JSC Sustainable development report - · PDF fileEN19, EN21, EN22 EN30 ... Wherever relevant data was ... scientific and technical expertise and is launching a number of major

NAC Kazatomprom JSCSustainable development report

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About the Report

Statement by Chairman of the Board of Directors of NAC Kazatomprom JSC

Statement by Chairman of the Management Board of NAC Kazatomprom JSC

About the Company

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131921

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252632

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3638404244465152

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566062

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CONTENT

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GRI index

3.1, 3.3, 3.5, 3.6, 3.7, 3.8

1.1

1.1

2.1, 2.3, 2.4, 2.6, 3.4

2.2, 2.5, 2.72.8, EC12.9, 2.10

4.1, 4.2, 4.3, 4.43.5, 4.14, 4.15, SO5

EN8, EN10EN11, EN13EN19, EN21, EN22EN30EN28

LA1, LA13, LA2, LA4, LA5, EC5, LA14, EC7LA7LA10, LA12

EC8

Main productsKey economic indicatorsKey events in 2010

Managing sustainable development

Environmental conservation

Development strategy of the CompanyCorporate governanceInteraction with stakeholders

Environmental goals and principlesInteraction with stakeholders in the field of environmental conservation and managementUtilities and materialsUse of landWater consumptionBiodiversityEnvironmental impactEnvironmental conservation costsMain approaches to environmental conservation

Interaction with employees7HR management policy

Labor management indicators. Occupational health and safety.Staff training and developmentIncentives and motivation schemes

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Social and economic development of regional operations8

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Development of small- and medium-sized businessesConstruction of social facilities and land improvementSponsorship and charitySupporting sports, healthcare and cultural development

NAC KAZATOMPROM JSCSUSTAINABLE DEVELOPMENT REPORT 2010

* Fuel assembly

ABOUT THE REPORT

This Report on National Atomic Company Kazatomprom JSC (“NAC Kazatomprom JSC”, the “Company”) is the first in a series of reports on the Company's activities in relation to sustainable development and it has been prepared in accordance with Global Reporting Initiative (“Global Reporting Initiative”, “GRI”) principles. When working on this Report, NAC Kazatomprom JSC has used the third version of the Sustainability Reporting Guidelines (G3). This Report complies with level C of the GRI Guidelines; the GRI compliance table is provided in table of contents.

Our approach assumes a gradual expansion in the list of the Company's declared aspects of sustainable development and performance indicators, in proportion to the enhancement of its management system.

The aim of preparing and releasing this Report is the Company's seeking to demonstrate a high level of engaging in dialogue with stakeholders and increase its transparency.

NAC Kazatomprom JSC is persuaded that a balance between the economic, environmental and social components of the Company's activities, based on an understanding of stakeholders' interests, can increase the Company's potential and consolidate its position on the nuclear and energy industry markets.

The Company also believes that effective interaction with stakeholders allows the Company not only to strengthen its reputation, but also to identify opportunities for future strategic business development to meet the needs of society.

This Report covers major subsidiaries and affiliated companies (“SAC”) of NAC Kazatomprom JSC.

The Company and its SAC together form a group of companies (the “Group”) which as of 31 December 2010 employed nearly 23,000 people. Financial information presented in this Report is based on the Company's accounting data prepared under IFRS (International Financial Reporting Standards). Complete financial statements can be found on the NAC Kazatomprom JSC website and annual report.

Indicators and information on human resource management, social payments and benefits, environmental activities, industrial safety, occupational health and safety, impacts on regional operations are related to the Company and its SAC operating in uranium mining and processing, the production of tantalum and beryllium products, and energy (NAC Kazatomprom JSC, Mining Company LLP, Volkovgeology JSC, Kazatomprom-Demeu LLP, High-Tech Institute LLP, Appak LLP, Semizbay-U LLP, Ulba Metallurgical Plant JSC (“UMP JSC”), MAEC-Kazatomprom LLP, Bailanys-NAC LLP, Kargan-Kazatomprom LLP, Karatau LLP, Akbastau LLP, Zarechnoe JSC, Katcj JV LLP, Inkai JV LLP, Kyzylkum LLP, Betpak Dala LLP, Baiken-U LLP). As of 31 December 2010, the share of the Company and these SAC accounted for the vast majority of revenue and financial results of the Group, 97% of uranium mining in the Republic of Kazakhstan (“RK”), and nearly 95% of the Group's staff.

This Report reflects the Company's activities for the period 1 January 2010 to 31 December 2010. Wherever relevant data was available, it was provided in comparison with the previous two years.

This Report is the first in a series and it has not received third-party verification. We have assumed that subsequent reports will be subject to external verification.

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* Uranium tablets


STATEMENT BY CHAIRMAN OF THE BOARD OF DIRECTORS OF NAC KAZATOMPROM JSC

Dear gentlemen,

NAC Kazatomprom JSC's strategic goal is to achieve a leading position in the global uranium market, produce goods and render services at all stages of the nuclear fuel cycle. A further goal of the Company is to develop across new related scientific and high-tech areas.

Achieving these goals will require the launching of major projects to increase uranium reserves and production volumes, constructing nuclear power plants, and creating new production facilities for the nuclear fuel cycle, rare and rare-earth materials and alternative energy sources – not only in the Republic of Kazakhstan, but also beyond its borders.

Today NAC Kazatomprom JSC is a public company, and this is a key factor in its sustainable development. The fact that the state has a stake in the company lowers investment risks, which inevitably arise during the implementation of large-scale long-term projects associated with uranium processing and the construction of nuclear power plants, and at the same time increases the Company's corporate social responsibility in terms of ensuring decent living conditions for its employees, developing social and economic infrastructure where these employees live, and minimizing environmental damage caused by the Company's production activities.

Over the past few years, NAC Kazatomprom JSC has created all the necessary foundations to ensure sustainable growth. The Company has stable economic indicators, a unique raw materials base and a professional management team in place. Through the efforts of the Company the Republic of Kazakhstan ranked first in the world in uranium production in 2009, and the Company ranked first in global uranium production in 2010. Mutually beneficial international cooperation is an integral part of the Company's strategy. With our foreign partners, the Company is not only engaged in joint uranium mining in the Republic of Kazakhstan, but also shares the best

scientific and technical expertise and is launching a number of major joint projects. These are some of the key reasons why Kazatomprom ranks among leading global uranium producers.

Compliance with global corporate governance standards is one of the priorities of NAC Kazatomprom JSC. The composition of the board of directors was optimized in 2010 by electing an independent director who is an auditing specialist. Moreover, two committees – an audit committee and an appointment and remuneration committee – were created in 2010. A Corporate Governance Code, Regulations on the Settlement of Corporate Disputes and Conflicts of Interests of NAC Kazatomprom JSC, Key Performance Indicators of NAC Kazatomprom JSC Managers and an Action Plan for Improving the Corporate Governance System of the Company were all approved by the board in 2010.

Today we are presenting to the public for the first time the Report on Sustainable Development of the NAC Kazatomprom JSC group. This document contains information for the year 2010 and was prepared using the principles of the Global Reporting Initiative (GRI).

The preparation and publication of a report on the Company's activities in the field of sustainable development represents an important milestone on the way to achieving a new quality of corporate governance.

Moreover, by publishing this Report, we hope to strengthen the dialogue between the Company and civil society. This now takes on especial importance after the accident at the nuclear power plant in Japan.

Readers of this Report will receive comprehensive information about the economic, social and environmental policies of the Company and will be able to independently draw conclusions about its contribution to society. We hope the Report will increase the trust of citizens – not only in NAC Kazatomprom JSC, but also in the nuclear industry as a whole.

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Yours sincerely,Timur Kulibayev

Chairman of the Board of DirectorsNAC Kazatomprom JSC


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* Yellowcake


Dear gentlemen,

Before you is the first report from NAC Kazatomprom JSC on the progress it is making in the area of sustainable development. In this Report you will find information about the Company's priorities, its financial situation and the results of its production activities for the year 2010.

Last year was a significant one for the Company.In May Company placed its debut Eurobond, worth USD 500

million.Kazatomprom increased uranium production, in the process

securing for Kazakhstan the status of global leader in this area of nuclear fuel cycle (NFC).

We are heading confidently towards becoming a transnational vertically integrated company holding key positions in the global nuclear energy market, and participating in all stages of the nuclear fuel cycle. In the pre-reactor nuclear cycle area we are strengthening our strategic partnership with Russia, France, Japan, China and Canada.

One of our key challenges is to preserve and increase social capital. When creating foundations for stable growth and resolving modernization issues, we understand that all financial and technological aspects are based on human resources. That is why Kazatomprom actively cooperates with its foreign partners in transferring not only technologies, but also knowledge, skills, and the best global expertise and practices.

The Company is actively involved in the lives of people living in the regions, and plays a significant role in this area. Our relationships with residents of uranium-producing regions, employees and partners, shareholders and investors are based on mutual trust and responsibility.

The Company actively strives to provide an optimal balance between its economic, environmental, scientific, research and social components. The Company's innovative technologies contribute to the efficient use and preservation of natural resources. The extraction

of uranium is carried out with a minimal impact on the environment, due to the in-situ leaching (ISL) method we use.

Despite the specific features of the nuclear industry, its complex labor-intensive processes, and the secrecy surrounding the nuclear industry (a hangover from Soviet times), Kazatomprom strives for transparency in its activities by adopting the best corporate governance practices.

In creating an industrial complex in Kazakhstan that can compete on both domestic and foreign markets, we focus on strategic areas and establish our priorities by taking into account the actual requirements of the time.

In addition to the implementation of NFC projects, the Company's priorities are: developing new projects in the field of alternative energy sources; establishing a program for rare and rare-earth metals; and scientific and research innovation support in the provision of resources for uranium production which will, in turn, contribute to the development of the country's chemical industry.

A sustainable development strategy forms an integral part of the Company's long-term strategy. The Company has a diversified portfolio of long-term contracts which allows us to look confidently to the future. Despite the tragic events in Japan forcing us to speak of a nuclear energy renaissance with some trepidation, events in Japan have in fact had no significant impact on Kazatomprom.

In presenting you with this Report, I hope for a constructive and keen discussion about both our current results and the challenges that we still need to address.

I wish to thank our shareholders, partners, and investors, as well as the thousands of employees of the Company for their devotion and support, professionalism and ability to find appropriate and timely technical and engineering solutions. In 2010, Kazatomprom proved once again that it knows how to operate as a united team to achieve an end result – the successful and effective development of a domestic nuclear company.

STATEMENT BY CHAIRMAN OF THE MANAGEMENT BOARD OF NAC KAZATOMPROM JSC3

Yours sincerely,Vladimir Shkolnik

Chairman of the Management BoardNAC Kazatomprom JSC

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* Tantalum. Production.


ABOUT THE COMPANY4

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Full name in Russian: Акционерное общество «Национальная атомная компания «Казатомпром»

Abbreviated name: АО «НАК «Казатомпром»

Full name in Kazakh: «Kазатомoнеркәсіп» Yлттыкатом компаниясы» Акционерлік когамы

Abbreviated name: «Kазатомoнеркәсіп» YАК» АK

Full name in English: Joint stock company «National atomic company «Kazatomprom»

Abbreviated Name: JSC «NAC «Kazatomprom»

Location: 010000, RK, Astana, 10 Kunaeva Ul.

Phone: 8 (717) 255 13 98; Fax: 8 (717) 255 13 99

E-mail: [email protected]

Website: www.kazatomprom.kz

Date of state registration: 5 September 2007


HISTORY OF THE COMPANY

National Atomic Company Kazatomprom Joint Stock Company was established under Decree No. 3593 dated 14 July 1997 of the President of the Republic of Kazakhstan “On Establishing National Atomic Company Kazatomprom in the Form of a Closed Joint Stock Company, with 100% State Participation in the Equity Capital”. NAC Kazatomprom JSC is a general operator for the export and import of uranium and its compounds, nuclear fuel for nuclear power plants, special equipment and technologies, and dual-use materials.

The founding of NAC Kazatomprom JSC was motivated by the need for a united corporate center providing strategic and coordination planning functions, the management of production activities of uranium industry companies, raising credit and attracting investment, and financial and administrative control. The special production features, the strategic importance of uranium mineral resources,

technology secrecy, and the limitations and special features of the global uranium market required maintaining a monopoly on uranium production.

At the time of NAC Kazatomprom JSC's establishment, the companies within its structure were in an extremely difficult situation, experiencing the loss of traditional sales markets, financial instability, the functional and physical deterioration of fixed assets, and reduced rates of mining and exploration. For these reasons uranium production, which totaled 2.5 thousand tons in 1992, dropped 2.8 times to 795 tons in 1997.

The internal state of the industry was exacerbated by a difficult situation on the markets. Market prices for natural uranium dropped from USD 36 per kilo in 1997 to USD 16.6 in 2000, making production in southern mines unprofitable.

1999

For the first time since its establishment, NAC Kazatomprom JSC achieved a positive financial result – profits totaled KZT 478.4 million, despite the lowest price for uranium being recorded in December 2000.

At the annual World Nuclear Association Symposium in London in September, NAC Kazatomprom JSC announced a new large-scale program – 15 Thousand Tons of Uranium by 2010. As part of this program, industrial production was launched at a uranium mine in Yuzhniy Moinkum (as part of the Kazakh-French KATCO joint venture). A refinery with the technology to perform direct uranium extraction from commodity-rich eluates began operation at the Taukent mining and chemical company.

The first stage of restructuring NAC Kazatomprom JSC was carried out, due to increased production volumes and the need to develop the social sector in order to resolve strategic challenges related to recruiting and retaining specialists at local economic mainstays. All uranium production functions were transferred to the newly established company GRK LLP, and the provision of services in the social sector was transferred to Kazatomprom-Demeu LLP.

The Ulba-China affiliate was established in the free economic zone of China in order to sell beryllium products.

2004The Company succeeded in obtaining its first credit line from

German bank WestLB, which enabled its loan portfolio to be restructured, loans to Kazakh banks to be repaid, and interest rates to be reduced 2.2 times. All pledged assets were released, and a regular and orderly funding of production was achieved.

2000

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2005

The Company began introducing a new mine-management concept. The entire technological production process became fully automated. This led to a substantial decrease in the average number of staff at the mine.

It was also decided to conduct the second stage of the Company's restructuring by releasing auxiliary assets. As a result of this restructuring, the average number of mine staff decreased to one hundred – this led to improved operational process and a five-fold increase in productivity.

2005

The Eastern Mynkuduk mine, with 1,000 tons capacity, was launched within the scope of the program to increase uranium production volumes. ISL mining at Southern Moinkum (part of the KATCO joint venture) also began industrial operation.

The Fitch ratings agency for the first time assigned a long-term foreign currency issuer rating of BB+ to NAC Kazatomprom JSC, and a short-term foreign currency issuer rating of B (positive). In the same year Moody's ratings agency assigned Kazatomprom a foreign currency issuer rating of BAA3 (stable).

Cooperation between Kazakhstan and Russia moved up to a new level. The Zarechnoe uranium-producing company launched industrial operations. The Comprehensive Program for Russian-Kazakh Cooperation in the Field of Nuclear Power for Peaceful Uses was developed and approved, in the scope of which the following were created: the Akbastau uranium mining joint venture, the Uranium Enrichment Center and Nuclear Plants joint ventures, and a joint venture to design the VBER-300 reactor.

The Karatau LLP uranium-producing company began industrial operations. Cooperation with Japanese companies expanded into different areas of the nuclear fuel cycle. The first-ever shipment of uranium to the Japanese market was completed. The Appak LLP Kazakh-Japanese company was established. The agreements concluded with Japanese partners enabled Kazakhstan in the near future to enter the Japanese market with high-tech uranium products.

Cooperation with Chinese companies was consolidated and expanded. A number of agreements were signed on joint work in various nuclear energy sectors. An agreement was concluded and signed with a Chinese partner on creating a joint venture in China producing rolled products from beryllium bronze.

