEX sets for 2010, it is worthwhile to point out the continued long-term contracting effort and bringing the contracted portfolio to USD 20 billion; also separating non-core assets and focusing on the principal activity (i.e., exports of nuclear fuel cycle products and services); incorporating JSC Spb Izotop as a subsidiary company to facilitate    competitiveness in the logistics and supplies; assisting the formation of a fuel company based on JSC TVEL; and participating in feasibility studies for the joint uranium enrichment facilities construction projects to be built abroad under the Russian gas centrifuge technology.