Kazatomprom-Demeu LLP implemented the first projects within the scope of the Social Program of Regional Development.

2006

A Protocol of Intent on creating a conversion company in RK was signed with Cameco Corporation.

10% of shares of Westinghouse Electric Company LLC were acquired, which enabled NAC Kazatomprom JSC to obtain access to fuel assembly producing technologies on a licensed basis. A work group was created to carry out feasibility studies for the construction of a new factory producing fuel assemblies for Western nuclear power plants.

RK ranked third in global natural uranium production. In 2007 the total volume of uranium production in RK amounted to 6,632.9 tons.

2007

2008Under Decree No. 669 dated 13 October 2008 of the President of

the Republic of Kazakhstan, NAC Kazatomprom JSC state-owned shares were transferred to the equity capital of Samruk-Kazyna National Welfare Fund JSC.

2009The Company increased uranium production in RK to 13,500 tons,

which ranked the country first in global uranium production.

Natural uranium production in RK totaled 14.8 thousand tons, which enabled the country to preserve its leading global market position, and which also meant that the Company was ranked first in global uranium production.

2010

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NAC KAZATOMPROM JSC – FUNCTIONAL STRUCTURE

As of 31 December 2010, the Company consisted of 28 organiza-tions, including 11 uranium mining organizations, one exploration and drilling company, two companies for the mining and production of rare

and rare-earth metals, seven nuclear fuel cycle organizations, two utility and alternative energy source producing companies, and five organizations involved in science, training and auxiliary activities.

Mining Company LLP 100%

Katco LLP 49%

Inkay LLP 40%

JSC Akbastau 50%

JSC Zarechnoye 49,67%

Betpak Dala LLP 30%

Karatau LLP 50%

Kyzylkum LLP 30%

Baiken-U LLP 5%

APPAK LLP 65%

Semizbai-U LLP 51%

SJC Volkovgeology 100%

MAEK LLP 100%

Ekoenergomash LLP 100%

Sareco LLP 51%

Kyzyltu LLP 76%

Institute of High Tech. LLP 100%

Geotechnology LLP 50%

Bailanys-NAC LLP 100%

Korgan-Kazatomprom LLP 100%

JSC Ulba Metallurgical Plan 100%

CJSC Center on Uranium Enrichment 50%

CJSC International Center on Uranium Enrichment 10%

Integrated Fuel Asia Star 49%

JSC Atomic Stations 50%

CJSC UKP TBC 33,33%

Westinghouse 10%

Kazatomprom-Demeu LLP 90%

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Social

Uranium production

Geological explorationand drilling

Energy resources

Rate metals

Science and education Nuclear Fuel Cycle

Auxiliary


NAC Kazatomprom JSC's main competitive advantage is the scale and quality of its resource base. In total, the Company's production companies have 572 thousand tons of explored uranium reserves (U) (A+B+C1+C2 categories) and around 443 thousand tons of P1+P2 resources. NAC Kazatomprom JSC's share (in terms of participation share in the production companies) is 319 thousand tons of explored U reserves and 157 thousand tons of U resources.

MAIN PRODUCTS

Resource base

Proven reserves. Ore bodies and minefields are contoured. The quality and quantity of ore, as well as the conditions for its development, are accurately determined. Exploration data guarantee the reliability of the project development.

CATEGORYRESERVES

А

Sufficiently proven reserves. Minefield and major ore bodies are contoured. The quality and quantity of ore, and the conditions for its development, are determined in detail. Exploration data to a large extent ensure the reliability of the project development.

CATEGORYRESERVES

В

Reserves explored at sparsely located reserves. Mine and ore body contours are reliably interpreted. This category also includes reserves adjacent to Category A and B deposits. Ore quantity is accurately determined using established average parameters. The quality and conditions of development are determined by experimental studies and analogy. This category of reserves is used for mine projects at deposits with a very complex structure and an uneven distribution of mineralization, in which a concentration of network exploration is inadvisable.

CATEGORYRESERVES

С1

CATEGORYRESERVES

С2Preliminary estimated reserves. The contours of ore bodies are

mainly determined by extrapolation within known geological structures and the space adjacent to Category A, B, C1 deposits. The quantity and quality of ore are determined based on limited data and can be accepted based on experimental studies. Category C2 reserves require further exploration and can only be used for the design of exploration and operating enterprises.

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Probable and preliminary estimated resources. The contours of ore zones are extrapolated within ore-bearing geological structures and the space adjacent to explored deposits. The quantity and quality of ore are determined based on limited data. Category P1 resources are a major source of additions to reserves.

CATEGORYRESERVES

P1

Estimated resources. Promising ore or ore-bearing zones are interpreted based on geological structures, characterized by the existence of prospective indicators. Category P2 resources are based on geophysical and geochemical data, and optimally on results from single-furrow intersections.

CATEGORYRESERVES

P2

Potential resources. Projections based on hypothetical constructs, metallogenic, structural and geological analyses, and the interpretation of geochemical and geophysical data, are classified as Category P3 resources.

CATEGORYRESERVES

P3

A distinctive feature of the Company's uranium reserves and resources is that they are concentrated in deposits connected with regional zones of in-situ oxidation, which are developed using the most advanced, relatively cheap and environmentally preferable ISL method. These types of deposits are not widespread across the globe – RK has 78% of explored global uranium reserves suited to the ISL method.

Geological exploration

In order to increase uranium reserves in RK, NAC Kazatomprom JSC is implementing plans to carry out geological exploration and the exploration of uranium deposits.

The main work is carried out by Volkovgeology JSC, which is 90% owned by the NAC Kazatomprom JSC Group. The successor of Volkov Geological Production Association (created by the USSR Ministry of Geology to prospect and explore uranium deposits in Kazakhstan),

Volkovgeology JSC has during its 60-year history discovered more than 40 uranium deposits and created the world's largest mineral and raw material base for the Kazakh uranium industry, with total uranium reserves of more than 1 million tons as of 1 January 2011.

In 2010, during the carrying out of geological exploration work, the increase in Category C1+C2 reserves of all NAC Kazatomprom JSC uranium mining companies totaled 7.5 thousand tons.

Resources Р1+Р2;

Structure of uranium reserves as of31.12.2010, U thousand tons

Resources А+В+С1+С2;

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443

582


Uranium products

Today NAC Kazatomprom JSC companies have production capacities for the following NFC levels:

Uranium production and the production of uranium oxides (U O );3 8

The reconversion of uranium hexafluoride (UF ) to uranium 6

dioxide powder (UO );2

The production of uranium fuel pellets.

In 2010, uranium production by NAC Kazatomprom JSC companies was carried out at 20 mines and mining complexes in three regions of RK, in the following ratio:

South Kazakhstan Region

Kyzyl-Orda Region

Akmola Region

The processing of uranium products into uranium oxides was carried out in RK and the Kyrgyz Republic (Karabalta Mining Combine OJSC) in the following ratios:

South Kazakhstan Region

West Kazakhstan Region

Akmola Region

Kyrgyz Republic

In 2010 NAC Kazatomprom JSC companies' uranium production amounted to 17,227 tons, an increase of 37% compared to 2009. In 2011 it is planned to increase uranium production to 19,568 tons, or by 13% compared to 2010.

Uranium Production by KazatompromEnterprises, tons of U

2008 2009 2010 2011 planned

7 44612 569

17 227

19 568

15

1,30 %13,10 %

85,60 % 55 %

6 %

18,80 %

20,20 %


Beryllium products

The affiliate of the Company, UMP JSC, is one of the leading global companies producing beryllium-containing products. Beryllium ligatures produced by UMP JSC are, in terms of quality, superior to their foreign equivalents.

UMP JSC is actively engaged in an international project to establish an ITER-controlled thermonuclear reactor.

Currently, UMP JSC's offers a comprehensive range of beryllium production, from extraction from concentrates to obtaining beryllium hydroxide, molten technical beryllium, ligatures, beryllium in the form of blanks, semi-finished products and items derived by powder metallurgical techniques, pressure treatment and cutting, and ceramics from beryllium oxide, including a large range of products having a wide application. Beryllium production has undergone serious improvement since its creation; new facilities for the production of ligatures using the carbothermic method and beryllium bronze were created.

UMP JSC's uranium production includes the following:

Natural uranium oxides (including nuclear grade), suitable for direct fluorination; Low-enriched ceramic nuclear grade uranium dioxide powders;Fuel pellets for reactors.

Moreover, UMP JSC's uranium production provides services for processing a wide range of uranium-containing materials:

Traditional types of raw materials (UF6, uranium oxides); Regenerated uranium;Hard tap ashes, scrap materials, sediments, including those containing burnable neutron absorbers.

NAC Kazatomprom JSC carries out activities related to the sale of natural uranium concentrates in the global market. Sales take place on all major global uranium consumption markets. Buyers include energy companies from North and South America, Europe, Asia and Japan. With the advent of nuclear power industries for peaceful purposes in other countries, Kazatomprom is planning to expand into new markets. The market boundaries of natural uranium concentrate are defined by the borders of the countries and regions that currently use nuclear fuel at nuclear power plants to generate electricity, or which plan to develop a nuclear industry in the future.

NAC Kazatomprom JSC clients are large nuclear power companies. In 2010, NAC Kazatomprom JSC's biggest five clients, whose share accounted for nearly 70% of the Company's total revenue, were:

China Nuclear Energy Industry Corporation (China)Nukem Inc. (US)Korea Hydro & Nuclear Power Company (South Korea)China Guandong Nuclear Power Corporation (China)Itochu Corporation (Japan)

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UMP JSC's main beryllium product items are:

Technical beryllium (Ве);Beryllium blanks and items made from Ве;Copper beryllium ligatures containing 4% or 10% beryllium;Copper beryllium ligatures derived by the carbothermic fusion method;Aluminum beryllium ligatures containing 5% beryllium;Beryllium bronze.


The main consumers of the Company's beryllium products are Russia, the US, China, Japan and Germany. UMP JSC had a 24% share of the global market in 2010*.

* Calculated based on internal information.

As the world's largest supplier of primary series beryllium products – beryllium and beryllium-containing ligatures – UMP JSC today holds strong positions in the beryllium products market.

The production of beryllium products in 2010 amounted to 1,817 tons of ligature weight – 2.6 times more than in 2009. This outstanding performance is related to the recovery of markets in China, Europe and the US after the global financial crisis in 2010. In 2011, beryllium production increased to 1,906 tons, or 5% up on 2010.

Tantalum and niobium products

UMP JSC's tantalum production is one of the largest in the world and covers the entire production cycle, from raw material processing to manufacturing a wide range of finished products.

Tantalum production is distinguished by having a flexible technology for processing all types of tantalum or niobium raw materials (including hard tap and radioactive), which ensures the production of items which have the required quality specifications.

UMP JSC's main tantalum products are:

Tantalum chips and ingots and vacuum-melted niobium;Flat and spherical tantalum and niobium products;High-purity tantalum and niobium products;Condensed tantalum and niobium powders, including high-capacity types;Tantalum and niobium alloys.

Tantalum production in 2010 was 183 tons, 19% more than in 2009. The over-fulfillment of the company's plan for the accounting period was due to additional orders for products. 170 tons of tantalum products are planned for 2011, which is lower than in 2010. The plan was developed based on existing contracts; however, the department responsible for marketing tantalum products is working on attracting new consumers and increasing product sales.

Production of Tantalum Products, tons of Ta

The main consumers of the Company's tantalum and niobium products are Russia, the US, Germany, the Czech Republic, Austria, Japan, Israel and France. UMP JSC's share of the global market was 9% in 2010*.The major issue in tantalum production is the lack of an own raw materials base. There are no tantalum deposits in RK of significant value or which are worth developing. As part of efforts to minimize risks, the Company is working on creating a joint venture with the leading consumer countries, purchasing a raw material producing and enriching facility, and concluding long-term agreements with reliable suppliers of raw materials on a tolling basis.

Production of Beryllium Products, tons of Be

2008 2009 2010 2011 planned

1 686712

1 817 1 906

2008 2009 2010 2011 planned

270

154183 170

17

* Calculated based on internal information.


Utilities

MNPC-Kazatomprom LLP is a company in the Mangistau region of RK that produces electricity and water resources for the entire region. MNPC-Kazatomprom LLP carries out the following:

The production, transfer, distribution and sale of electrical and thermal energy to consumers;The production and sale of drinking, distilled, industrial and sea water to consumers.

MNPC-Kazatomprom LLP was originally designed and constructed as a combined energy and water-producing complex that included thermal power plants, multi-level distilling desalination plants, and a BN-350 fast breeder reactor, which has no equivalent in RK or the CIS, that has a specific type of continuous interconnected technological process in place to produce energy and water.

In the complete absence of fresh water in the region, the needs of the region's industrial companies and the population are provided by the combined energy and water-producing complex. Artificial fresh water is produced by desalinating Caspian Sea water through a process of thermal distillation.

The company has a BN-350 fast breeder reactor which is currently being decommissioned and is not involved in the production of commercial items.

Alternative energy sources

In 2010, the new production of heat pump installations – equipment that absorbs low-potential heat from the environment (the atmosphere, ground water, cooling towers, reservoirs, etc.) and transfers it to a heat supply system in the form of heated water or air – was created at Mashzavod LLP (a UMP JSC affiliate).

A project to create solar cell production is to be launched in 2011.

Production of Utilities

2008 2009 2010 2011 planned

4 114

2 789

1 091

4 019

2 713

970

4 290

2 760

1 132

4 451

2 903

1 135

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Electric power production, mln KW/h

Hear power production, thous. Gcal

Water production, mln cubic m


Stakeholders: the state, shareholders, communities* 2008 2009 2010

Tax payments to budget at all levels, mln KZTDividends to sole shareholder, mln KZTInvestment social infrastructure, costs of charity and social programs, mln KZT

61 15410346 696

73 20804 760

97 4988 3206 094

NAC KAZATOMPROM JSC: KEY ECONOMIC INDICATORS4

As of 31 December 2010, NAC Kazatomprom JSC is the largest uranium production company in the world. Its main activities are the exploration, production and marketing of natural uranium, as well as the production of nuclear fuel components, tantalum, beryllium, niobium products, and utilities.

Production and financial indicators* 2008 2009 2010

Revenue, mln KZTNet profit, mln KZTTotal assets at the end of period, mln KZTPayables on loans at the end of period, mln KZTReturn on average capital employed (ROACE)Uranium production by NAC Kazatomprom JSC enterprises, tons U

127 10511 200341 67068 4809,63%7 466

178 50740 684387 25360 98218,46%12 569

230 93959 014528 537122 12718,48%17 227

* According to the audited financial statements for 2008-2010.

Staff* 2008 2009 2010

Average number, including SACLabor costs, mln KZT

21 68730 921

22 06633 987

22 72741 696

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АО «НАК «КАЗАТОМПРОМ»ГОДОВОЙ ОТЧЕТ 2010

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NAC Kazatomprom JSC is planning to increase uranium production in the nearest future by achieving full production capacity at mines in the Kharasan (areas 1 and 2), Budenovskoe (areas 1, 3, 4), Mynkuduk (Western area), Southern Zarechnoe, Zhalpak and Moinkum (Central area) deposits.

The Company is reconstructing warehouses and roads, and building sulfuric acid plants in order to ensure that companies have an uninterrupted supply of materials and reagents.

The construction of ion exchangers, hydrogen peroxide and caustic soda is planned in the short term.

In order to implement energy-saving programs, heat producing heat-pump installations are being introduced to uranium mining companies.

The Company will seek to reduce the scale of any negative impact on the environment despite increasing production volumes, by introducing modern technologies that reduce any negative impact on the environment.

The Company is actively introducing modern human resource management methods and strives to provide employees with decent working conditions and wages.

Increasing uranium production will have an increasingly strong influence on the development of social and economic infrastructure in the regions, through an increase in tax payments and the creation of new jobs.

The Company will continue to voluntarily invest in the social and economic infrastructure of regions where it operates, and support the social sector through charity initiatives.

KEY ECONOMIC INDICATORS4


KEY EVENTS IN 20104

NAC Kazatomprom JSC issued its debut USD 500 million Eurobond with a duration of five years and a coupon of 6.25%: the most successful Eurobond issuance ever in emerging markets.

The investors bid book totaled USD 4.3 billion. Thus, demand for the bonds outstripped supply by more than eight times.

The revenue was determined based on the closing results of the bid book on 14 May 2010. Kazakh investors purchased 10% of the issuance, i.e., USD 50 million.

The result of the company's debut Eurobond issuance provides evidence of the high credibility and trust the international community has towards RK. This has largely been made possible by the personal contribution made by President N.A. Nazarbayev to consolidate the country's position on strengthening international security and bring

the country's nuclear non-proliferation standards into line with international standards and IAEA regulations.

This is testament that the dynamics of NAC Kazatomprom JSC's development correspond to global nuclear industry development trends, which will further ensure the Company's established and stable position in the uranium market.

The bonds were issued in accordance with RegS/144A; the effective settlement date was 20 May 2010.

NAC Kazatomprom JSC appointed JP Morgan and BNP Paribas as leading joint managers and bookrunners, and Halyk Finance as the leading Kazakh manager of the issuance. The issuance of this debut Eurobond was governed by British law.

As part of uranium production development:

The production complex and geological technology fields' facilities of Inkai JV LLP at the Rudnik PV Inkai-1 project were put into operation by the Act of the State Acceptance Commission dated 18 February 2010.

A residential complex for 245 people in a camp belonging to Baiken-U LLP, located in Baikenzhe County, Zhanakorgan District, Kyzylorda Region, was put into operation by the Act of the State Acceptance Commission dated 24 May 2010.

The facilities for the project “Phase one expansion of pilot ISL-method uranium production at Area 2 of the Budenovskoe site” (Decree No. 85 dated 27 May 2010 of the Ministry of Industry and New Technologies) were put into operation by the Act of the State Acceptance Commission dated 24 May 2010.

First phase construction facilities (TKDS-FT) for the project “Increasing production output at Tortkuduk Area No. 2 of the Moinkum deposit” (Decree No. 261 dated 31 August 2010 of the Ministry of Industry and New Technologies) were put into operation by the Act of the State Acceptance Commission dated 26 July 2010.

The Satellite-1 plant at the Inkai deposit was put into operation on 7 December 2010, under Decree No. 290 dated 17 September 2010 of the Ministry of Industry and New Technologies.

Uranium production by NAC Kazatomprom JSC companies was up 37% compared to 2009.

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2

3

4

5

6

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As part of nuclear fuel cycle construction:

A decision was taken to implement an alternative version of Uranium Enrichment Center CJSC's project. As a result, NAC Kazatomprom JSC will participate in the equity capital of Ural Electrical and Chemical Combine OJSC through Uranium Enrichment Center CJSC, instead of constructing new capacities jointly with Techsnabexport OJSC. The share of Uranium Enrichment Center CJSC will be determined based on the production of uranium enrichment services that are sufficient to process 6,000 tons of uranium per year. The alternative project's main technical and economic indicators and profitability will be similar to those in the initial project.

Feasibility studies for the project “Establishing joint nuclear fuel production in RK with the AREVA Company” were carried out in September 2010. Based on the results of these studies, it was decided in October 2010 to continue with the project. An agreement on procedures for joint activities in the production of fuel assemblies (FA), outlining the terms of a joint venture to produce FAs and the main stages of work, was signed between NAC Kazatomprom JSC and AREVA Company during the official visit of President N.A. Nazarbayev of Kazakhstan to France on 27 October 2010. Technical work related to the certification of FAs of Ulba Metallurgical Plant JSC by AREVA was completed in November 2010.

As part of work to create alternative energy sources:

A memorandum on carrying out joint studies in the field of photovoltaic solar energy was signed between NAC Kazatomprom JSC and the French Alternative Energies and Nuclear Energy Commission (Commissariat à l'énergie atomique et aux énergies alternatives) on 27 October 2010. A Memorandum of Mutual Understanding was signed between NAC Kazatomprom JSC, the French Alternative Energies and Nuclear Energy Commission, the European Company for Monitoring and Strategic Consulting, ECM Technologies and SEMCO Engineering, which establishes the basic principles of relations during the project's implementation.

In the first half of 2010, a feasibility study for the Production of Heat Pump Installations project was developed and approved by NAC Kazatomprom JSC. Permission to establish Legmash LLP Company was received from Samruk-Kazyna NWF JSC, which was subsequently registered on 13 April 2010 in the city of Oskemen. Production was launched in December 2010.

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1 2

1 2


As part of efforts to produce rare and rare-earth elements:

The state registration of Summit Atom Rare Earth Company Joint Venture Limited Liability Partnership took place on 11 May 2010. Currently, the joint venture is carrying out pre-investment activities as part of a project to extract rare-earth metals from man-made mineral formations in the tailings of the former Caspian Mining and Chemical Industrial Complex in Aktau, and monazite from the tailings of Ulba Metallurgical Plant JSC. Estimated output is 1,100 tons of REO per year.

Awards given to NAC Kazatomprom JSC

The work of the Company has resulted in a high level of confidence being placed in NAC Kazatomprom JSC, and its work has also been recognized by various awards, including:

Golden statue in Best Social Project of the Year category of the Paryz Republican corporate social responsibility contest;Altyn Zhurek (Golden Heart) National Award in Company of the Year category;SIQS quality certificate from the Europe Business Assembly;Best Company award and Best Top Manager award from the international image program Leaders of the XXI Century (Europe Business Assembly);1st class diploma in the Best Employer in the Regions category of the national SENIM-2010 contest.

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* Beryllium


MANAGING SUSTAINABLE DEVELOPMENT5DEVELOPMENT STRATEGY OF THE COMPANY

Today, NAC Kazatomprom JSC successfully implements a strategy aimed at gaining leading positions in the global nuclear industry market, as a competitive transnational vertically integrated Company seeking to promote industrial and innovative development within the economy and strengthen RK's strategic significance in the international arena.

The Company has outlined the following strategic development areas till 2020:

2Establishing on the basis of NAC Kazatomprom JSC a competitive, transnational, diversified company, including through participation in foreign assets of the nuclear fuel cycle (i.e. by participating in the redistribution of produc-tion, conversion, uranium enrichment, nuclear fuel production, and nuclear power plant construction);

Achieving leading positions in the global uranium market;

1 3Developing NAC Kazatomprom JSC's scientific and technical potential in order to diversify into related high-tech areas.

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CORPORATE GOVERNANCE 5NAC Kazatomprom JSC strives to continuously improve its

corporate governance system by carrying out continuous monitoring procedures and introducing global best practices.

The Company's main objectives in this area are:

The introduction, distribution, monitoring and ensuring of an effective functioning of common management standards in all structural subdivisions and communities; The continuous improvement of interaction with shareholders, employees, business partners and other stakeholders;Improving information policies and informational transparency;Ensuring effective long-term cooperation with local authorities in order to promote social and economic regional development.

NAC Kazatomprom JSC's corporate governance system includes the general meeting of shareholders, the board of directors, the collegial executive body (management board) and sole executive body (chief executive officer).

Interaction between the Company's bodies is conducted in accordance with:

The Law of the Republic of Kazakhstan “On Joint Stock Companies”;The Law of the Republic of Kazakhstan “On the Domestic Welfare Fund”;NAC Kazatomprom JSC's Charter;NAC Kazatomprom JSC's Corporate governance code;The Regulations on NAC Kazatomprom JSC's board of directors and management board;The Procedure for interacting on issues concerning the provision of activities of Samruk-Kazyna JSC representatives on the boards of directors and supervisory boards of Samruk-Kazyna JSC Group companies;The Framework for the distribution of powers of joint stock company bodies, all voting shares of which are owned by Samruk-Kazyna JSC;Decisions of the Sole Shareholder of NAC Kazatomprom JSC.

The Sole Shareholder of NAC Kazatomprom JSC is Samruk-Kazyna National Welfare Fund JSC.

In the Charter the following tasks were assigned to the competence of the Sole Shareholder:

Improving strategic planning, monitoring and internal control systems;Providing the regular disclosure of information and transparency; Formalizing interactions with the sole shareholder;Improving the work of internal audit;Creating an effective risk management system;Improving the efficiency of human resource management and staff development as the most important resource of the Samruk-Kazyna NWF JSC group of companies;Introducing principles of corporate social responsibility.

General meeting of shareholders

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Management board meetings of Samruk-Kazyna NWF JSC, which addressed issues related to NAC Kazatomprom JSC, were held in Astana in 2010.

As a result, NAC Kazatomprom JSC's financial statements for 2008 and 2009 and procedures for the distribution of net income for these periods were approved, and new heads of all subsidiary companies were appointed.

In 2010, the following documents were approved by the Sole Shareholder in order to improve the corporate governance system:

An updated Charter of NAC Kazatomprom JSC, in which the distribution of powers to the Company bodies are assigned under the Framework of Samruk-Kazyna NWF JSC (Resolution No. 69 of the Sole Shareholder, dated 29 December 2009);The Corporate governance code (Resolution No. 76-p of the Sole Shareholder, dated 15 November 2010);Regulations on the Board of Directors (Resolution No. 21-p of the Sole Shareholder, dated March 26, 2010).

Board of directors

The board of directors is a key component of NAC Kazatomprom JSC's corporate governance system, carrying out the general management of the Company's activities on behalf of and in the interests of all shareholders and within the limits of its competence, as defined by law and the Charter of the Company. The board of directors performs its activities in accordance with the Regulations on the Board of Directors.

The board of directors not only provides effective management, but also: the functioning of the system of monitoring the activities of its executive bodies; effective interaction between the management bodies of the Company; and the observance and protection of the sole shareholder's rights and legitimate interests. In performing these functions, the board of directors is actively engaged through its committees with the internal auditor of the Company, and the management and structural divisions of the Company and its officials.

The board of directors, when making decisions, is guided by principles of efficiency and responsibility, observing and implementing the interests of the Company and the Sole Shareholder to the maximum, protecting the Sole Shareholder's rights, and being responsible for the Company activities.

Audit committee and appointment and remuneration committee of NAC Kazatomprom JSC's board of directors were established, approved by the Regulation on the Audit Committee of NAC Kazatomprom JSC's board of directors (Decision No. 4 of the board of directors, dated 21 September 2009) and the Regulation on the Appointment and Remuneration Committee of NAC Kazatomprom JSC's board of directors (Decision No. 4/10 of the board of directors, dated 3 March 2010);

Risk management policy (Decision No. 1 of the board of directors, dated 27 January 2010) and performance indicators for assessing risk management at NAC Kazatomprom JSC (Decision No. 2/11 of the board of directors, dated 10 March 2011) were approved;

In 2010, in order to improve the corporate governance system, the board of directors took the decision to carry out the following:

The boards of directors' composition was optimized by electing an independent director - auditing specialist;

Regulations on the Management Board (Decision No. 8/10 of the board of directors, dated 26 July 2010), Regulation of the Corporate Secretary (Decision No. 11/10 of the board of directors, dated 27 October 2010) and Regulations on Regulating Corporate Disputes and Conflicts of Interests of NAC Kazatomprom JSC (Decision No. 2/11 of the board of directors, dated 3 March 2011) were approved;

Key performance indicators for NAC Kazatomprom JSC managers (Decision No. 2/11 of the board of directors, dated 3 March 2011) were approved;

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The work plans of the board of directors and its committees, as well as reports on the activities of the committees and internal audit are approved annually.

NAC Kazatomprom JSC seeks to maximize the effectiveness of the board of directors. This is facilitated by having highly qualified members, each member of the board taking individual responsibility, and the board taking overall responsibility for its decisions.

As of 31 December 2010, there were three independent directors on the board of directors, out of eight members.

The composition of the board of directors changed this year: in accordance with the Resolution of the Sole Shareholder dated 13 August 2010, the powers of Akchulakov Bolat Uralovich were revoked on 16 July 2010, and Abishev Zhandos Zhantoreyevich was elected to the board of directors of NAC Kazatomprom JSC.

30 issues concerning the SAC of the Company; The conclusion of 24 transactions in which the Company had an interest; The approval of 18 internal and planning documents of the Company; 11 decisions related to staff issues; The conclusion of three major deals.

In 2010, the board of directors held 13 meetings (two in person, 11 in the form of absentee voting), in which 94 issues were considered and decided on, including:

Information on the most significant issues was disclosed by NAC Kazatomprom JSC in press releases and in the form of statements of material facts/information which may have an impact on the Company activities.

The composition of NAC Kazatomprom JSC's board of directors as of 31 December 2010

When selecting candidates for independent director posts, candidates' experience and qualifications and the qualifications of other members of the board of directors were taken into account. In line with international best practices, independent directors include professionals with a deep industry understanding, and highly qualified specialists in the fields of accounting and auditing, internal control and risk management.

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Kulibayev Timur Askarovich Ramazanov Serikzhan Mnaidarovich

Sadenov Murat Adilkhanovich

Ramazanov Tlekkabul Sabitovich

Baizhanov Ulan SapparovichAbishev Zhandos Zhantoreyevich Candidate of Technical SciencesMagauov Aset Maratovich Shkolnik Vladimir Sergeyevich PhD in Physical and Mathematical Sciences

Chairman of NAC Kazatomprom JSC's board of directors Independent member of NAC Kazatomprom JSC's board of directors Chairman of the audit committeeIndependent member of NAC Kazatomprom JSC's board of directors Member of the appointment and remuneration committeeIndependent member of NAC Kazatomprom JSC's board of directors Chairman of the appointment and remuneration committeeMember of NAC Kazatomprom JSC's board of directors Member of NAC Kazatomprom JSC's board of directors Member of the audit committee, Member of the appointment and remuneration committeeMember of NAC Kazatomprom JSC's board of directors Member of NAC Kazatomprom JSC board of directors Chairman of NAC Kazatomprom JSC's management board


In 2010, in order to preliminarily consider the most pressing issues and prepare relevant recommendations, the audit committee and the appointment and remuneration committee began reporting to the board of directors. These committees worked under approved plans and in line with the board of directors' objectives.

The committees' activities are carried out in accordance with the Regulations on the Audit Committee and the Appointment and Remuneration Committee.

The committees consist of members of the Company's board of directors and invited experts and are headed by independent directors.

The committees which operated this year were established on the basis of decisions taken by NAC Kazatomprom JSC's board of directors in March 2010 and June 2010.

Audit committee of the board of directorsThe committee was established by Decision No. 6/10 of the board of directors, dated 1 June, 2010, and consisted of three individuals:

Ramazanov Serikzhan MnaidarovichAbishev Zhandos ZhantoreyevichMynsharipova Saya Naimanbaykyzy

NAC Kazatomprom JSC independent director; chairman of audit committeeMember of NAC Kazatomprom JSC's board of directors; member of audit committeeDirector of Samruk-Kazyna JSC's Audit and Control Department; audit committee expert (no voting rights)

The audit committee's main objectives are:

Establishing an effective system for monitoring the Company's financial and business activities (including the completeness and accuracy of financial statements);

Monitoring the reliability and efficiency of internal control and risk management systems, as well as the execution of documents related to corporate governance;

Monitoring the independence of external and internal audits, as well as ensuring compliance with law.

The committee's exclusive functions include evaluating candidates for auditor positions at NAC Kazatomprom JSC, evaluating auditors' assessments, and evaluating the effectiveness of internal control and risk management procedures and preparing proposals for their improvement.

The committee's functions also include a preliminary review of the Company's financial (accounting) statements, assessing the quality of auditors' services and observance of auditors' independence, and overseeing the completeness and accuracy of tax, accounting and management reporting in the Company.

The committee enables continuous interaction to take place between the board of directors and auditors of NAC Kazatomprom JSC, the audit commission, executive bodies, the financial department, and business units of the Company exercising internal control and internal audit functions.

Committees of the NAC Kazatomprom JSC board of directors

The committee's work plan for the year 2010 was approved by Decision No. 1/10 of the committee, dated 24 June 2010. The plan provides for the consideration of 43 issues, including 13 issues to be considered not less than once a year; four issues to be considered quarterly; and 27 issues to be considered if necessary. Out of 17 issues to be considered on annual and quarterly bases, 17 were considered by the committee in 2010. Out of 27 issues to be considered if necessary, two issues were considered by the committee.

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Audit committee of the board of directors


Ramazanov Tlekkabul SabitovichSadenov Murat AdilkhanovichAbishev Zhandos ZhantoreyevichKaissenova Gulzhihan Kabdylkairovna

NAC Kazatomprom JSC independent director; chairman of the committeeNAC Kazatomprom JSC independent director; committee memberMember of NAC Kazatomprom JSC's board of directors; committee memberHead of Samruk-Kazyna JSC HR department; committee expert (no voting rights)

The appointment and remuneration committee was established by Decision No. 4/10 of the board of directors, dated 19 March 2010.

Attracting highly qualified specialists to the board of directors and management board and to internal audit service positions, the position of corporate secretary and other positions whose appointments or the approval of appointments are carried out by the board of directors;

Developing recommendations for the Sole Shareholder on determining remuneration levels for members of management, the board of directors and the corporate secretary.

The appointment and remuneration committee's main objective is to provide recommendations on the following issues:

In addition, the committee, in conjunction with the HR department, carries out a preliminary assessment of: candidates for membership positions on the management board of the Company; internal audit service employees; the corporate secretary; the head of the business unit of the Company responsible for carrying out organization and procurement procedures; and other employees.

The Regulations on the Appointment and Remuneration Committee determine: the composition, status, procedures, powers and functions of the committee; the procedure for convening and holding meetings; the drawing up of decisions; and the responsibilities of committee members. The committee reports to the board of directors and operates under powers granted by the board of directors.

In 2010, the committee convened two meetings; five issues were considered in accordance with the agenda.

Appointment and remuneration committee

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The committee consists of four individuals:


The current operations of the management of NAC Kazatomprom JSC are carried out by the executive bodies of the Company, manage-ment board (collegial executive body) and chairman of the board (the sole executive body), which are accountable to the Company's board of directors and Sole Shareholder.

Members of NAC Kazatomprom JSC's management board are appointed for a period of three years. As of 31 December 2010, the Company's management board consisted of six members serving a term until 1 September 2012.

Members of NAC Kazatomprom JSC's management board as of 31 December 2010

Shkolnik Vladimir SergeyevichPhD in Physical and Mathematical SciencesYashin Sergei Alekseyevich Ryspanov Nurlan Bektassovich PhD in Technical SciencesPirmatov Galymzhan Olzhayevich Poltoratskiy Sergei IvanovichOkshina Galina Ivanovna

Chairman of NAC Kazatomprom JSC management board Member of NAC Kazatomprom JSC's board of directors Deputy Chairman of NAC Kazatomprom JSC management board Deputy Chairman of NAC Kazatomprom JSC management board

Deputy Chairman of NAC Kazatomprom JSC management board Director of NAC Kazatomprom JSC Corporate Governance department Does not hold any other positions

Remuneration of NAC Kazatomprom JSC's board of director members and managers

Under the law of the Republic of Kazakhstan '“On Joint Stock Companies”, members of boards of directors when performing their duties may receive remuneration and/or reimbursement of expenses related to the performance of their functions by a decision of the general meeting of shareholders.

The amounts of such remuneration and reimbursement shall be approved by the general meeting of shareholders.

Annual fixed remuneration;Additional remuneration for attending each committee meeting requiring physical attendance; Compensation for expenses related to meetings of the board of directors and committees of the board.

The remuneration amounts are assigned only to independent members of NAC Kazatomprom JSC's board of directors, by decisions of the management board of Samruk-Kazyna NWF JSC executing the functions of Sole Shareholder in respect to the Company:

The amounts of remuneration for 2009 and 2010 were paid in 2010 in the following sums:

Amount of remuneration, thousand KZT 2 051 3 647

2009 год 2010 год

Management board of NAC Kazatomprom JSC

The remuneration of NAC Kazatomprom JSC managers (members of the management board) consists of a monthly salary and material compensation for leave. No additional remuneration is paid to managers of the Company for the work they perform in the manage-ment bodies of NAC Kazatomprom JSC or its subsidiary (affiliated) companies.

The amounts of monthly salary are determined by labor contracts concluded when employees are hired.

Under Samruk-Kazyna NWF JSC's policies, no bonuses are paid to managers at the end of the year.

The amounts of remuneration for 2009 and 2010 were paid in 2010 in the following sums:

Amount of remuneration, thousand KZT

87 041 93 206

2009 год 2010 год

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INTERACTION WITH STAKEHOLDERS 5

During its activity NAC Kazatomprom JSC interacts with stakeholders – legal entities and individuals with which the Company works.

Observing the rights and interests of shareholders; Effective management of the Company by the board of directors and executive body; Transparency and objective disclosure of the Company's activities; The rule of law and ethics; Effective HR policies; Protecting the environment; Regulating corporate disputes.

In accordance with NAC Kazatomprom JSC's Corporate governance code, the management of the Company is based on the following principles:

In addition to the absolute priority of the rights and interests of the Sole Shareholder, the Company's corporate governance system provides for the observance of the rights and interests of all stake-holders engaged in the Company activities. In turn, stakeholders may have some influence on the Company's current operations and achieving its strategic objectives.

NAC Kazatomprom JSC strives to create an effective system of interaction with stakeholders, aimed at balancing the interests of all stakeholders and implementing sustainable development principles into its daily activities. This involves the implementation of production strategy at the same time as providing support in activities related to staff development and building mutually beneficial relationships with the business community, government agencies, and local communities in regions where the Company operates.

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Stakeholders Interaction levels

SuppliersConsumersSubsidiary and affiliated companiesInternational organizationsEducational establishments

International

Domestic

StaffSole ShareholderStateSuppliersConsumersEducational establishments

StaffStateSuppliersLocal communityEducational establishments

Regional


Dialogue within the scope of the board of directors;Meetings, conferences and negotiations between management and the representatives of stakeholders;Visiting production and social facilities of subsidiaries;Public hearings;Participating in forums, exhibitions and talks;Media relations;Joint programs with authorities aimed at the social and economic development of regions in which the Company operates.

The company interacts with stakeholders in a number of ways. These include:

Position on public policy and participating in shaping public policy and lobbying

All NAC Kazatomprom JSC activities related to nuclear energy use are conducted under the continuous supervision of the state and in strict adherence to the international obligations of the Republic of Kazakhstan and the legal requirements of the Republic of Kazakhstan, such as the Constitution of the Republic of Kazakhstan, and laws including “On the Domestic Welfare Fund,” “On Subsoil and Subsoil Use,” “On the Use of Nuclear Energy,” “On Radiation Safety,” “On Licensing,” “On Export Controls,” and “On Customs Procedures in the Republic of Kazakhstan”.

The Company participates in elaborating and discussing legislative and regulatory acts, as well as government development programs in the nuclear industry.

In accordance with Decree No. 3593 of the President of RK dated 14 July 1997 “On Establishing the National Atomic Company Kazatomprom”, the company is subject to mandatory examinations when it is considered for licenses to explore, extract and process uranium-bearing materials.

In accordance with the law of the Republic of Kazakhstan “On Subsoil and Subsoil Use”, the implementation of priority rights of the state for subsoil use is carried out by a national management holding company, a national company or an authorized state body.

In 2010, NAC Kazatomprom JSC continued its cooperation with the Ministry of the Environment of the Republic of Kazakhstan, aimed at improving the legislative framework for environmental conservation.

At the request of this state authority, representatives of the Company participated in the meetings of a working group on issues related to changes in environmental law (with respect to procedures and the use of environmental payments and the implementation of the Zhasyl Damu program) and on increasing liability for crimes and offenses in the area of environmental conservation.

Company representatives also participated in a working group of the Parliament of the Republic of Kazakhstan on elaborating the Law of the Republic of Kazakhstan “On Nuclear Energy Use”. Proposed amendments to the draft of new radiation safety standards in a number of documents related to nuclear safety were prepared and submitted to the supervising Ministry of Industry and Trade of the Republic of Kazakhstan. These include the following projects: Rules for Accounting for Nuclear Materials, Rules for Establishing Categories of Risk for Ionizing Radiation Sources, and Rules for Licensing Activities in the Field of Nuclear Energy.

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* Sibinskoe Lake, East-Kazakhstan region


Environmental conservation and creating a safe working environment for staff and providing secure accommodation for people in areas where nuclear facilities are located;Natural resource management;Ensuring environmental safety in relation to the construction and operation of mining, processing, transporting and storing of natural uranium.

The list of the Company's top priorities includes issues aimed at:

ENVIRONMENTAL CONSERVATION

ENVIRONMENTAL GOALS AND PRINCIPLES

6The long-term environmental goals of NAC Kazatomprom JSC are set out in the Company's development strategy. The goals are implemented in accordance with domestic legislation and international requirements.

Considerable intellectual, material and financial resources have been allocated to these issues.Environmental conservation activities are conducted by the Company in accordance with the environmental conservation principles of the Company's corporate governance code, which includes:

Compliance with the laws of the Republic of Kazakhstan in the field of environmental conservation;Preserving the environment in the vicinity of SAC of the Company, especially water basins and the atmosphere;Achieving a level of environmental safety that conforms with the current state of science and technology;Continuous improvement of the system of environmental conservation management in the nuclear industry;Preemptive action to prevent negative impacts on the environment from different operational activities prior to their implementation, and a consideration of the impact on the environment;Reducing the amount and toxicity of emissions, discharges of pollutants and waste by increasing production through the introduction of advanced technologies and equipment, and increasing the automation of production processes;

Ensuring the complete environmental safety of products during their use and recycling;Working with suppliers which have the required licenses and certificates, as well as a positive reputation;Payment for nature management and compensation for damages to the population and environment;Continually raising the awareness and competence of staff in relation to environmental conservation and nature manage-ment;The transparency of environmental information.

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INTERACTION WITH STAKEHOLDERS IN THE FIELD OF ENVIRONMENTAL CONSERVATION AND MANAGEMENT6

Together with other domestic companies in the working group of the Kazakhstan Association of Oil and Gas and Energy Corporations (KAZENERGY), of which NAC Kazatomprom JSC is a member, the Company comments and makes proposals in relation to the Kyoto Protocol and post-Kyoto agreements; in particular, on the methodology

of calculating greenhouse gas emissions from energy activities, reducing and absorbing greenhouse gas emissions, and on the procedure for managing and trading greenhouse gas emissions within the country.

The Company has been actively cooperating with the International Nuclear Energy Agency (IAEA) for the past two years:

In 2009, the Company's staff participated in a meeting of the program committee and in the work of the IAEA international conference Recultivation of Land Contaminated by the Residues of Radioactive Materials and in the IAEA technical meeting on elaborating guidelines for the layman for the environmental remediation of land contami-nated by radioactive substances. In these meetings, employees of the Company prepared and submitted the reports Industrial environmental monitoring as a tracking tool of land reclamation costs upon in-situ leaching and Experience from conducting public hearings in Kazakhstan, which are published on the IAEA website;

2009

During 2010, work was carried out in relation to the regional technical cooperation project IAEA RER/3/010, “Supporting preparatory activities to rectify the consequences of uranium production”. Within the scope of this project, the specialists of the Company and SAC attended IAEA courses. In addition, as part of the above IAEA project, trainings to exchange information on potential hazards when working to restore the environment were held at MAEC-Kazatomprom LLP.

2010

The Company's employees participated in the relocation of spent nuclear fuel (SNF) from a BN-350 nuclear reactor at the Baikal Research Reactor Complex; in a high level European Commission meeting on the restoration of Central Asian sites where uranium production had taken place; in a meeting of a working group of experts of EurAsEC member states on a draft of the interstate program entitled 'Restoration of territory of EurAsEC member states impacted by uranium mining industries'; and in a regional seminar organized by the European Commission entitled 'Valuation design and cost management'.

Company representatives also take part in public hearings on environmental impact assessment (EIA).

Public hearings are a form of public participation for resolving environmental issues. During hearings, the proponents of economic activity explain their intentions, justify the proposed project activities and give stakeholders the opportunity to comment or make proposals to change a project.

In RK, the holding of public hearings is mandatory for projects whose implementation may have a direct impact on the environment and public health. The process is part of the environmental impact assessment and provides public access to decision making. Article 57 “Making Public State Environmental Assessments and Public Access to Decision Making,” of the Environmental Code of the Republic of Kazakhstan describes how the public may access information about the environmental impact of projects. According to this article, all interested citizens and public associations are provided with the opportunity to express their opinions during state environmental assessments.

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NAC Kazatomprom JSC organized similar hearings on various projects in the Kyzyl-Orda, South Kazakhstan and Mangistau Regions of RK. Hearings were held both on uranium mining projects and auxiliary production facilities of the uranium industry, as well as on feasibility studies for building a nuclear power plant. In each case, a public awareness campaign was conducted through the media and by organizing meetings between the public and professionals working for the Company. Manuals on the nuclear industry were also distributed to the public and in schools.

In 2010, representatives of the Company participated in public hearings on the Evaluation of Environmental Impact, Stage 1, 'Overview of the Environment', to the Declaration of Intent to develop a copper and molybdenum mine in Kyzyltu, together with the construction of a processing plant and other auxiliary facilities in the Ereimentau district of the Akmola Region.

The principles of corporate social responsibility have been introduced in most enterprises of the Company which, in particular, actively cooperate with local executive bodies on environmental conservation management. Participation in regional environmental programs (the creation of regional or municipal environmental monitoring systems, monitoring at facilities for production purposes, implementing measures to transfer vehicles to using natural gas, measures to improve the management of municipal waste, the preservation of significant natural features and territories) as well as in the agreements on industrial and environmental security in the region are among the forms of such cooperation.

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UTILITIES AND MATERIALS6Resource base

The mining and processing of natural uranium plays a dominant role in the production structure of NAC Kazatomprom JSC's activities. The ISL method employed by the Company's uranium mining companies has a minimal negative impact on the environment. This has been confirmed by long-term studies.

Kazatomprom has extensive experience in the sulfuric acid leaching of uranium. It has been determined that the natural hydro-geochemical environment at uranium deposits in Kazakhstan has a unique ability to recover from man-made impacts. Due to the gradual restoration of natural reductive-oxidative conditions, a slow but irreversible process of restoration of groundwater ore-bearing aquifers occurs. The results of a 13-year observation held in the Irkol uranium deposit may serve as an example of the natural demineralization of residual solutions.

Compared to conventional ores (quarries, mines), in-situ leaching ores are characterized by having less capital (2-3 times) and performance (25-40%) costs and the option to mine ores in difficult mining and hydro-geological conditions. The open method of processing mineral deposits gives rise to additional sources of contamination by radioactive substances of surface soil and the air. The processing of deposits by underground mining operations without stowing is accompanied by significant subsidence and often collapse, and compromises the integrity of the earth's surface.

Developing deposits by in-situ leaching through wells has a far less negative impact on the earth's surface. The integrity of the earth's surface is not compromised and there is no subsidence or dumping of out-of-balance ore, debris or tailings. There occurs no dust formation during all aspects of processing, including the dissection and preparation of ore bodies. Processing works are hugely reduced by

eliminating the cumbersome processes of ore lifting, ore preparation and leaching operations.

The rapid development of the ISL mining method of uranium deposits presented new environmental conservation challenges, which until now have not been properly addressed. Using progressive methods to extract natural uranium provides a significant increase in production efficiency and a reduction of solid, liquid and gaseous waste per unit of output.

However, there is a chemical and radioactive environmental impact when using the ISL method, which usually occurs after violation of environmental requirements during mining operations and the absence of preventative measures to control pollution.

Measures to improve environmental and industrial safety, as well as the efficiency of production processes of uranium mining and processing, are implemented at all ISL sites. To that end, the Company's uranium mining companies have introduced an automated process control system (APCS), which allows both deposits and processing complexes to reduce the risk of accidental chemical and radioactive pollution. This system provides control over virtually all production processes, which in the event of an emergency are automatically stopped. The APCS system controls ruptures to process pipelines, which eliminates spills of both productive and leaching solutions onto the deposits. All tanks are equipped with emergency acid vials, which activate the acid supply valve in case of an emergency. During the commissioning of the APCS system at uranium mining companies, obsolete equipment, monitoring and measuring tools and automated equipment were replaced by a complete set of new stop and control valves built to the required specifications.

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Energy saving

Kazatomprom's Mangistau Nuclear Power Combine (MNPC), is a combined energy and water producing complex, which includes thermal power plants and multi-effect distillation desalination plants. Kazatomprom MNPC's goal and main strategic mission is to provide population centers and production facilities of the Mangistau region with electrical power, back-up electrical power for the Atyrau region, to provide Aktau with thermal energy and drinking, hot and industrial water and to provide production facilities with distilled water. MNPC's

production technique in relation to electrical power and heat is unique, because it is based not on fresh water, which would require minimal water treatment, but on distilled water.

As part of the Program to Develop the Uranium Industry of the Republic of Kazakhstan, the Program for Energy Saving and Modernizing the Energy and Technological Complex of Uranium Mines was developed in order to provide system solutions to energy-saving issues at production facilities of Kazatomprom NAC subsidiaries.

The creation of energy-efficient production at uranium mining complexes;Modernizing existing power supply facilities, with a view to reducing energy consumption;The creation of an incentive program to implement energy-saving technologies;Training and retraining qualified specialists.

Kazatomprom NAC's energy saving program sets out the following main strategic directions:

The implementation of automatic process control systems;Replacing existing equipment with equipment that is more efficient and less energy consuming;Using energy-saving technology (reactive-power compensation, frequency regulation, etc.);Construction of own traditional sources of energy in a region;Implementation of alternative energy sources (heat pumps, wind-powered generators, solar panels, etc.)

The following strategic missions have been identified under the strategic directions of the energy saving program:

Six heat pumps with total thermal capacity of 332 kW were installed;Solar panels with total thermal capacity 82 kW were installed;The test launching of 10 kW wind-generating plant is being carried out;Two shunt reactors each having 20 MVAr capacity were installed at the 220/110 kV RU-6 substation;Lamps with solar cells were installed at warm-water-power supply facilities as street lighting.

The current energy-saving plans are based on certain strategic directions developed annually at NAC Kazatomprom JSC companies. The following main energy-saving measures have so far been implemented at NAC Kazatomprom JSC companies:

At MNPC-Kazatomprom LLP facilities, particular importance is attached to optimizing production costs and implementing energy-saving technologies. The upgrading of BKZ-160 boiler units at stations No. 4 and 5, TPP-1 was carried out by increasing steaming capacity to 210 t/h and improving reliability indicators, and explosion and fire safety indices have been improved over the past two years. A new HTFE-I (horizontal thin film evaporator) plant preparing distilled water was

put into operation, and the construction of HTFE-II, beginning operation in 2012, is planned.

To ensure that adequate incentives are in place for the implementation of energy-saving technologies, NAC Kazatomprom JSC has developed regulations on invention and innovation, which allow employees to receive cash rewards of up to 30% of the annual economic impact of energy saving measures.

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Period prior to restoration

Design period

Period of restoration

Period subsequent to restoration

Overview of the environment. Obtaining data on natural background concentrations of chemical and radioactive substances in the environment prior to field development. Engineering and construction of mine.

Stages of measures to restore damaged land at used uranium deposits of NAC Kazatomprom JSC:

Use of mine. Environmental monitoring by including future restoration facilities in the industrial environmental control program.

Restoration plan with the EIA section, including industrial control programs.

Restoration of land in accordance with project design;implementation of environmental measures;execution of the industrial environmental control program.Radiation-hygienic monitoring of the liquidated facility;implementation of industrial environmental controls;accounting and reporting.

USE OF LAND6Under the Act on Subsoil and Subsoil Use of the Republic of

Kazakhstan, the right to perform work related to subsoil use can be exercised after a contract between the government and subsoil user is concluded. Recultivation liabilities are already included in an application when a company applies for subsoil use and under the terms of the agreement a liquidation fund is set up by the subsoil user in order to remove the consequences of subsoil use operations in RK.

The amount and procedure of payments to liquidation funds are provided in the agreement. The use of the liquidation fund is carried out with the relevant permission from the competent authorities (the regulator in the field of subsoil use).

When developing deposits using the ISL method, soil and vegetation cover in selected areas is subject to anthropogenic impact and can undergo changes.

During the successful implementation of comprehensive restoration work on land that was damaged in the process of the exploration and mining of natural uranium, a special role is played by the organization and implementation of industrial environmental monitoring at all stages of restoring land, as one form of control prescribed by environmental law.

NAC Kazatomprom JSC's main activity in relation to the production and processing of uranium is closely linked to issues of land and subsoil protection. The basic document for developing uranium deposits is the contract on subsoil use which, together with other documents, prescribes environmental liability in relation to the protection of mineral resources and the environment. Under the Environmental Code of the Republic of Kazakhstan, all projects to select land for carrying out production activities of the Company are to be subject to public hearings, with the participation of public representatives, the media, non-governmental organizations and the local population, after which projects are submitted for state environmental appraisal. No project implementation is possible without an environmental impact statement.

In RK, the use of subsoil resources is regulated by a number of regulatory legal acts, the main one being the Environmental Code of the Republic of Kazakhstan, dated 9 January 2007, No. 212–III LRK. This legislative act establishes for users of natural resources special environmental land use requirements, including requirements on the recultivation of disturbed soils.

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As can be seen, the period prior to restoration, which provides for mandatory environmental monitoring of land damaged during the exploration or mining natural uranium, where restoration works are planned to be carried out, was included in a list of stages. This organization of remedial actions is necessary in order to minimize environmental pollution and save funds when drafting expenditures connected with restoration, including planning and surveying inspections, laboratory analysis, and mapping.

NAC Kazatomprom JSC's uranium mining companies, according to the sanitary qualification of production facilities, relate to the second category of environmentally hazard facilities. In this regard, companies develop an industrial environmental control program and implement it based on the most effective approaches (direct and indirect) to the continuous tracking of operation parameters, emissions and the environment.

When conducting environmental monitoring in relation to the restoration of land, liability rests with the environmental service of the uranium mining company, which performs the following functions:

Staff preparation and training on forms and methods of organizing controls at a facility;Analyzing reasons for not observing environmental requirements and radiation safety standards on sources of pollution; Taking decisions to eliminate deviations and enforce environmental parameters in the technological process;Creating an environmental management system with a clear allocation of responsibility for observing environmental law, environmental quality regulations and radiation safety standards.

As part of an approved program for the gradual liquidation of used drillhole ISL blocks of uranium mines of Mining Company LLP (2007-2010), and in accordance with the developed work project to restore used blocks of the Uvanas deposit (east and central sections), work was begun to restore damaged land. A branch of Mining Company LLP, Stepnoe Rudoupravlenie, was reorganized as a structural subdivision in 2007 by a decision of the management board of NAC Kazatomprom JSC and Mining Company LLP, in order to organize and carry out restoration works on ISL uranium deposits.

Works on the restoration of the east and central sections of the Uvanas deposit were completed in 2010 in accordance with work draft of Mining Company LLP, developed for the period 2007-2010. The total area of used blocks of indicated areas of the Uvanas deposit totaled 284 hectares; 16 sand ponds and 4,015 production wells were liquidated. KZT 301.6 million was spent during the entire execution period of the work draft, connected with the restoration of the Uvanas deposit. The State Commission accepted the work of the Mining Company LLP branch Stepnoye Rudoupravlenie on 7-9 September 2010, on condition that reserves at the ISL uranium Uvanas deposit be written off.

Dynamics of Disturbed and Rehibilitated Lands at KazatmpromNAC JSC Enterprises for the period 2005 - 2009, ha

Disturbed Lands

Rehabilitated Lands

41

2005 2006 2007 2008 2009

67,34,3

64,73,2

230

23,8

130

580

467

139


WATER CONSUMPTION6Each SAC of the Company carries out the special management of

water resources, annually receiving regulatory documents from an authorized body for the protection of water resources, granting rights within the scope of established limits to use underground or surface water for industrial, domestic or drinking purposes and to carry out water disposal, after appropriate waste water treatment, on local land, in reservoirs or in surface run-offs. The use of groundwater reserves by the Company totaled 21,568.2 thousand cubic meters in 2010.

Significant water user in the operating structure of the Company is UMP JSC, which carries out intakes of fresh industrial water from the Atamanov water supply for production needs. The total volume of water intake from underground sources by UMP JSC (together with companies that make up part of UMP JSC's corporate governance) totaled 11,855.8 thousand cubic meters in 2010.

Complying with the terms of water consumption at the company is carried out in accordance with regulatory documents (an agreed draft of MPD* norms for a definite period, which have positive findings from the state ecological appraisal, and permits for environmental emissions and special water consumption).

Monitoring and accounting for the amount of fresh and recycled water is carried out by special instruments and registered in journals, and presented in the monthly technical reports of the company.

The accredited Laboratory of Occupational Health and Environment Protection monitors waste water discharged into ponds and its influence on surface run-offs and the Ulba River, and monitors waste water discharged from production facilities and in the recycling system.

MNPC-Kazatomprom LLP is one of the major water consumers in the Mangistau region. The Caspian Sea is a source of supplying water in the regions and receives waste water.

MNPC- Kazatomprom LLP, as a primary water consumer, takes in the volume of water necessary to supply the population and the Mangistau industrial complex.

The Caspian Sea is a fisheries water and belongs to water sources of cultural and general significance in accordance with the sanitary regulations “Sanitary and Epidemiological Requirements for Water Sources, Domestic Water Supplies, Places of Cultural and Community Water Safety and Water Bodies.”

The Kuyulusskoe fresh underground water deposit is the second water source for withdrawal of drinking water and industrial water.

The ground water intake of the plant is 46.1 thousand cubic meters of water per day, according to the approved stock production under contract No. 1718 dated 25 April 2005.

Special features of water use in the company are:

The use of sea water for cooling thermal power equipment and sending it to other suppliers;The use of captured sea and artesian water during the production of the company, in the form of industrial and drinking water, distilled water and hot water from a heat supply system.

Water allocated to the company belongs to the category of partially clean water.

Discharged streams are formed from water used for cooling the thermal power equipment CHP-2, TPP, TPP-1 and evaporated brine desalination plants for the preparation of distilled water.

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*maximum permissible discharges


The share and total volume of recycled and repeatedly used water by all SAC of NAC Kazatomprom JSC for the year 2010:

The volume of captured water, thousand cubic metersThe volume of recycled and repeatedly used water, thousand cubic metersThe share of recycled and repeatedly used water

1 108 1275 7270,5%

ValueIndicator

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BIODIVERSITY 6The most pressing problem today is the preservation of biological

diversity, the diversity of animals and plants species, and landscapes and ecosystems. Preservation of biodiversity is not only a new area of environmental conservation but also an integral part of the framework of humanity transitioning to principles of sustainable development.

Some uranium deposits developed by the Company's production companies are located close to sensitive ecosystems, including protected ones. This is land belonging to state forest resources, comprising 860 hectares of the Moinkum uranium deposit in the Sozak district of South Kazakhstan, where KATCO JV LLP carries out ISL uranium production. Moinkum sand expanse is formed from pit-and-mount sand of alluvious and aeolian origin, covered with sparse vegetation. The plant and animal life are typical of deserts and semi deserts; haloxylon dominates the sand expanse. Large mammals include saigas, gazelles, wild pigs, small rabbits, ground squirrels and jerboas. The production of natural uranium at this deposit has been carried out since 2000, and the restoration of damaged land will be carried out to the extent that the areas were developed in accordance with environmental law.

The Zarechnoe deposit in South Kazakhstan, which has natural uranium resources, is also a protected ecosystem. Zarechnoe JV JSC has carried out ISL production since April 2007. The company rents 38 sq. km. of the State Arys and Karatau protected areas. Hydro geological and geotechnical conditions at the Zarechnoe deposit ore-hosting sediments are favorable for carrying out industrial deposit develop-ment by ISL. The ore horizon is located at a depth of 530-570 meters. The horizon, at the top and bottom, is restricted by clay layers that eliminate the entry of productive and leaching solutions in other aquifers. Observation wells, by which the Physical and Chemical Laboratory jointly with Radiation Security Service and Environmental Service periodically (once a quarter) measure Н SО , РН, Ме+ and total alpha-2 4

beta activity, were constructed to monitor the spread of liquids. Indications of productive and leaching solutions have not been found outside the limits of developed blocks during the observation process. The analysis of drinking water is carried out in nearby populated areas by specialists of the District Sanitary and Epidemiological Center. The results of these analyses have also not shown changes in the chemical composition of water caused by the industrial activity of the company. Fire-prevention measures, aimed at preserving the landscape and vegetation, are carried out.

85.8% (37.7 sq. km) of the total area of 43.9 sq. km. of leasing land owned by Mangistau Nuclear Power Combine and occupied for industrial use relates to the conservation area. This is the Karakol State Natural Preserve, located 12 kilometers north-west from the north border of the Karaki main territory, the western tip of the Mangishlak peninsula in the desert flat Usturt-Mangishlak district of Aral-Caspian County.

The Karakol cooling basin, 37.7 sq. km. in area, is according to the project to be used to reduce thermal capacity on the coastal zone of the sea when cooling partially clean water from thermal stations of the company in the Caspian Sea and is included in the Karagie-Karakol State Zoological Preserve by Decree No. 96 of Ministerial Council of Kazakh SSR, dated 13 March 1986.

The biodiversity value of this preserve lies in the habitat of birds, and wetland bird fauna: span, breeding and settled; mammals, insects, vegetation, and coastal desert strips. Birds of wetland bird fauna include more than 175 species, of which 24 species are listed as endangered in Kazakhstan. The preserve has 11 species of mammals and over 223 species of insects. Vegetation is represented by systems dominated by semishrubs: Artemisia and Chenopodiaceae, and systems of annual and perennial shrubs.

A shallow lake, no more than 0.55 meters deep, 18 km in length, and around 2-3 km in width, has formed as a result of the long-term discharge of partially clean cooling water from MNPC- Kazatomprom LLP thermal stations into Karakol, defined under the project as a cooling basin before discharging partially clean cooling water into the water body receiving the water, the Caspian Sea. Favorable conditions, shallow and warm water, weak streams, and lush flora, have attracted about 175 aquatic-marsh species of birds for wintering, nesting and dwelling in the Karakol cooling basin. The growth of perennial and annual grass and shrub vegetation has contributed to the dispersal of mammals and insects. The occupancy and ongoing existence of the lake will depend on the volume of disposed partially clean water into the Karakol basin drained after cooling the energy equipment at thermal stations.

The discharge of partially clean water is performed in line with the concentration ratios for pollutants, in accordance with established standards for maximum permissible discharges. There is no pollution. Amounts of harmful chemical substances in drained partially clean water do not exceed established standards for maximum permissible discharges for water disposal by MNPC-Kazatomprom LLP into the water body receiving the water, the Caspian Sea.

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The monitoring of flora and fauna on the Karakol shore is carried out bi-annually. The most recent monitoring was carried out in 2009 by public association "KenDala" with the involvement of specialists from zoology and botany institutions. The conclusion was: “Thus, in accordance with the monitoring results, the ecological state of the fauna of the Karakol Shore can be assessed as being satisfactory, and the ecological state of flora as normal. The significance of the Karakol Shore for migrating birds should be noted. It should also be pointed out that the discharged partially clean water from MNPC-Kazatomprom is

the only source of the shore water basin. Currently, the company's activity is maintaining the ecological balance that has been established at the Karakol water basin. At the same time, it is important to note that even a small deviation in the industrial mode of production processes may have negative consequences. This places special responsibility on staff operating the plant. The mission is to monitor the implementation of all nature-conservation measures provided by the work programs, at the same time avoiding any emergencies.”

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ENVIRONMENTAL IMPACT6

Chemical and radioactive emissions into the atmosphere

In the ISL industrial extraction process chain of uranium, a major environmental impact comes from technological solutions circulating according to the following system: acidification node (leaching solution) – injection well – underground ore deposits water – pumping well (production solution) – sand pond – deposit of uranium on anion and its extraction – stock solution – sand pond – acidification unit. There is chemical and radiation exposure to the air. The main sources of chemical pollution into the atmosphere are high-altitude sources of primary production through which chemicals are released into the atmosphere, as well as boiler station auxiliary production facilities.

The main types of pollutants for companies using the ISL uranium mining method are sulfuric acid, ammonia, nitrogen oxides, sulfur dioxide, and carbon monoxide. The source of ammonia and sulfuric acid

emissions are primary production facilities, namely geotechnological fields, sand ponds, cascades of sorption, desorption, regeneration, deposition, and the storage of dry chemicals and finished products. The source of nitrogen oxide, sulfur dioxide and carbon monoxide emissions are companies' auxiliary production facilities, i.e. boilers installed at boiler stations.

Radioactive contamination of the atmosphere as a result of the ISL uranium mining method may result in dust formations of polluted soil, which may be in violation of production procedures related to the injection and pumping out of industrial solutions. In addition, when the absorption and desorption of produced materials is carried out, radioactive nuclides can get into the atmosphere through the ventilation systems of plants in the form of aerosols from primary production.

Electrical and thermal energy production, desalination of sea water

These economic activities are carried out by MNPC-Kazatomprom LLP. The thermal power stations of this company, whose emissions of chemicals into the atmosphere are 83% of the established standard, operate on natural gas. Low-sulfur fuel oil is used as an emergency backup fuel when there is a reduction below the acceptable level in pressure of the gas supply to boiler stations of thermal power plants.

The share of fuel oil in the fuel balance of the company is less than 5%. In future, the use of fuel oil will be reduced, as it is less environmentally safe and more expensive. By performing a series of organizational and technical measures (replacing oxygen analyzers, introducing an automated system for calculating emissions) the amount of nitrogen oxide emissions at thermal power stations has decreased by 15-20%.

ISL production and processing of natural uranium

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Production of nuclear fuel for nuclear power plants, goods and semi-finished products from beryllium, tantalum, niobium and their fusion

Sources of environmental pollution at UMP JSC are polluting substances released into the atmosphere in the form of emissions from the company's production facilities, and disposed waste.

The amount of environmental pollution permissible is established in elaborated draft standards for the maximum permissible emissions and discharges and the disposal of production and consumption waste. On the basis of these standards, the company is annually issued with an environmental emissions permit. Inorganic dust, liquids and gases released in the beryllium, uranium and tantalum production process undergo a special purifying procedure and are captured in special dust and gas collection units (scrubbing filters; various types of sack filters).

An analysis of the fulfillment of environmental obligations set out in the development strategy of the Company until 2030 implies that the foundation for the sustainable development of the Company's business was laid during 2007-2010. The total gross emissions of pollutants into the atmosphere in 2010 was 2,911.4 tons – 20.1% less than in 2007. The reduction in emissions was achieved mainly at UMP JSC (61.3%) and at uranium mining facilities (27.6%), where work was performed to optimize the technological parameters of hazardous industries, upgrade and replace older types of treatment and ventilation systems, other production equipment, and equipment for new boiler stations with improved environmental features.

Moreover, the reduction in emissions into the environment at the sites of SAC of the Company occurred at the same time as production at these enterprises grew. For example, the total amount of uranium mining in 2010 amounted to 17,803 tons – almost 2.7 times higher than in 2007.

Dynamics of Environmental Impact of Emisslons forthe years 2007-2010, tons

2008

2993

2009

2796

2010

2911

In 2010, all the Company's SAC had environmental emissions permits. Regulations and limits on emissions of pollutants into the atmosphere were developed and complied with. Environmental monitoring and the monitoring of the industrial and sanitary zones of industrial facilities were carried out, in accordance with environmental law.

Actual emissions of radioactive substances into the atmosphere at the Company's enterprises remain stable. The average annual discharge of radio nuclides at the Company's industrial facilities in 2010 is significantly below the norm and, of the permitted emission level, was 23.5% at GRK LLP, 18.9% at UMP JSC and 0.15% at MNPC-Kazatomprom LLP.

Greenhouse gas emissions

United Nations Framework Convention on Climate Change, the Kyoto Protocol, took effect in RK on 17 September 2009. The protocol is aimed at reducing global climate change by restricting and reducing emissions of man-made greenhouse gases. Under the Kyoto Protocol these include carbon dioxide (CO ), methane (CH ), nitrogen monoxide 2 4

(N O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs) and SF . At 2 6

the Company's enterprises, work was carried out to implement Kyoto protocol regulations. This subject was in particular discussed at the seminar 'Work results of NAC Kazatomprom JSC companies on issues related to occupational health and environmental conservation, radiation and nuclear safety' which took place in Almaty on 21-22 April 2010. As a result of this seminar, the company heads were instructed to perform accelerated stocktaking, develop standards for maximum permissible emissions of greenhouse gases, and identify measures to minimize their impact on the environment.

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The accounting and regulation of greenhouse gases of the Company's enterprises for 2010

Name of company

UMP JSCMNPC-Kazatomprom LLPVolkovgeology JSCMining Company LLPTotal for NAC Kazatomprom JSC

Volume of greenhouse gas emissions, tons per year Total, in CO2 equivalent, tons per yearСО2 СН4 N O2 Sf6 HFC (CH FCF)2 PFC

10 4933 313 06621 202101 7993 446 560

2,616,42,9837,4859,3

116,35,70,25 078,75 200,9

-0,00059--0,00059

0,004140,00235--0,00649

-----

10 646,323 315 219,4921 321,99188 129,953 535 317,60

Note:

СО equivalent: the ratio of greenhouse gas influence on global warming, which is estimated in conventional units of CO equivalent. For example, if for carbon 2 2

dioxide the quantity of CO equivalent is equal to 1, for methane it is equal to 21, for N O – 310, and for SF – 23,900. 2 2 6

The volumes shown above of greenhouse gases in SAC of the Company were arrived at using the calculation method for greenhouse gas emissions, approved by Order No. 251-p of the Minister of Environment of the Republic of Kazakhstan, dated 24 November 2009. This calculation method for greenhouse gas emissions is designed to calculate greenhouse gas emissions from activities such as fuel consumption, leakages during extraction, the storage or transporta-tion of coal, oil or gas, the manufacture of iron, steel, ferroalloys, aluminum oxide, and aluminum and cement. The effect of all greenhouse gases is considered cumulatively, i.e. stocktaking data are expressed in units of CO equivalent. The net effect of greenhouse gases 2

is obtained as a weighted sum of emissions of certain gases, weighted to reflect their overall greenhouse effect. The effect of the CO 2

greenhouse influence is taken as a unit. Emissions of other greenhouse gas are multiplied by the applicable coefficient – global warming potential (GWP).

The stocktaking of sources of greenhouse gas emissions has been carried out in accordance with Order No. 348-p of the Minister of Environment of RK “On Approving Stocktaking Rules For Emissions of Greenhouse Gases and Ozone-destroying Substances”, dated 13 December 2010.

The success of the Kyoto Protocol, the achievement of its goals and issues on restricting and reducing greenhouse gas emissions, will depend mainly on the circumstances and interests of a business, and primarily those companies which make emissions.

However, the necessary conditions must be put in place to incentivize businesses to carry out appropriate actions. For this, the calculation method of greenhouse gas emissions shall be developed at

state level; its absence makes it difficult to elaborate draft standards for maximum permissible greenhouse gas emissions.

NAC Kazatomprom JSC takes an active part in the implementation of the Kyoto Protocol in Kazakhstan, by promoting the wider use of new and renewable energy, involving innovative technologies and preparing a list of energy efficiency investment projects to improve energy efficiency. These are the creation of heat-pumping facilities at UMP JSC capacities, vertical-axis wind-power stations with a capacity of 10kWt or more, and solar panels.

NAC Kazatomprom JSC, as a participant in the large-scale program to develop alternative energy in Kazakhstan, commissioned in June 2010 autonomous wind and solar energy complexes in the green belt of the capital (Akmola region). The serial production of these installations is being planned at Mashzavod LLP and UMP JSC.

Within the scope of Resolution No. 124 of the Government of the Republic of Kazakhstan, dated 8 February 2008 “On Approving the State Recording of Sources of Greenhouse Gas Emissions Into the Atmosphere and the Consumption of Ozone-destroying Substances”, companies in RK record the consumption of ozone-destroying substances, and producing or delivering enterprises submit data on the annual consumption of ozone-destroying substances according to established standards to the authorized environmental body. MNPC is a major consumer of these substances in the nuclear sector. In 2010 emissions of ozone-destroying substances discharged into atmosphere by domestic air conditioners, refrigerating mechanisms, and split conditioning systems, totaled 0.7623 tons, calculated in equivalent CFCs-11.

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Discharge of pollutants

Activities related to the production, transportation, storage and processing of natural uranium are not connected with intensive water use. Nevertheless, Kazatomprom regularly reduces water consumption for industrial needs, and develops capacities for recycled and repeated water supplies. Waste water is discharged into waste water systems, reservoirs, surface water facilities, and onto land.

The total volume of waste water discharged by the Company into surface water facilities, reservoirs and onto land totaled 3,706 tons in 2010, an increase of 16.3% on 2009. It should be noted that at SAC of the Company, waste water treatment is carried out by mechanical, physic-chemical and biological methods to extract impurities. There are virtually no methods available for the extensive cleaning of water in which the degree of removal of contaminants is practically unlimited and is determined by the conditions of water discharge at related facilities. Most operating treatment facilities of the Company's enterprises require renovation and modernization; funds for this are provided for in enterprises' medium-term development plans.

At UMP JSC, industrial waste water is assigned to a special tailing area, whose operation complies with environmental requirements and radiation safety standards. The bulk of conditionally clean discharge and blow-down water of the circulatory system is directed into storm sewers and discharged into the river Ulba. The UMP JSC facility discharges sanitary waste water, volumes of which totaled 475.2 thousand cubic meters in 2010, to the treatment facilities of a city, under an agreement with the city municipality.

Disposal of industrial and consumer waste

The priority mission of Kazatomprom's industrial activity is to provide the safe handling of industrial and consumer waste. Waste formed at the Company's enterprises includes:

Solid and liquid radioactive waste; Mining excesses of fluorite and copper-molybdenum ore;Drill cuttings from well sinking into the ground;Fluoric gypsum from fluoric acid production;Ash and slag waste from thermal energy production;Municipal waste;Processed oil products and automobile tires.

The analysis of the results of surface water monitoring, by taking into account the discharge of storm water through three industrial storm water collectors, shows that UMP JSC's industrial activity has no influence on the surface water of Ulba River.

At ISL facilities industrial waste water formed in processing plants returns fully to the work cycle and forms no waste water. Household waste water from administrative/domestic buildings and camps is discharged into filtration fields after undergoing biological treatment, or stored in septic tanks and then transferred to tailing ponds.

Waste water discharges from MNPC-Kazatomprom LLP subdivisions are made in the form of partially clean water after cooling thermal energy equipment. The water body receiving the waste water is the Caspian Sea. The volume of discharge of partially clean water into the Caspian Sea by MNPC-Kazatomprom LLP and third-party organizations totaled 1,046,065 thousand cubic meters in 2010. The service waste water system of the city is the second accepting facility of waste water of the affiliate and plant itself. 136.6 thousand cubic meters of service water were transferred in 2010. During the period under consideration, the plant transferred a regulatory pure water volume of 24,381.9 thousand cubic meters for third-party organiza-tions to reuse, via injecting into aquifers to maintain reservoir pressure.

Service water from the former BN-350 nuclear reactor is drained into the Karakol Shore cooling basin after treatment; polluted waste water formed during the acid-cleaning of desalination plants is drained into evaporation fields.

The basic mass of waste (almost 86%), formed in NAC Kazatomprom JSC companies is low toxic and belongs to the less harmful 4th and 5th hazard categories. In 2010 the total mass of industrial and consumer waste formed at SAC of the Company amounted to 660.3 thousand tons, 557.4 thousand tons of which was industrial, 98.8 thousand tons radioactive, and 4.1 thousand tons municipal.

49


Liquid and solid radioactive waste forms during the production and processing of natural uranium. Liquid waste from ISL mining after acidification feeds back into the system and is pumped into ore-bearing layers, thus forming a closed technological cycle. Solid radioactive waste is buried in specially constructed waste burial areas, whose projects have passed state environmental and sanitar y-epidemiological appraisals.

The volume of radioactive waste produced by the Company is approximately 0.03% of the total quantity of waste produced annually by companies in RK. Radioactive waste belongs to low-active waste under the International Nuclear Energy Agency (IAEA) classification, i.e.

6waste with a volume activity less than 3.7*10 Bq/kg. It is formed at hydro-plants and NAC Kazatomprom JSC ISL landfills.

Programs to reduce the volume of unused industrial activity waste up to 2015 have been developed and are being implemented at UMP JSC and uranium producing companies, in order to minimize the influence of radioactive waste on the environment.

Specific standards on the formation of liquid radioactive waste output per unit of integrated product have been developed and established at UMP JSC for main plant productions, including uranium production, which allows a limit for uranium production to be established for its discharge into tailing dumps. The volumes of liquid and solid radioactive waste formed annually do not exceed established standards. 86.2% of the limit, or 97.2 thousand tons of solid and liquid radioactive waste, was formed in 2010, from the established limit of 112.7 thousand tons. Tailing dump volumes of liquid radioactive waste are currently being increased to take into account the plant's future development.

The handling of liquid radioactive waste, which has accumulated to 3,073 cubic meters at MNPC-Kazatomprom LLP, occupies an important place in terms of providing environmental and radioactive

safety. This volume of waste was formed during the operation of the BN-350 reactor and continues to accumulate during the decommis-sioning process.

A special feature of handling industrial waste in the nuclear sector is that economic operators have to resolve issues related to the allocation, utilization, and the neutralization of radioactive, industrial and municipal waste in remote villages close to where uranium deposits are processed and in major regional cities.

In 2010 the Company's enterprises regularly carried out work in relation to waste, including: accounting, the stocktaking of sources of formation, organizing storage and burial areas of industrial and consumer waste, using waste as a secondary resource, transferring waste for reuse to third-party organizations, utilization and processing, and the burial of radioactive and industrial waste at specially allocated territories. 4.7 thousand tons of waste was used (or sold) and 4.0 tons was neutralized, and 21.4 thousand tons was transferred to third-party organizations and allocated to storage and burial areas, which is 46.9% less than in 2009.

However, for Kazatomprom companies and other domestic companies, the issue of solid radioactive waste management is represented by the recycling and disposal of large-sized radioactive products made of black and non-corrosive stainless steel (equipment that was decommissioned, air transfer ducts, industrial pipelines, etc.)

Thousands of tons of radioactive metal are currently located at non-owned Sredmash companies of the former USSR. The creation of specialized companies to process and bury solid radioactive waste and a facility to process liquid radioactive waste is necessary in Kazakhstan in order to solve this inter-departmental problem. This issue is becoming particularly pressing in terms of the decommissioning of the BN-350 reactor facility and plans to build nuclear power plants in the country.

50


ENVIRONMENTAL CONSERVATION COSTS6

Динамика затрат по мероприятиям охраны окружающей среды в АО «НАК Казатомпром» за период 2008–2010 годы, млн. тенге

2008

621

2009

820

2010

1500

In 2010 KZT 265.8 million was spent by IMP JSC on improving technological processes, including reducing unsanctioned environ-mental emissions. The measures included: the purchase of equipment for new observation and production wells, reconstruction of map No. 1 of the tailing facility area, the drilling and equipping of two production wells, and the liquidation of radioactive pollutants. The end ecological result is allowed the entering of pollutants of 1-4 hazard categories from unsanctioned environmental emissions into underground reservoirs to be reduced by 78 tons.

More than KZT 56 million was spent on increasing the effectiveness of existing dust and gas retention and water treatment installations. These measures included: works to optimize the ventilation and conditioning system at Building 600 for uranium production, the modernization of high-voltage mechanical supply electric motors at Building 600 for uranium production, the complete repair of the CD-120 conditioner system at Building 58 for tantalum production, and the re-equipment of ventilation systems (VS-4, VS-17-18) for uranium production.

Main areas of funding environmental conservation activities, mln KZT 2009 2010

TotalCurrent costs on minimizing the negative impact on the environment (drafts of emissions standards, discharges, formation of industrial and consumer waste, EIA, etc.) Improving industrial processes, including decreasing organized environmental emissions Improving the effectiveness of existing dust and gas retention and water treatment installations Other measuresEnvironmental costs, total Payments for environmental emissions Punitive and economic sanctions

1 111545

4

14164384121263

1 76891

928

6054714212913

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MAIN APPROACHES TO ENVIRONMENTAL CONSERVATION6

As part of the “Framework of the Republic of Kazakhstan Transitioning to Sustainable Development, 2007-2024”, approved by Decree No. 216 of the President of Kazakhstan, dated 14 November 2006, the domestic company Kazatomprom is working to preserve the natural environment in the areas of deploying nuclear industry facilities, environmental requirements and standards for environmen-tal quality, environmental safety in the operation of production equipment, processing and transporting uranium-bearing ores, and finished products.

The environmental management system and environmental policy operate within 16 of the Company's enterprises; these are revised in the event of a change in market conditions, the reconstruction or modernization of production facilities, or the emergence of new urgent environmental challenges.

The implementation of planned measures to improve the environment management system, as a constituent part of the Company's administration, are carried out annually at SAC of the Company.

For these purposes, nature conservation activities of SAC are regularly inspected, and monitoring the implementation of orders from the environmental conservation authority related to rectifying discovered violations is carried out at the Company's enterprises.

Each enterprise of the Company conducts an internal audit and makes and presents periodic reports on the results of industrial environmental monitoring in accordance with requirements established by the Environmental Conservation Authority.

Drafts of standards related to maximum permitted emissions for pollutants into the atmosphere and maximum permitted discharges of waste water into reservoirs and on land are reworked and updated on a timely basis at SAC of the Company, and work is being carried out to streamline the regulatory framework in the areas of the production and consumption of waste.

Compliance with conditions established in environmental regulatory documents is enforced at all companies. Today, environmen-tal conservation activity is, from an informational aspect, public and transparent; this enables interested individuals to be kept informed on environmental matters relating to uranium-bearing ore production and processing facilities.

The legal bases of the Company's policy in the field of environmen-tal conservation include: the Ecological Code of the Republic of Kazakhstan; the Land Code of the Republic of Kazakhstan; the Water Code of the Republic of Kazakhstan; the law “On Soil and Subsoil Use” of the Republic of Kazakhstan; the law “On the Use of Nuclear Power” of

the Republic of Kazakhstan; the law “On Licensing” of the Republic of Kazakhstan; and the law “On Public Radiation Safety” of the Republic of Kazakhstan.

The Company uses funds generated from its business activity to resolve these issues, as well as any other funds that may be used under law.

The most important components of the Company's environmental conservation and occupational health and safety policies are: improving environmental awareness among employees; the transparency of information; constructive dialogue and relations with the public; maintaining and developing a health service support system for staff; launching a quality assurance program for radiation safety at the Company; and bringing existing occupational health and safety and environment systems into line with international standards.

Integrated services related to radiation safety, occupational safety and health and environmental conservation exist at all SAC of the Company, which are the bases for operational control over the environment, radiation, technical and nuclear safety. Monitoring discharges and waste water from hazardous substances and the formation, utilization and burial of waste is carried out under an established industrial monitoring program.

In order to prevent the occurrence of accidents, the transport of radioactive substances and other dangerous substances is monitored. Over the past five years not a single accident involving dangerous substances has been recorded.

Radio-ecological monitoring, a constituent part of environmental conservation monitoring, is carried out in order to provide ecological safety. This work is performed by the Radiation Monitoring Service, which is equipped with dosimetric and radiometric equipment for the regular measurement of parameters in accordance with the established organization of radiation monitoring coordinated by state sanitary supervision bodies. The Company's enterprises have modern state-accredited radio-ecological laboratories.

In providing radiation safety to its staff, the Company is governed by three main principles established by the law “On Public Radiation Safety”: standardization, substantiation and optimization.

Differences in the technological processes of the Company's SAC can be defined as differences in the range of radiation risk factors that staff working with sources of ionizing radiation are exposed to and priority areas to implement measures to decrease radiation exposure.

Monitoring levels are implemented at companies to maintain the same level of radiation exposure to staff and effective responses to changes in radiation.

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At all companies, radiation safety services monitor industrial radiation levels and implement legislative and regulatory require-ments. Environmental and occupational health and safety administra-tions organize the systematic supervision of services at Company level.

The Company's existing system in its enterprises for providing radiation safety allows a stable radiation level to be maintained and staff to be exposed to low radiation levels. The Company's SAC have never recorded a case of a member of staff being exposed to levels of radiation which exceed those permitted under the radiation safety standards.

Nuclear safety forms an integral part of public policy to ensure environmental safety, environmental protection and sustainable development in the use of nuclear energy for peaceful purposes – both now and in the long term. In its activity in the area of ensuring nuclear safety when using, processing, storing and transporting radioactive

fissile materials, NAC Kazatomprom JSC is governed by the main principles of state policy for the use of nuclear power, established under the law of the Republic of Kazakhstan “On the Use of Nuclear Power”.

It was only through the carrying out of environmental conserva-tion activities in the main production subsidiaries and affiliates of the Company and complying with environmental quality standards that punitive economic sanctions in 2010 fell 19.8 times in comparison with 2009, amounting to KZT 13.3 million.

In line with its environmental policy on informational disclosure, NAC Kazatomprom JSC strives for the efficient and full provision to the public of information regarding its environmental conservation activity. Non-governmental organizations conduct environmental tours at uranium mining sites and thermal and electrical energy production sites.

53


54

* Production departnent


INTERACTION WITH EMPLOYEES

HR MANAGEMENT POLICY

7Highly qualified professional staff form the basis of success at

Kazatomprom today, and guarantee sustainable development in the future. Therefore, it is important for the Company to recruit, train and retain accomplished employees of all categories and levels. Today this is felt even more acutely, as the Company, not the first year, experiences a shortage of qualified specialists. Considerable attention is paid to recruiting and nurturing local staff, and on this basis a strategic HR plan is developed.

The enterprises of the Company endeavor to create a working environment in which everyone can find an appropriate position based on their business skills, knowledge, and abilities. NAC Kazatomprom JSC's HR management policy is based on equal opportunities and is opposed to any form of discrimination.

The Company actively cooperates with trade unions, which operate in the vast majority of its enterprises and unite more than half of all employees. Trade union representatives monitor working conditions and the distribution of social benefits and participate in discussions on leisure and health care for employees and their families.

In 2010, the average number of NAC Kazatomprom JSC company employees totaled 22,727 people, working across different regions of Kazakhstan. 4,039 people were recruited during the year. Increases in staff numbers were recorded in all the Company's major activities, with the largest share (41%) being in the mining industry.

A minor part of the work is carried out by self-employed workers, or persons who are not employees or monitored workers.

Share of Regular Staff in the Total Number

Controlled Workers

Average PayrollAmount forthe Year 2010

Share of Employees who have concluded Temporary Labor Agreement

Temporary Labor Agreement

10%

90%

Permanent Labor Agreement

In the past few years NAC Kazatomprom JSC has, like many other large mining companies, faced a severe problem related to a significant number of experienced and qualified production unit employees reaching retirement age – this trend is also set to continue in the next three-to-five years. Such a situation on the labor market has led to increased competition for staff. As a result, the Company is developing new recruitment methods and plans to develop human resources in NAC Kazatomprom JSC regional organizations.

Special emphasis has been placed on attracting college graduates, through regular participation at job fairs organized by the Ministry of Education and Science. At the same time, there has been active collaboration with leading universities in the country and abroad, identifying student numbers and creating applications for their core specializations. Those who received a technical education are of particular interest to the Company; thus a large number of graduates recruited in 2010 are engineers.

2%

98%

55

Recruiting staff


NAC Kazatomprom JSC also benefits considerably from local human resources. The Company has a long tradition of working with local municipalities, trade unions and other bodies designed to monitor the situation with respect to employment, hiring local people to work in mining companies, and the training and development of local staff.

The results in this area are thoroughly studied by both the Company's HR services and regional government agencies; this allows policies to be implemented which ensure that priority is placed on local people when hiring. According to reports, in 2010 the local population represented 19% of the Company's share of senior managers and members of management and executive bodies.

In its companies NAC Kazatomprom JSC has established an HR club for its executives and HR managers, which helps to develop and implement various HR-effective tools for staff selection, adaptation and development. Experts from consulting companies with extensive experience in implementing advanced HR practices are invited to monthly meetings of the club, which helps the HR services of Company's enterprises to better understand the interaction between HR functions and other departments and develop an HR vision for human resources that forms “a coherent picture.”

Diversity and non-discrimination

The staff analysis carried out in all our companies is intended to help us navigate the market and without delay recruit the required number of talented employees from all walks of life.

The average age of employees was in the range of 30 to 50;Employees aged 30 or below accounted for 26% of all employees;Women accounted for 26% of the total number of employees;5% of members of management bodies were women; The average age of members of management ranged from 30 to 50;28% of members of governing bodies were aged 50 or over; The proportion of employees with a higher education was 33%;The proportion of non-residents was 0.4% of the total number of employees.

The 2010 staff diversity report revealed the following:

Staff structure by age

Up to 30

5963

From 30 to 50 Over 50

11278

5855

Staff structure by gender

Women

Man

Staff structure by categories

Service Staff

Operational Staff

Administrative Staff

Managers

Executives

9,6%

75,5%

13,6%

0,6%

0,8%

56


26%

74%

Structure of Employees who left the Company

Men at the age < 30 лет

Women at the age < 30 лет

Men at the age 30-50 лет

Women at the age 30-50 лет

Men at the age > 50 лет

Women at the age > 50 лет34%

12% 9%

17%

6%22%

Staff turnover amounted to 13% in 2010.

Of those employees who have left our Company, 72.5% were men:

The Company respects individual freedom, rights and human dignity, and does not tolerate harassment, child labor or forced labor. Kazatomprom seeks to create a favorable working environment in which recruitment policies and practices facilitate the development and promotion of all employees.

An important role in supporting the principles of diversity and non-discrimination belongs to the Company's management, which contributes greatly to the cultural diversity of staff at our facilities, and encourages a constructive dialogue and promotes better labor relations.

A key principle of the Company's code of ethics is the prohibition of discrimination on grounds of origin, social, property status, sex, age, race, nationality, language, religion, creed, place of residence or any other circumstances. The code has been posted on the corporate website and can be viewed by all so that employees can be familiar with its provisions and incorporate it in their daily work.

Total number of employees at the end of the yearTotal number of employees covered by collective agreementsThe share of all employees covered by collective agreements, %

23 09622 06596%

ValueIndicator

Satisfaction and dedication

About 80% of NAC Kazatomprom JSC employees took part in a 2010 employee satisfaction survey, organized by the HR departments of our companies for the second time.

Overall the results of the survey were positive, while the employee satisfaction index – one of our key HR indicators – was 73.6%, which represents a significant achievement for a company as large as NAC Kazatomprom JSC. The figure was unchanged on the previous year.

The most positive aspects of the survey results related to criteria such as job satisfaction and management relations. However, for two divisions, including the central office, the survey results were negative, caused by dissatisfaction with the amount of employee compensation,

as well as opportunities for professional growth and career develop-ment.

Privacy is crucial in order for the survey to be successful and reliable. Hence, the questioning process is done in such a way that privacy is ensured.

To date, the survey results have not yet spread to the Company; however there are immediate plans to organize a discussion of the results with employees. The survey results will be most useful for the heads of companies, who will be able to become familiar with them, along with their subordinates, and be able to develop plans for appropriate measures to be taken.

57

Collective agreements include provisions on the minimum period of notice to be given to employees (one month) and their elected representatives (two months) on implementing significant changes in the Company which may affect them materially.


LABOR MANAGEMENT INDICATORS. OCCUPATIONAL HEALTH AND SAFETY.7

A major area of NAC Kazatomprom JSC's work is in occupational safety and health, and the Company is improving its efficiency in this area by introducing management systems that are aimed at bringing occupational health and safety standards into line with international standards.

The strategic development plan of NAC Kazatomprom JSC and its SAC is focused on protecting and improving staff working conditions, improving industrial safety, and seeking to implement each employee's constitutional right to working conditions that meet safety require-ments. To this end, companies are constantly taking steps to improve the system of measures to ensure health and safety in production facilities. All Company enterprises have developed and implemented the OSH (occupational safety and health) management system, which covers all structural subdivisions of enterprises and industrial processes and is the only system under which all organizational work concerning health and safety is carried out. The system identifies the tasks, functions and work necessary to ensure work safety, and the relationships needed between departments and divisions so that occupational safety and health management is carried out in accordance with their functional responsibilities, and distributions of roles, rights and responsibilities of each employee of a company are allocated correctly to create healthy and safe working conditions and ensure compliance with rules and safety standards.

In order to further enhance the effectiveness of OSH management systems in companies, the following were elaborated and imple-mented: a provision on the individual responsibility of staff for violating safety requirements; a provision on the management of subsidiaries; and occupational health and environmental conservation require-ments for contractors involved in various types of work. Given that road transport makes up a large part of the Company's production operations, the Company has developed and implemented a system to ensure the safe operation of vehicles. This includes general rules for the safe operation of vehicles; organizational and operational measures to ensure vehicle safety; organizing the monitoring and supervising of vehicle operations; organizing the safe transport of people, dangerous goods and radioactive materials; the operation of cranes and road-building equipment; and the procedure for documenting traffic safety and accident prevention.

All NAC Kazatomprom JSC companies promptly certify production facilities and have elaborated and approved in the prescribed manner industrial safety declarations, which were submitted to the Ministry of Emergency Situations of the Republic of Kazakhstan and regional bodies. To eliminate the consequences of potential accidents at companies, special units approved by the Ministry of Emergency Situations were established. Dispatching services directly linked to the Company's enterprises and headquarters and emergency and domestic security agencies were established, which can be called upon in the event of an emergency.

At a total cost of KZT 3.28 billion, a variety of organizational and technical measures were implemented in 2010 to improve working conditions and health and industrial safety and to prevent occupational injuries. Preventive work on safety was conducted at facilities under the current OSH management system.

The following measures were carried out: OSH information support; an analysis of causes of injuries and accidents at companies and adopting appropriate measures to prevent them; improving safety at production facilities; and staff responsibility for performing assigned functions to ensure work safety.

During the year 19,599 safety violations were uncovered by departmental supervision and state control and supervision bodies, of which 18,833 (96%) were resolved in a timely manner. Measures were taken in many companies to improve the technical level of production and working conditions, and ensure that systemized preventive work was carried out to prevent occupational injuries and accidents.

In 2010, there were 14 accidents related to production, including two with fatal consequences, seven with severe consequences, and five with minor consequences, and 13 traffic accidents occurred at NAC Kazatomprom JSC companies due to non-compliance with safety rules. All cases were investigated in accordance with the law of the Republic of Kazakhstan, and preventive measures were elaborated. Multi-disciplinary work on occupational safety and health was carried out by the Company and its subsidiaries jointly with the state authorities to improve industrial safety. In recent years, a stable trend has been seen where occupational injuries and accidents at companies have fallen. The Company will continue to strive to ensure that the activities of its companies are socially important, meet the requirements of society, and contribute to the country's sustainable development.

58


Indicators of occupational safety 2008 2009 2010

Ratio of frequency of injuries per 1,000 employees

Ratio of severity of injuries, disability days per injury

1,17

32,17

0,65

36,90

0,63

53,20

Health and culture

The strategy of NAC Kazatomprom JSC in terms of the occupational safety and health of staff contributes to the overall effectiveness of the Company. This strategy is implemented in practice through consistently introducing a range of measures. At present, there are already programs in place for voluntary health insurance, professional medical assessments, vaccinations, medical ambulance services, a corporate fitness program, sports and recreational activities, and extra paid holidays.

Trade union committees provide health resort treatment benefits to NAC Kazatomprom JSC employees and their families and rent sports facilities for training in the martial arts, volleyball, basketball and other sports. Summer camps are organized for the children of Company employees, and financial assistance is provided for hospital treatment.

In order to strengthen corporate spirit and promote a healthy lifestyle, the NAC Kazatomprom JSC Olympics are held every year.

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STAFF TRAINING AND DEVELOPMENT7NAC Kazatomprom JSC's main staff development strategy is to

involve the maximum number of young people in its companies to strengthen the Company's scientific potential, develop lateral thinking, initiative-taking and creativity, and thus create a team of highly skilled professionals.

The Company is committed to providing its employees with all the necessary conditions to ensure their creative abilities and skills can be developed, and strives to support their initiatives, support talented employees, and incentivize them to move up the career ladder.

NAC Kazatomprom JSC provides an opportunity to develop staff through a wide range of training programs and training courses and seminars, ranging from distance learning courses to sending staff on internships in other countries. Training courses are mandatory for certain groups of staff. A number of NAC Kazatomprom JSC companies send employees to educational institutions to obtain a higher education.

In 2010, the total number of hours spent in the training, skills development and training of all categories of Company employees amounted to 664,700.

A competency model for each category of employees has been developed in some enterprises of the Company; currently, this project is being tested and will be further extended to other divisions. This will allow more thorough and rational individual staff development plans to be created that will be tied to the overall strategy of the Company.

Average Number of Training Hours per Employee per Year

Members of Managing Bodies

Operational Staff


Managers

Executives

Service Staff16

1

52

30

31

16

Total number of employees at the end of the yearNumber of employees that passed formal productivity assessmentShare of employees that passed formal productivity assessment, %

22 72710 16345%

ValueIndicator

Much attention is paid to the training of a human resources reserve, which begins outside NAC Kazatomprom JSC: in schools, colleges and secondary vocational schools. The Company has implemented a system of continuing education: kindergarten – school – university/college – advanced training. The purpose of this program is to establish an intake

of highly educated young people with good professional training achieved through a process of preparatory training and cooperation with relevant higher education institutions. Kindergartens and schools have been built, renovated and fully equipped for this program in all uranium mining villages.

60


Specific requirements are established for the proficiency of instructors. Training seminars for instructors are held twice a year at the Republican Institute of Advanced Studies. Instructors obtain certification after attending a course and receive a salary increase. As a result of these steps, students in schools in uranium mining towns in South Kazakhstan demonstrated the highest percentage pass mark in the united national test (about 75%). NAC Kazatomprom JSC awards scholarships to any graduate of a uranium mining region who has qualified to study a specialized professional course at a Kazakh university. In cases of admission to foreign universities, the Company pays tuition fees. The Company allocates KZT 40 million annually to training and scholarships.

An important step in continuing education is to work with newcomers and young professionals. NAC Kazatomprom JSC

companies are working on a new specially adapted pilot project for new employees designed to acquaint them with the Company and help them understand how they may rapidly begin to contribute to the Company's overall operations. The New Staff Adaptation Rules are already in place and are producing positive results. In 2010, 85.4% of newcomers passed this procedure and 83.3% successfully passed their probationary periods. The program provides feedback to newcomers through questionnaires, which helps streamline the process.

A mentoring system is widely used at facilities. During the first few months, an intern is assigned to a mentor from among the most experienced and qualified staff, with whom a young professional starts his initial stage of individual development. In order to engage a larger number of skilled workers in this process, premium bonuses are used as incentives.

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INCENTIVES AND MOTIVATION SCHEMES 7Increasing employee salaries is NAC Kazatomprom JSC's priority in

the area of wages. The Company continually monitors the wage levels of staff categories in order to maintain competitive salaries.

On this basis, decisions are made to increase salaries according to companies and staff categories. In the event of a high level of inflation in RK, a relevant salary indexation is carried out.

During the global financial crisis, the Company succeeded in maintaining the salary levels of production staff and even managed to increase them slightly.

However, at the same time some changes were made to the incentives scheme for administrative staff in the Company's central office.

Minimum salary in RK, KZTMinimum monthly rate of entry-level employee, KZTRatio, %

14 95215 002100,3%

ValueIndicator

Соотношение минимальной заработной платы Республики Казахстан, установленной в 2010 году и минимального должностного окладасотрудников Компании:

Level of base rates for men and women by category of staff:

Base Rate for Men

Base Rate for Women

However, the most important challenge, which was addressed by the Company in 2010 and which it will continue to address in the future, is the alignment of remuneration and bonus systems for administrative staff in its subsidiaries with Samruk-Kazyna NWF JSC's remuneration policy. To this end, the Company has worked to create a single system for staff categories and positions, which is closely tied to the incentive system.

Work was also undertaken to improve the incentive system, which meant developing and implementing key performance indicators for managers based on an assessment of goals. In the future we plan to develop key performance indicators for other staff categories.

62

175 300180 000

210 000210 000

35 18024 700 15 002 15 002 16 000

20 000

Operational Staff


ManagersExecutives Service Staff


The motivation of employees of NAC Kazatomprom JSC operating divisions is carried out using a wide range of incentive tools, including bonuses and raises for quality work, mentoring, proficiency, leadership, and continuous service. Bonuses and rewards exist for: productive results; performing mission-critical tasks; making astute and creative proposals, and proposals to improve performance levels. State, national

and professional holidays and financial assistance for leave are also provided.

Management body members are, in general, employed in parent companies; thus they are not paid for their work on supervisory boards or boards of directors.

Social payments and benefits

NAC Kazatomprom JSC's social policy is based on the number of years spent at the Company and principles of efficiency and economic feasibility. It covers not only workers but also their families, as well as out-of-work WWII veterans and pensioners.

In the majority of the Company's enterprises, collective agreements are usually signed which apply to all employees, regardless of whether they are union members or not. NAC Kazatomprom JSC employees are guaranteed the followings under collective agreements:

A health care package (including voluntary health insurance, professional medical assessments, medical ambulance services);The holding of cultural events and sports and recreational activities;Providing material assistance for: the birth of a child, marriage, anniversaries, illness, accidents, funerals, etc.;Providing additional paid leave;Maintaining the average wage of an employee sent for training, retraining and professional development;Social benefits for temporary disability;Providing material assistance during an employee's sick leave;Lump-sum retirement payments;Providing charitable assistance to retirees of the Company on International Day for the Elderly and to World War II veterans on 9 May; Providing where feasible interest-free loans for home improvements to help address complex housing issues.

Recognition

As an important component of corporate culture, the Company has implemented a recognition system. This is based on three levels of honorary awards and a diploma entitled Honored Worker of the Nuclear Power Industry of Kazakhstan.

In addition, NAC Kazatomprom JSC companies implement the following types of employee rewards:

Commendations;Entry to the Hall of Fame;Entry in the Book of Honor;Valuable gifts;The Kazatomprom NAC JAS honorary diploma;The NAC Kazatomprom JSC jubilee award.

The timely and appropriate giving of awards for work achieve-ments promotes a sense of employees sharing in the Company's success, and increases their motivation and hence loyalty to the Company.

In 2010, 56 Company employees were awarded commendation letters, 35 were awarded honorary NAC Kazatomprom JSC diplomas, five were presented with an industry award badge, and one worker was awarded with the Honored Worker of the Nuclear Industry of the Republic of Kazakhstan diploma.

In addition, company cars, mobile payments, guarantees to obtain loans from commercial banks and rental payments are also provided to motivate innovators, outstanding professionals and employees who have achieved particularly good results in their work.

Annual sports, artistic and cultural events are conducted at the Company's enterprises. Most of these have already become a permanent fixture of the calendar: sports days, celebrating the Company's anniversary, Nuclear Industry Day, the New Year, and children's drawing contests.

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64

* Kindergarten in Shieli village


SOCIAL AND ECONOMIC DEVELOPMENT OF REGIONAL OPERATIONS 8

The industrial and economic activities of the Company, in particular related to its mining units, are the locomotive of economic and social sector development of regions where the Company operates. The main ways that this is achieved are:

The creation of high-salary jobs;Growth in consumer activity;Tax payments to local budgets;Investments in energy facilities, road infrastructure, settlements; social facilities for both employees and the whole population of a region;Support for medical and educational institutions.

DEVELOPMENT OF SMALL- AND MEDIUM-SIZED BUSINESSES8

In 2005, the Company launched a program aimed at supporting small- and medium-sized businesses. To do this, business incubators were established in three uranium mining villages, where anyone could obtain help to organize a business. This facilitated the creation of more jobs which were not related to the core business of the Company. As a result, small businesses were created, which currently successfully operate in:

Taukent village (Suzak District, South Kazakhstan). Cattle slaughtering and meat processing plant; photo salon; computer club; beauty salons (2007).Shieli village (Kyzyl-Orda Region). Sewing plant (2007).Kyzemshek (South Kazakhstan). The Isotope restaurant with a summer eating area (2007).

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CONSTRUCTION OF SOCIAL FACILITIES AND LAND IMPROVEMENT8

The construction and support of social facilities such as kindergar-tens, schools, medical and health institutions, and cultural centers is tremendously important for the Company, since these institutions have a significant impact on the quality of life of people in regions where the Company operates. In almost all regions NAC Kazatomprom JSC builds and maintains social facilities.

Funding for social infrastructure development is carried out both independently and in accordance with memoranda concluded with federal executive bodies in regions where the Company operates. Currently, a wide range of social projects is being implemented: the construction of health centers, schools, kindergartens, and children's health camps, family entertainment centers, and landscaping and planting areas on land that is desert.

The following were constructed and reconstructed in 2010: a boarding school in Shieli village in the Kyzyl-Orda Region for 50 disabled children, a medical facility with 40 beds in Taukent village, and an open stadium in Shieli village.

The construction of the following facilities will be completed in 2011: a Palace of Pupils Art in Astana (seating 3,880), a children's health camp in Matrosovo and a kindergarten with 250 places in Oskemen, drinking water systems in Shymkent, a kindergarten with 200 places and a school named after Suleimenov with nine classes in Sholakkorgan village, a school with 200 places in Zhartytobe village, and a landfill for biological and medical waste in Taukent village.

It should be noted that work is ongoing on the project 'Construc-tion of the Palace Pupils Art in Astana.' A lack of infrastructure and inadequate quality of pre-school and secondary education is a major problem in Kazakhstan today. While issues related to the construction of schools and kindergartens are being solved, there has been no change in the number of further education facilities, and existing

organizations lack physical infrastructure. Therefore, the construction of a specialized contemporary arts palace in the capital of the country is particularly relevant for the development of children.

The construction of the Palace of Pupils Art is a large-scale project involving 10,000 students studying in two classroom sessions twice a week. The number of one-time visits is 3,880, including in study rooms and auditoriums. It is reckoned that the estimated total area of the Palace of Pupils Art will amount to over 46,550 m2, including: a dining room seating 100; an indoor rink; a swimming pool for recreation and sports with a warm-up hall; athletics, basketball and tennis facilities; a wrestling hall; a theater complex; a choral singing hall; a dance studio; a theater and drawing studio; music and biology classes; an educational center; a scientific research and engineering laboratory; a planetarium; and a resource center.

Through the construction of the Palace of Pupils Art complex, new additional capacities will be introduced to organize and improve further education and the sports development of children in Astana aged 5-18.

Another project, the 'Major Reconstruction of the Matrosovo Children's camp in Oskemen', is intended to create world-class children and family recreational facilities, develop physical education and sports in the region, promote health, and provide leisure opportunities.

In addition to the Matrosovo children's camp, NAC Kazatomprom JSC has financed the construction of a kindergarten with a capacity for 250 in the town of Oskemen. The kindergarten building is intended to provide kindergarten teachers and medical services related to education, training, care and childcare, as well as guidance for parents or persons replacing them based on approved education and training programs.

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SPONSORSHIP AND CHARITY8Charity represents an important area of NAC Kazatomprom JSC's

social activity. The company provides constant support for veterans, disabled people, orphaned children, and people in difficult situations.

Help is permanently provided to:

WWII veterans/former employees of the Company;Children's home No.2 in Almaty;Boarding school No. 8 in Almaty;Schoolchildren from low-income families of South Kazakhstan and the Kyzylorda region;Children from low-income families of South Kazakhstan and the Kyzylorda region (who are provided with hot meals).

In 2010, the Company provided sponsorship worth KZT 2,032 million, which was 1.9 times more than in 2009.

In addition, as part of its charitable efforts the Company provides help to its employees and their families, as well as pensioners and veterans.

Such criteria as: the reason for applying for assistance (illness, difficult family conditions, etc.), income, family composition, work experience at the Company, and professional achievements are taken into account when deciding the justification for and the amount of material help to be provided.

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SUPPORTING SPORTS, HEALTHCARE AND CULTURAL DEVELOPMENT8

NAC Kazatomprom JSC's strategy of providing health care for employees contributes towards the Company achieving positive results. The realization of this strategy is brought about through the consistent implementation of a package of measures.

The Company annually organizes various sports competitions. The building of large modern sport complexes is carried out in regions of operations using Company funds.

Hospitals with in-patient, maternity, pediatric and diagnostic departments have been built and opened in every village of our uranium producing regions. Hospitals are equipped with the latest technologies and the best medical specialists are recruited on a competitive basis. It should be noted that in NAC Kazatomprom JSC hospitals, all local people receive medical help, regardless of whether or not they work for the Company. Infant mortality rates are falling in uranium producing regions as a result of the measures we have undertaken, and fertility rates are increasing. In the long term it is planned to concentrate efforts on managing the consequences of demographic changes.

Kazatomprom puts considerable effort and resources into increasing the cultural level of the population, and in particular into organizing leisure time. Entertainment centers with free libraries,

gyms, and games rooms have been opened at uranium producing villages, catering for different study and sports groups for children. 57 study and sports groups are up and running at present, regularly attended by 2,500 adults and children. All activities are free. Events rich in cultural and entertainment value and sports and health programs are regularly organized. Organizing New Year holiday events every day during school winter breaks, to which not only children of NAC Kazatomprom JSC employees are invited but also the children of neighboring villages, has become an excellent tradition of the Company. Free transport is also provided to children.

The organization of leisure events prevents a number of social problems, including alcoholism and drug addiction. The result of the Company's strategy realization is favorable social climate at uranium producing villages.

As part of its aims to develop and support sport in RK, NAC Kazatomprom JSC is the primary sponsor of the Ball Hockey Federation (Bandy). The Kazakhstan men's national hockey team was victorious at the 7th Asian Olympic Games, beating the Mongolian team in the final by the crushing score 16:2. The match was attended by President Nursultan Nazarbayev of Kazakhstan.

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NAC Kazatomprom JSC10, Kunayev Str., Astana, 010000, Republic of Kazakhstan.

Теl.: +7 (717) 255 13 98; fax: +7 (717) 255 13 99e-mail: [email protected], www.kazatomprom.kz

JSC Sustainable development report - · PDF fileEN19, EN21, EN22 EN30 ... Wherever relevant data was ... scientific and technical expertise and is launching a number of major

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